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--12-31
VZ
VERIZON COMMUNICATIONS INC
No
Yes
2009-06-30
10-Q
0000732712
Yes
Large Accelerated Filer
N.A.
false
-8962000000
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>2</b></font><b>.</b></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size=
"2"><b>Acquisitions</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
 </p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Acquisition of Alltel
Corporation</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On June 5, 2008, Verizon
Wireless entered into an agreement and plan of merger with Alltel
Corporation (Alltel), a provider of wireless voice and advanced
data services to residential and business customers in 34 states,
and its controlling stockholder, Atlantis Holdings LLC, an
affiliate of private investment firms TPG Capital and GS Capital
Partners, to acquire, in an all-cash merger, 100% of the equity of
Alltel for cash consideration of $5.9 billion. Verizon Wireless
closed the transaction on January 9, 2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">We expect to experience
substantial operational benefits from the acquisition of Alltel,
including additional combined overall cost savings from reduced
roaming costs by moving more traffic to our own network, reduced
network-related costs from the elimination of duplicate facilities,
consolidation of platforms, efficient traffic consolidation, and
reduced overall expenses relating to advertising, overhead and
headcount. We expect reduced combined capital expenditures as a
result of greater economies of scale and the rationalization of
network assets. We also anticipate that the use of the same
technology platform will enable us to rapidly integrate
Alltel’s operations with ours.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The acquisition of Alltel has
been accounted for as a business combination under the acquisition
method. We have commenced the appraisals necessary to assess the
fair values of the tangible and intangible assets acquired and
liabilities assumed, the fair value of noncontrolling interests,
and the amount of goodwill recognized as of the acquisition date.
As the values of certain assets, liabilities and noncontrolling
interests are preliminary in nature, they are subject to adjustment
as additional information is obtained about the facts and
circumstances that existed as of the acquisition date. The
valuations will be finalized within 12 months of the close of the
acquisition. When the valuations are finalized, any changes to the
preliminary valuation of assets acquired, liabilities or
noncontrolling interests assumed may result in significant
adjustments to the fair value of the net identifiable assets
acquired and goodwill.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The fair values of the assets
acquired and liabilities assumed were preliminarily determined
using the income, cost, and market approaches. The fair value
measurements were primarily based on significant inputs that are
not observable in the market other than interest rate swaps (see
Note 5) and long-term debt assumed in the acquisition. The income
approach was primarily used to value the intangible assets,
consisting primarily of wireless licenses and customer
relationships. The income approach indicates value for a subject
asset based on the present value of cash flow projected to be
generated by the asset. Projected cash flow is discounted at a
required rate of return that reflects the relative risk of
achieving the cash flow and the time value of money. The cost
approach, which estimates value by determining the current cost of
replacing an asset with another of equivalent economic utility, was
used, as appropriate, for plant, property and equipment. The cost
to replace a given asset reflects the estimated reproduction or
replacement cost for the asset, less an allowance for loss in value
due to depreciation. The market approach, which indicates value for
a subject asset based on available market pricing for comparable
assets, was utilized in combination with the income approach for
certain acquired investments. Additionally, Alltel historically
conducted business operations in certain markets through non-wholly
owned entities (Managed Partnerships). The fair value of the
noncontrolling interests in these Managed Partnerships as of the
acquisition date of approximately $583 million was estimated by
using a market approach. The market approach indicates value based
on financial multiples available for similar entities and
adjustments for the lack of control or lack of marketability that
market participants would consider in determining fair value of the
Managed Partnerships. The fair value of the majority of the
long-term debt assumed was primarily valued using quoted market
prices.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!--##PBStart##-->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The following table
summarizes the consideration paid and the preliminary allocation to
the assets acquired, including cash acquired of $1.0 billion, and
liabilities assumed as of the close of the acquisition, as well as
the fair value at the acquisition date of Alltel’s
noncontrolling partnership interests:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="62%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font face="Times New Roman" size="2">(dollars in
millions)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size="2"><b>As
of<br />
January 9, 2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Adjustments</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Adjusted as of<br />
January 9, 2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cash consideration:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cash payments to Alltel’s equity
holders</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,782</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,782</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other cash payments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">143</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">143</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"9"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total purchase price</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,925</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,925</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"9"> </td>
<td> </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="4" height="16"></td>
<td colspan="4" height="16"></td>
<td colspan="4" height="16"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Assets acquired</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Current assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,778</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,778</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Plant, property and equipment</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,404</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(7</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,397</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Wireless licenses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,808</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">636</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,444</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Goodwill</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">16,573</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(344</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">16,229</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Intangible assets subject to
amortization</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,370</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">138</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,508</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,688</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(119</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,569</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"9"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total assets acquired</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">36,621</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">304</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">36,925</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"9"> </td>
<td> </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="4" height="16"></td>
<td colspan="4" height="16"></td>
<td colspan="4" height="16"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Liabilities assumed</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Current liabilities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,810</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,814</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Long-term debt</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23,929</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23,929</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Deferred income taxes and other
liabilities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,800</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">273</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,073</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"9"> </td>
<td> </td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total liabilities assumed</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30,539</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">277</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30,816</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"9"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net assets acquired</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,082</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">27</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,109</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Noncontrolling interest</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(490</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(27</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(517</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Contributed capital</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">333</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">333</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"9"> </td>
<td> </td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">    5,925</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">    5,925</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"9"> </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Adjustments to the
preliminary purchase price allocation during the three months ended
June 30, 2009 were primarily related to updated valuations in
the preliminary appraisals of identifiable intangible and tangible
assets as well as the acquired liabilities, deferred taxes and
noncontrolling interests. Included in the above purchase price
allocation is $2.2 billion of net assets held for sale to be
divested as a condition of the regulatory approval as described
below.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Wireless licenses have an
indefinite life, and accordingly, are not subject to amortization.
The weighted average period prior to renewal of these licenses at
acquisition is approximately 5.4 years. The customer relationships
included in Intangible assets subject to amortization are being
amortized using an accelerated method over 8 years, and other
intangibles are being amortized on a straight-line basis or an
accelerated method over a period of 24 to 32 months. Goodwill of
approximately $1.4 billion is expected to be deductible for tax
purposes.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Alltel Divestiture
Markets</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">As a condition of the
regulatory approvals that were required to complete the Alltel
acquisition, Verizon Wireless is required to divest overlapping
properties in 105 operating markets in 24 states (Alltel
Divestiture Markets). These markets consist primarily of Alltel
operations, but also include a small number of pre-merger
operations of Verizon Wireless. As of June 30, 2009, total
assets and total liabilities to be divested of $2,636 million and
$154 million, respectively, are included in Prepaid expenses and
other current assets and Other liabilities, respectively, on the
accompanying condensed consolidated balance sheets as a result of
entering into the transactions described below.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On May 8, 2009, Verizon
Wireless entered into a definitive agreement with AT&T Mobility
LLC (AT&T Mobility), a subsidiary of AT&T Inc. (AT&T),
pursuant to which AT&T Mobility agreed to acquire 79 of the 105
Alltel Divestiture Markets, including licenses and network assets
for $2.35 billion in cash. Verizon Wireless expects the transaction
with AT&T Mobility to close within the next 12 months. On
June 9, 2009, Verizon Wireless entered into a definitive
agreement with Atlantic Tele-Network, Inc (ATN), pursuant to which
ATN agreed to acquire the remaining 26 Alltel Divestiture Markets
that were not included in the transaction with AT&T Mobility,
including licenses and network assets, for $200 million in cash.
Verizon Wireless expects the transaction with ATN to close during
the second half of 2009. Completion of each of the foregoing
transactions is subject to receipt of regulatory
approvals.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!--##PBStart##-->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Pro Forma Information</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The unaudited pro forma
information presents the combined operating results of Verizon and
Alltel, with the results prior to the acquisition date adjusted to
include the pro forma impact of: the elimination of transactions
between Verizon and Alltel; the adjustment of amortization of
intangible assets and depreciation of fixed assets based on the
preliminary purchase price allocation; the elimination of merger
expenses and management fees incurred by Alltel; and the adjustment
of interest expense reflecting the assumption and partial
redemption of Alltel’s debt and incremental borrowings
incurred by Verizon Wireless to complete the acquisition of
Alltel.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The unaudited pro forma
results are presented for illustrative purposes only and do not
reflect the realization of potential cost savings, or any related
integration costs. Certain cost savings may result from the merger;
however, there can be no assurance that these cost savings will be
achieved. These pro forma results do not purport to be indicative
of the results that would have actually been obtained if the merger
occurred as of January 1, 2008, nor does the pro forma data
intend to be a projection of results that may be obtained in the
future.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The following unaudited pro
forma consolidated results of operations assume that the
acquisition of Alltel was completed as of January 1,
2008:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="68%"></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font face="Times New Roman" size="2">(dollars in millions, except
per share amounts)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Three months ended<br />
June 30, 2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Six months ended<br />
June 30, 2008</b></font></td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Operating revenues</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26,366</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">52,376</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net income attributable to
Verizon</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,903</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,552</font></td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Earnings per common share from net
income attributable to Verizon:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Basic</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">.66</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.24</font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">.66</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.24</font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Consolidated results of
operations reported for the six months ended June 30, 2009
were not significantly different than the pro forma consolidated
results of operations assuming the acquisition of Alltel was
completed on January 1, 2009.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Acquisition of Rural Cellular
Corporation</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On August 7, 2008,
Verizon Wireless acquired 100% of the outstanding common stock and
redeemed all of the preferred stock of Rural Cellular Corporation
(Rural Cellular) in a cash transaction valued at approximately $1.3
billion.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The acquisition of Rural
Cellular has been accounted for as a business combination under the
purchase method. The following table summarizes the preliminary
allocation of the acquisition cost to the assets acquired,
including cash acquired of $42 million, and liabilities assumed as
of the acquisition date:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="87%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font face="Times New Roman" size="2">(dollars in
millions)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>As of<br />
August 7, 2008</b></font></td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Assets acquired</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Wireless licenses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,096</font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Goodwill</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">933</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Intangible assets subject to
amortization</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">198</font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">973</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total assets acquired</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,200</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Liabilities assumed</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Long-term debt</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,505</font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Deferred income taxes and other
liabilities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">384</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total liabilities assumed</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,889</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net assets acquired</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">    1,311</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Included in Other assets are
assets that were divested of $485 million. On December 22,
2008, we exchanged these assets and an additional cellular license
with AT&T for assets having a total preliminary aggregate value
of approximately $495 million.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Acquisition Related
Charges</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During the three and six
months ended June 30, 2009, we recorded pretax charges of $47
million, of which $8 million is attributable to Verizon after-tax,
and $345 million, of which $104 million is attributable to Verizon
after-tax, respectively, primarily related to the Alltel
acquisition for transaction fees and costs associated with the
acquisition, including fees related to the credit facility that was
entered into and utilized to complete the acquisition.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Merger Integration
Costs</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During the three and six
months ended June 30, 2009, we recorded pretax charges of $181
million, of which $52 million is attributable to Verizon after-tax,
and $339 million, of which $102 million is attributable to Verizon
after-tax, respectively, for merger integration activities
primarily related to the Alltel acquisition comprised of trade name
amortization, contract terminations, and network integration
activities.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During the three and six
months ended June 30, 2008, we recorded pretax charges of $36
million ($22 million after-tax), and $65 million ($40 million
after-tax), respectively, primarily comprised of systems
integration activities and other costs related to re-branding
initiatives, facility exit costs and advertising associated with
the MCI acquisition.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Other</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On May 8, 2009, Verizon
Wireless entered into an agreement with AT&T to purchase
certain assets of Centennial Communications Corporation
(Centennial) for $240 million, contingent on AT&T completing
its acquisition of Centennial.</font></p>
</div>
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>11.</b></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size=
"2"><b>Commitments and Contingencies</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
<font size="+0"> </font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2"><font size="2">Several state
and federal regulatory proceedings may require our telephone
operations to pay penalties or to refund to customers a portion of
the revenues collected in the current and prior periods. There are
also various legal actions pending to which we are a</font> party
and claims which, if asserted, may lead to other legal actions. We
have established reserves for specific liabilities in connection
with regulatory and legal actions, including environmental matters
that we currently deem to be probable and estimable. We do not
expect that the ultimate resolution of pending regulatory and legal
matters in future periods, including the Hicksville matter
described below, will have a material effect on our financial
condition, but it could have a material effect on our results of
operations for a given reporting period.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During 2003, under a
government-approved plan, remediation commenced at the site of a
former Sylvania facility in Hicksville, New York that processed
nuclear fuel rods in the 1950s and 1960s. Remediation beyond
original expectations proved to be necessary and a reassessment of
the anticipated remediation costs was conducted. A reassessment of
costs related to remediation efforts at several other former
facilities was also undertaken. In September 2005, the Army Corps
of Engineers (ACE) accepted the Hicksville site into the Formerly
Utilized Sites Remedial Action Program. This may result in the ACE
performing some or all of the remediation effort for the Hicksville
site with a corresponding decrease in costs to Verizon. To the
extent that the ACE assumes responsibility for remedial work at the
Hicksville site, an adjustment to a reserve previously established
for the remediation may be made. Adjustments to the reserve may
also be made based upon actual conditions discovered during the
remediation at any of the sites requiring remediation.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">In connection with the
execution of agreements for the sales of businesses and
investments, Verizon ordinarily provides representations and
warranties to the purchasers pertaining to a variety of
nonfinancial matters, such as ownership of the securities being
sold, as well as indemnity from certain financial
losses.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Subsequent to the sale of
Verizon Information Services Canada in 2004, we continue to provide
a guarantee to publish directories, which was issued when the
directory business was purchased in 2001 and had a 30-year term
(before extensions). The preexisting guarantee continues, without
modification, despite the subsequent sale of Verizon Information
Services Canada and the spin-off of our domestic print and Internet
yellow pages directories business. The possible financial impact of
the guarantee, which is not expected to be adverse, cannot be
reasonably estimated since a variety of the potential outcomes
available under the guarantee result in costs and revenues or
benefits that may offset each other. In addition, performance under
the guarantee is not likely.</font></p>
</div>
0.92
20789000000
44340000000
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>6.</b></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size=
"2"><b>Debt</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
 </p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Verizon Wireless</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On December 19, 2008,
Verizon Wireless and Verizon Wireless Capital LLC, as the
borrowers, entered into a $17.0 billion credit facility (Bridge
Facility). On January 9, 2009, Verizon Wireless borrowed $12.4
billion under the Bridge Facility in order to complete the
acquisition of Alltel and repay certain of Alltel’s
outstanding debt as described below. Through June 30, 2009,
Verizon Wireless used cash generated from operations and the net
proceeds from the sale of the notes described below to repay all of
the borrowings under the Bridge Facility. As of June 30, 2009,
no borrowings were outstanding under the Bridge Facility and the
commitments under the Bridge Facility have been
terminated.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">In connection with the Alltel
acquisition, Verizon Wireless assumed approximately $23.9 billion
of debt, of which approximately $2.3 billion remains outstanding to
third parties as of June 30, 2009. Under the terms of a tender
offer that was completed on March 20, 2009, $0.2 billion
aggregate principal amount was redeemed for a loss that was not
significant.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">In February 2009, Verizon
Wireless and Verizon Wireless Capital LLC co-issued $4.3 billion
aggregate principal amount of three and five-year fixed rate notes
in a private placement resulting in cash proceeds of $4.2 billion,
net of discounts and issuance costs. In May 2009, Verizon Wireless
and Verizon Wireless Capital LLC co-issued $4.0 billion aggregate
principal amount of two-year fixed and floating rate notes in a
private placement resulting in cash proceeds of approximately $4.0
billion, net of discounts and issuance costs.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">In June 2009, Verizon
Wireless issued in a private placement $1.0 billion aggregate
principal amount of floating rate notes due 2011. Commencing on
December 27, 2009 and on each interest payment date
thereafter, both the note holders and Verizon Wireless have the
right to require settlement of all or a portion of these notes at
par. Accordingly, these notes are classified as current maturities
in the condensed consolidated balance sheet.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Cellco Partnership (d/b/a
Verizon Wireless) and Verizon Wireless Capital LLC filed a
registration statement with the SEC on July 6, 2009 to
register a total of approximately $11.8 billion of new notes which
may, once the registration statement is declared effective by
the SEC, be exchanged for privately placed debt with similar terms,
pursuant to the requirements of registration rights agreements. The
privately placed debt includes the debt issued in November of 2008,
as well as February and May of 2009. This Report on Form 10-Q does
not constitute an offer of any securities for sale.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Verizon Communications</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">In March 2009, Verizon issued
$1.8 billion of 6.35% notes due 2019 and $1.0 billion of 7.35%
notes due 2039, resulting in cash proceeds of $2.7 billion, net of
discounts and issuance costs, which was used to reduce our
commercial paper borrowings, repay maturing debt and for general
corporate purposes. In December 2008, we entered into a $0.2
billion vendor provided credit facility and in January 2009, we
borrowed the entire amount available under this facility. During
the first half of 2009, $0.2 billion of 5.5% notes issued by
Verizon California Inc., $0.2 billion of 5.875% notes issued by
Verizon New England Inc., and $0.5 billion of floating rate notes
issued by Verizon matured and were repaid.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On April 15, 2009, we
terminated all commitments under our $6.0 billion three-year credit
facility with a syndicate of lenders that was scheduled to mature
in September 2009 and entered into a new $5.3 billion 364-day
credit facility with a group of major financial institutions. As of
June 30, 2009, the unused borrowing capacity under the 364-day
credit facility was approximately $5.2 billion.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Guarantees</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">We guarantee the debt
obligations of GTE Corporation (but not the debt of its subsidiary
or affiliate companies) that were issued and outstanding prior to
July 1, 2003. In April 2009, $0.5 billion of 7.51% notes
issued by GTE Corporation matured and were repaid. As of
June 30, 2009, $1.7 billion principal amount of these
obligations remained outstanding.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Debt Covenants</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">As of June 30, 2009, we and our
consolidated subsidiaries are in compliance with all of our debt
covenants.</font></p>
</div>
1296000000
8119000000
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>7.</b></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size=
"2"><b>Stock-Based Compensation</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
 </p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Verizon Communications Long-Term
Incentive Plan</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">In May 2009, Verizon
shareholders approved the 2009 Verizon Communications Inc.
Long-Term Incentive Plan (the Plan) which permits the granting of
stock options, stock appreciation rights, restricted stock,
restricted stock units, performance shares, performance share units
and other awards. The maximum number of shares available for awards
from the Plan is 115 million shares. The Plan amends and
restates the previous long-term incentive plan.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Restricted Stock Units</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The Plan provides for grants
of Restricted Stock Units (RSUs) that generally vest at the end of
the third year after the grant. The RSUs are classified as
liability awards because the RSUs will be paid in cash upon
vesting. The RSU award liability is measured at its fair value at
the end of each reporting period and, therefore, will fluctuate
based on the performance of Verizon’s stock. Dividend
equivalent units are also paid to participants at the time the RSU
award is paid.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The following table summarizes
Verizon’s Restricted Stock Unit activity:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="69%"></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(shares in
thousands)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right"><font face="Times New Roman" size=
"2"><b>Restricted Stock<br />
Units</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="right" colspan="2">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="right">
<font face="Times New Roman" size="2"><b>Weighted-Average<br />
Grant-Date</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="right">
<font face="Times New Roman" size="2"><b>Fair Value</b></font></p>
</td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Outstanding, beginning of
year</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">21,820</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35.01</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Granted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,427</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">31.59</font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Payments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(9,349</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">31.64</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cancelled/Forfeited</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(62</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35.92</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Outstanding, June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">18,836</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35.52</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Performance Share
Units</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The Plan also provides for
grants of Performance Share Units (PSUs) that generally vest at the
end of the third year after the grant if certain threshold
performance requirements have been satisfied. The PSUs are
classified as liability awards because the PSUs will be paid in
cash upon vesting. Dividend equivalent units are also paid to
participants at the time that the PSU award is determined and paid,
and in the same proportion as the PSU award.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The following table summarizes
Verizon’s Performance Share Unit activity:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="67%"></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(shares in
thousands)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right"><font face="Times New Roman" size=
"2"><b>Performance Share<br />
Units</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="right" colspan="2">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="right">
<font face="Times New Roman" size="2"><b>Weighted-Average<br />
Grant-Date</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="right">
<font face="Times New Roman" size="2"><b>Fair Value</b></font></p>
</td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Outstanding, beginning of
year</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">33,214</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35.04</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Granted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">13,056</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">31.59</font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Payments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(17,141</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">31.58</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cancelled/Forfeited</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(169</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">33.95</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Outstanding, June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">28,960</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35.54</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">As of June 30, 2009,
unrecognized compensation expense related to the unvested portion
of RSUs and PSUs was approximately $470 million and is expected to
be recognized over a weighted-average period of approximately two
years.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Verizon Wireless Long-Term Incentive
Plan</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The 2000 Verizon Wireless
Long-Term Incentive Plan (the Wireless Plan) provides compensation
opportunities to eligible employees and other participating
affiliates of Verizon Wireless. The Wireless Plan provides rewards
that are tied to the long-term performance of Verizon Wireless.
Under the Wireless Plan, Value Appreciation Rights (VARs) were
granted to eligible employees. As of June 30, 2009, all VARs
were fully vested.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The following table summarizes the Value
Appreciation Rights activity:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="67%"></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(shares in
thousands)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right"><font face="Times New Roman" size=
"2"><b>Value Appreciation<br />
Rights</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="right" colspan="2">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="right">
<font face="Times New Roman" size="2"><b>Weighted-Average<br />
Grant-Date</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="right">
<font face="Times New Roman" size="2"><b>Fair Value</b></font></p>
</td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Outstanding, beginning of
year</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">28,244</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">16.54</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Exercised</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(9,706</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">15.74</font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cancelled/Forfeited</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(150</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">18.07</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Outstanding, June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">18,388</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">16.95</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Stock Options</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The Plan provides for grants
of stock options to employees at an option price per share of 100%
of the fair market value of Verizon stock on the date of
grant. Each grant has a 10 year life, vesting equally over a
three year period, starting at the date of the grant. We have not
granted new stock options since 2004; all stock options outstanding
are vested and exercisable.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The following table summarizes our stock
option activity:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="71%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(shares in
thousands)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right"><font face="Times New Roman" size=
"2"><b>Stock Options</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="right" colspan="2"><font face=
"Times New Roman" size="2"><b>Weighted-Average<br />
Exercise Price</b></font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Outstanding, beginning of
year</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">134,767</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">47.69</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Exercised</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26.33</font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cancelled/Forfeited</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(20,428</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">51.70</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Outstanding, June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">114,337</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">46.97</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The weighted-average
remaining contractual term was approximately two years for stock
options outstanding as of June 30, 2009. The total intrinsic
value for stock options outstanding and exercised was not material
as of June 30, 2009.</font></p>
</div>
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>3.</b></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size=
"2"><b>Dispositions</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
 </p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>2009</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On May 13, 2009, we
announced that we will spin off a newly formed subsidiary of
Verizon (Spinco) to our stockholders. Spinco will hold defined
assets and liabilities of the local exchange business and related
landline activities of Verizon in Arizona, Idaho, Illinois,
Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South
Carolina, Washington, West Virginia and Wisconsin, and in portions
of California bordering Arizona, Nevada and Oregon, including
Internet access and long distance services and broadband video
provided to designated customers in those areas. Immediately
following the spin-off, Spinco will merge with Frontier
Communications Corporation (Frontier) pursuant to a definitive
agreement with Frontier, and Frontier will be the surviving
corporation. The transactions do not involve any assets or
liabilities of Verizon Wireless. The assets and liabilities
that will be held by Spinco are currently included in
Verizon’s continuing operations.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Depending on the trading
prices of Frontier common stock prior to the closing of the merger,
Verizon stockholders will collectively own between approximately
66% and 71% of Frontier’s outstanding equity immediately
following the closing of the merger, and Frontier stockholders will
collectively own between approximately 29% and 34% of
Frontier’s outstanding equity immediately following the
closing of the merger (in each case, before any closing
adjustments). The actual number of shares of common stock to
be issued by Frontier in the merger will be calculated based upon
several factors, including the average trading price of Frontier
common stock during a pre-closing measuring period subject to a
collar mechanism, the total number of Verizon shares outstanding at
that time and other closing adjustments. Verizon will not own
any shares of Frontier after the merger.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Both the spin-off and merger
are expected to qualify as tax-free transactions, except to the
extent that cash is paid to Verizon stockholders in lieu of
fractional shares.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">In connection with the
spin-off, Verizon will receive from Spinco approximately $3.3
billion in value through a combination of a special cash payment to
Verizon, a reduction in Verizon’s consolidated indebtedness,
and, in certain circumstances, the issuance to Verizon of debt
securities of Spinco. In the merger, Verizon stockholders are
expected to receive approximately $5.3 billion of Frontier common
stock, assuming no closing adjustments.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The transaction is subject to
the satisfaction of certain conditions, including receipt of state
and federal telecommunications regulatory approvals. If the
conditions are satisfied, we expect this transaction to close
during the second quarter of 2010.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>2008</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On March 31, 2008, we
completed the spin-off of the shares of Northern New England Spinco
Inc. to Verizon shareowners and the merger of Northern New England
Spinco Inc. with FairPoint Communications, Inc. As a result of the
spin-off, our net debt was reduced by approximately $1.4 billion.
The condensed consolidated statements of income for the periods
presented include the results of operations of the local exchange
and related business assets in Maine, New Hampshire and Vermont
through the date of completion of the spin-off.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During the first six months
of 2008, we recorded pretax charges of $103 million ($81 million
after-tax), for costs incurred related to the separation of the
wireline facilities and operations in Maine, New Hampshire and
Vermont from Verizon at the closing of the transaction, as well as
for professional advisory and legal fees in connection with this
transaction.</font></p>
</div>
1.10
1.10
1420000000
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>5.</b></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size="2"><b>Fair
Value Measurements</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
 </p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The following table presents the assets
measured at fair value on a recurring basis as of June 30,
2009:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="69%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(dollars in
millions)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Level 1 </b><font face="Times New Roman" size=
"1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(1)</sup></font></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Level 2 </b><font face="Times New Roman" size=
"1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(2)</sup></font></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Level 3</b> </font><font face="Times New Roman"
size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(3)</sup></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Total</b></font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Assets:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Short-term investments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">178</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">182</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">360</font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Investments in unconsolidated
businesses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">324</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">324</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,302</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,302</font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px"
align="justify"><font face="Times New Roman" size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(1)</sup></font>
<font face="Times New Roman" size="2">– quoted prices in
active markets for identical assets or liabilities</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px"
align="justify"><font face="Times New Roman" size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(2)</sup></font>
<font face="Times New Roman" size="2">– observable inputs
other than quoted prices in active markets for identical assets and
liabilities</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px"
align="justify"><font face="Times New Roman" size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(3</sup></font><font face="Times New Roman"
size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">)</sup></font>
<font face="Times New Roman" size="2">– no observable pricing
inputs in the market</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Upon closing of the Alltel
acquisition (see Note 2), the $4.8 billion investment in Alltel
debt, which was classified as Level 3 at December 31, 2008,
became an intercompany loan and is eliminated in
consolidation.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The fair value of our
short-term and long-term debt, excluding capital leases, is
determined based on market quotes for similar terms and maturities
or future cash flows discounted at current rates. The fair value of
our long-term and short-term debt, excluding capital leases, was
approximately $68 billion and $53 billion at June 30, 2009 and
December 31, 2008, respectively, as compared to the carrying
value of approximately $65 billion and $52 billion at June 30,
2009 and December 31, 2008, respectively.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Derivative Instruments</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">We have entered into
derivative transactions primarily to manage our exposure to
fluctuations in foreign currency exchange rates, interest rates,
equity and commodity prices. We employ risk management strategies
which may include the use of a variety of derivatives including
cross currency swaps, foreign currency and prepaid forwards and
collars, equity options, interest rate and commodity swap
agreements and interest rate locks. We do not hold derivatives for
trading purposes.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">We measure all derivatives,
including derivatives embedded in other financial instruments, at
fair value and recognize them as either assets or liabilities on
our consolidated balance sheets. The derivative instruments
discussed below are valued primarily using models based on readily
observable market parameters for all substantial terms of our
derivative contracts and thus are classified as Level 2. Changes in
the fair values of derivative instruments not qualifying as hedges
or any ineffective portion of hedges are recognized in earnings in
the current period. Changes in the fair values of derivative
instruments used effectively as fair value hedges are recognized in
earnings, along with changes in the fair value of the hedged item.
Changes in the fair value of the effective portions of cash flow
hedges are reported in Other comprehensive income (loss) and
recognized in earnings when the hedged item is recognized in
earnings.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Interest Rate Swaps</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">We have entered into domestic
interest rate swaps to achieve a targeted mix of fixed and variable
rate debt, where we principally receive fixed rates and pay
variable rates based on London Interbank Offered Rate (LIBOR).
These swaps are designated as fair value hedges and hedge against
changes in the fair value of our debt portfolio. We record the
interest rate swaps at fair value on our balance sheet as assets
and liabilities. Changes in the fair value of the interest rate
swaps are recorded to Interest expense, which are offset by changes
in the fair value of the debt due to changes in interest rates. The
fair value of these contracts was $197 million and $415 million at
June 30, 2009 and December 31, 2008, respectively, and is
included in Other assets and Long-term debt. As of June 30,
2009, the total notional amount of these interest rate swaps was $3
billion.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Cross Currency Swaps</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During the fourth quarter of
2008, Verizon Wireless entered into cross currency swaps designated
as cash flow hedges to exchange approximately $2.4 billion of the
net proceeds from the December 2008 Verizon Wireless and Verizon
Wireless Capital LLC debt offering of British Pound Sterling
and Euro denominated debt into U.S. dollars and to fix our future
interest and principal payments in U.S. dollars, as well as
mitigate the impact of foreign currency transaction gains or
losses. The fair value of these swaps included in Other assets at
June 30, 2009 was approximately $302 million. For the three
and six months ended June 30, 2009, a pretax gain of $318
million and $297 million, respectively, was recognized in Other
comprehensive income, of which $218 million and $119 million,
respectively, were reclassified from Accumulated other
comprehensive loss to Other income and (expense), net to offset the
related pretax foreign currency transaction loss on the underlying
debt obligation.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Alltel Interest Rate
Swaps</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">As a result of the Alltel
acquisition, Verizon Wireless acquired seven interest rate swap
agreements with a notional value of $9.5 billion that pay fixed and
receive variable rates based on three-month and one-month LIBOR
with maturities ranging from 2009 to 2013. We have settled all of
these agreements using cash generated from operations as of
June 30, 2009. Changes in the fair value of these swaps were
recorded in earnings. The gain recognized upon settlement in the
condensed consolidated statements of income was not
significant.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Prepaid Forward
Contracts</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During the first quarter of
2009, we entered into privately negotiated prepaid forward
agreements for approximately $390 million in Verizon shares, which
are included in Other assets. Changes in the fair value of the
agreements, which were not significant during the three and six
months ended June 30, 2009, were included in Selling, general
and administrative expense and Cost of services and
sales.</font></p>
</div>
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>4.</b></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size=
"2"><b>Wireless Licenses, Goodwill and Other Intangible
Assets</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
 </p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Wireless Licenses</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">Changes in the carrying amount of
wireless licenses are as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="90%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="top" colspan=
"4">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">(dollars in millions)</font></p>
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">  </font></p>
</td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Balance at December 31,
2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">    61,974</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Wireless licenses acquired (Note
2)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,444</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Capitalized interest on wireless
licenses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">367</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Reclassifications, adjustments and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(77</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Balance at June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">71,708</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Reclassifications,
adjustments and other primarily includes the reclassification of
wireless licenses associated with the pre-merger operations of
Verizon Wireless that are included in the Alltel Divestiture
Markets (see Note 2) as held for sale and included in Prepaid
expenses and other in the accompanying condensed consolidated
financial statements. As of June 30, 2009, and
December 31, 2008, $12.2 billion and $12.4 billion,
respectively, of wireless licenses were under development for
commercial service for which we are capitalizing interest
costs.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Renewals of licenses have
occurred routinely and at nominal costs, which are expensed as
incurred. Moreover, we have determined that there are currently no
legal, regulatory, contractual, competitive, economic or other
factors that limit the useful life of our wireless licenses. As a
result, we treat the wireless licenses as an indefinite-lived
intangible asset. The average remaining renewal period of our
wireless license portfolio was 8.3 years as of June 30,
2009.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Goodwill</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">Changes in the carrying amount of
goodwill are as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="76%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(dollars in
millions)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="right">
<font face="Times New Roman" size="2"><b>Domestic</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="right">
<font face="Times New Roman" size="2"><b>Wireless</b></font></p>
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Wireline</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Total</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Balance at December 31,
2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,297</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,738</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,035</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Acquisitions (Note 2)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">16,229</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">16,229</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Reclassifications, adjustments and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(68</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(7</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(75</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"9"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Balance at June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">17,458</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,731</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">  22,189</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"9"> </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Reclassifications,
adjustments and other primarily include the reclassification of
goodwill associated with the pre-merger operations of Verizon
Wireless that are included in the Alltel Divestiture Markets (see
Note 2) as held for sale and included in Prepaid expenses and other
in the accompanying condensed consolidated financial
statements.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Other Intangible
Assets</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The following table displays the details
of other intangible assets:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="51%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
rowspan="3"><font face="Times New Roman" size="2">(dollars in
millions)</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" align="middle" colspan="9"><font face=
"Times New Roman" size="2"><b>At June 30, 2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" align="middle" colspan="9"><font face=
"Times New Roman" size="2"><b>At December 31,
2008</b></font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"18"> </td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Gross<br />
Amount</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Accumulated<br />
Amortization</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Net<br />
Amount</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="right">
<font face="Times New Roman" size="2"><b>Gross</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="right">
<font face="Times New Roman" size="2"><b>Amount</b></font></p>
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Accumulated<br />
Amortization</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Net<br />
Amount</b></font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other intangible assets:</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Customer lists (6 to 8 years)</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,114</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(709</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,405</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,415</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(595</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">820</font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Non-network internal-use software (2 to
7 years)</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,460</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(4,276</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,184</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,099</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(4,102</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,997</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other (1 to 25 years)</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">852</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(209</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">643</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">465</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(83</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">382</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"18"> </td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Total</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12,426</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(5,194</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,232</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,979</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(4,780</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,199</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"18"> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Customer lists, Non-network
software and Other at June 30, 2009, include $2,508 million
related to the Alltel acquisition. Amortization expense was $498
million and $973 million for the three and six months ended
June 30, 2009, respectively. Amortization expense was $338
million and $671 million for the three and six months ended
June 30, 2008, respectively. Amortization expense is estimated
to be $1,994 million for the full year 2009, $1,746 million in
2010, $1,391 million in 2011, $1,117 million in 2012 and $880
million in 2013.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During 2008, we entered into
an agreement to acquire a non-exclusive license (the IP License) to
a portfolio of intellectual property owned by an entity formed for
the purpose of acquiring and licensing intellectual property. We
paid an initial fee of $100 million for the IP License, which is
included in Other intangible assets, net and is being amortized
over the estimated average remaining lives of the licensed
intellectual property. In addition, we executed a subscription
agreement (with a capital commitment of $250 million, of which
approximately $192 million remains to be funded at June 30,
2009, as required, through 2012) to become a member in a limited
liability company (the LLC) formed by the same entity for the
purpose of acquiring and licensing additional intellectual
property. In connection with this investment, we will receive
non-exclusive license rights to certain intellectual property
acquired by the LLC for an annual license fee.</font></p>
</div>
256000000
-173000000
1350000000
2070000000
1814000000
1712000000
-9821000000
-13278000000
14137000000
3128000000
3242000000
9112000000
64000000
-119000000
-64000000
0
2614000000
8094000000
0
12040000000
-971000000
-103000000
6370000000
643000000
18173000000
53452000000
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>10.</b></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size="2"><b>Segment
Information</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
 </p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Reportable Segments</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">We have two reportable
segments, which we operate and manage as strategic business units
and organize by products and services. We measure and evaluate our
reportable segments based on segment operating income. The use of
segment operating income is consistent with the chief operating
decision maker’s assessment of segment
performance.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Beginning in 2009, we changed
the manner in which the Wireline segment reports Operating revenues
to align our financial presentation to the continued evolution of
the wireline business. Accordingly, there are four marketing units
within the Wireline segment: Mass Markets, Global Enterprise,
Global Wholesale and Other. Mass Markets includes consumer and
small business revenues. Global Enterprise includes all retail
revenue from enterprise customers, both domestic and international.
Global Wholesale includes all wholesale revenues, both domestic and
international. Other primarily includes operator services, payphone
services and revenues from the former MCI mass markets customer
base.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Corporate, eliminations and
other includes unallocated corporate expenses, intersegment
eliminations recorded in consolidation, the results of other
businesses, such as our investments in unconsolidated businesses,
lease financing, and other adjustments and gains and losses that
are not allocated in assessing segment performance due to their
non-recurring or non-operational nature. Although such transactions
are excluded from the business segment results, they are included
in reported consolidated earnings. Gains and losses that are not
individually significant are included in all segment results, since
these items are included in the chief operating decision
maker’s assessment of segment performance.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The reconciliation of segment
operating revenues and expenses to consolidated operating revenues
and expenses below also include those items of a non-recurring or
non-operational nature. We exclude from segment results the effects
of certain items that management does not consider in assessing
segment performance, primarily because of their non-recurring
and/or non-operational nature. We believe that this presentation
will assist readers in better understanding our results of
operations and trends from period to period.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During the first quarter of
2008, we completed the spin-off of our local exchange and related
business assets in Maine, New Hampshire and Vermont (see Note 3).
Accordingly, Wireline results from these operations have been
reclassified to Corporate and Other to reflect comparable operating
results.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">Our segments and their principal
activities consist of the following:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" border="0">
<!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="17%"></td>
<td valign="bottom" width="2%"></td>
<td width="81%"></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 2px solid" valign="top">
<font face="Times New Roman" size="2"><b>Segment</b></font></td>
<td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">
<font face="Times New Roman" size=
"2"><b>Description</b></font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Domestic Wireless</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p align="justify"><font face="Times New Roman" size="2">Domestic
Wireless’s products and services include wireless voice, data
services and other value-added services and equipment sales across
the United States.</font></p>
</td>
</tr>
<tr>
<td height="8"></td>
<td colspan="2" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Wireline</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p align="justify"><font face="Times New Roman" size=
"2">Wireline’s communications services include voice,
Internet access, broadband video and data, next generation Internet
Protocol network services, network access, long distance and other
services. We provide these services to consumers, carriers,
businesses and government customers both in the United States and
internationally in 150 countries.</font></p>
</td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The following table provides operating
financial information for our two reportable segments:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="72%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right" colspan="6"><font face=
"Times New Roman" size="2"><b>Three Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" align="right" colspan="6"><font face=
"Times New Roman" size="2"><b>Six Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(dollars in
millions)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>External Operating
Revenues</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Domestic Wireless</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Service revenue</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">13,330</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">10,472</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26,387</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">20,599</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equipment and other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,125</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,620</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,164</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,135</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total Domestic Wireless</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">15,455</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12,092</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30,551</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23,734</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Wireline</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Mass Markets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,956</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,943</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,877</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,829</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Global Enterprise</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,705</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,971</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,447</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,846</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Global Wholesale</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,100</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,321</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,186</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,684</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">399</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">565</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">889</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,162</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total Wireline</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,160</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,800</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">22,399</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23,521</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26,615</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23,892</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">52,950</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">47,255</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Corporate, eliminations and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">246</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">232</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">502</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">702</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total consolidated –
reported</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26,861</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">24,124</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">53,452</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">47,957</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Intersegment Revenues</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Domestic Wireless</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">25</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">51</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">53</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Wireline</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">328</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">313</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">656</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">618</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">353</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">339</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">707</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">671</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Corporate, eliminations and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(353</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(339</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(707</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(671</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total consolidated –
reported</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Total Operating
Revenues</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Domestic Wireless</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">15,480</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12,118</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30,602</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23,787</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Wireline</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,488</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12,113</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23,055</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">24,139</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26,968</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">24,231</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">53,657</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">47,926</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Corporate, eliminations and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(107</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(107</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(205</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">31</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total consolidated –
reported</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26,861</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">24,124</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">53,452</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">47,957</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Operating Income</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Domestic Wireless</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,459</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,463</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,730</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,718</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Wireline</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">555</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,063</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,246</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,103</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,014</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,526</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,976</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,821</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Reconciling items</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(596</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">20</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(864</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">58</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total consolidated –
reported</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,418</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,546</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,112</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,879</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="76%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(dollars in
millions)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>At June 30,<br />
2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>At December 31,<br />
2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Assets</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Domestic Wireless</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">134,383</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">111,979</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Wireline</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">92,720</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">90,386</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"5"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">227,103</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">202,365</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Reconciling items</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2,104</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(13</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"5"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total consolidated –
reported</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">224,999</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">202,352</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"5"> </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">A reconciliation of the total
of the reportable segments’ operating income to consolidated
Income before provision for income taxes is as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="76%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right" colspan="6"><font face=
"Times New Roman" size="2"><b>Three Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" align="right" colspan="6"><font face=
"Times New Roman" size="2"><b>Six Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td style="BORDER-BOTTOM: #000000 1px solid" valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">(dollars in millions)</font></p>
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font face="Times New Roman" size="2"><b> </b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size=
"2"><b>  </b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font face="Times New Roman" size="2"><b> </b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size=
"2"><b>  </b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font face="Times New Roman" size="2"><b> </b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size=
"2"><b>  </b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font face="Times New Roman" size="2"><b> </b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size=
"2"><b>  </b></font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Total segment operating
income</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,014</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,526</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,976</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,821</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Merger integration costs (see Note
2)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(181</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(36</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(339</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(65</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Severance, pension and benefit charges
(see Note 8)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(416</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(416</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Acquisition related charges (see Note
2)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(88</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Access line spin-off related charges
(see Note 3)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(103</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Impact of divested operations (see Note
3)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">44</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Corporate and other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">56</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(21</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">182</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total consolidated operating
income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,418</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,546</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,112</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,879</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity in earnings of unconsolidated
businesses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">128</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">150</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">256</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">247</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other income and (expense),
net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">92</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">64</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">115</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(787</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(403</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1,712</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(862</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Income Before Provision For Income
Taxes</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,770</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,385</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,720</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,379</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">We generally account for
intersegment sales of products and services and asset transfers at
current market prices. No single customer accounted for more than
10% of our total operating revenues during the three and six months
ended June 30, 2009 and 2008.</font></p>
</div>
15432000000
2841000000
2841000000
5367000000
7720000000
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>8.</b></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size=
"2"><b>Employee Benefits</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
 </p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">We maintain noncontributory
defined benefit pension plans for many of our employees. In
addition, we maintain postretirement health care and life insurance
plans for certain of our retirees and their dependents, which are
both contributory and non-contributory and include a limit on the
company’s share of cost for certain recent and future
retirees.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Net Periodic Benefit (Income)
Cost</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The following table summarizes the
benefit (income) cost related to our pension and postretirement
health care and life insurance plans:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="67%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom" rowspan="2"><font face="Times New Roman" size=
"2">(dollars in millions)</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right" colspan="6"><font face=
"Times New Roman" size="2"><b>Pension</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" align="right" colspan="6"><font face=
"Times New Roman" size=
"2"><b>Health Care and Life</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2"><b>Three
Months Ended June 30,</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Service cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">96</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">94</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">78</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">79</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">481</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">489</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">442</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">426</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Expected return on plan
assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(735</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(794</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(75</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(80</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Amortization of prior service
cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">28</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">13</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">100</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">98</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Actuarial loss, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">28</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">10</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">59</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">66</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net periodic benefit (income)
cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(102</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(188</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">604</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">589</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Settlement loss</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">416</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total (income) cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">314</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(188</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">604</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">589</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="8" height="16"></td>
<td colspan="8" height="16"></td>
</tr>
<tr>
<td valign="bottom" rowspan="2"><font face="Times New Roman" size=
"2">(dollars in millions)</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right" colspan="6"><font face=
"Times New Roman" size="2"><b>Pension</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" align="right" colspan="6"><font face=
"Times New Roman" size=
"2"><b>Health Care and Life</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2"><b>Six Months
Ended June 30,</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Service cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">192</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">190</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">156</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">160</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">962</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">980</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">883</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">855</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Expected return on plan
assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">  (1,469</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">  (1,594</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">  (151</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">  (160</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Amortization of prior service
cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">56</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">27</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">200</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">197</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Actuarial loss, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">56</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">20</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">119</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">133</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net periodic benefit (income)
cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(203</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(377</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,207</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,185</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Settlement loss</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">416</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total (income) cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">213</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(377</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,207</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,185</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"13"> </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Severance, Pension and Benefit
Charges</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During the three and six
months ended June 30, 2009, we recorded pension settlement
losses of $416 million ($253 million after-tax), related to
employees that received lump-sum distributions primarily resulting
from our previous separation plans in which prescribed payment
thresholds have been reached.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Employer Contributions</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During the three months ended
June 30, 2009, we contributed $29 million to our qualified
pension trusts, $18 million to our nonqualified pension plans and
$426 million to our other postretirement benefit plans. During the
six months ended June 30, 2009, we contributed $64 million to
our qualified pension trusts, $77 million to our nonqualified
pension plans and $842 million to our other postretirement benefit
plans. The anticipated qualified pension trust contributions for
2009 disclosed in Verizon’s Annual Report on Form 10-K for
the year ended December 31, 2008, have not changed. Our
estimate of the amount and timing of required qualified pension
trust contributions for 2009 is based on current proposed Internal
Revenue Service regulations under the Pension Protection Act of
2006.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Severance Benefits</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">During the three and six
months ended June 30, 2009, we paid severance benefits of $99
million and $198 million, respectively. At June 30, 2009, we
had a remaining severance liability of $944 million, which includes
future contractual payments to employees separated as of
June 30, 2009.</font></p>
</div>
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>9.</b></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size="2"><b>Equity
and Comprehensive Income</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
<font size="+0"> </font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Equity</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">Changes in the components of equity were
as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
<font size="+0"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="40%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="10"><font face="Times New Roman" size="2"><b>Six
Months Ended June 30, 2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="10"><font face="Times New Roman" size="2"><b>Six
Months Ended June 30, 2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(dollars in
millions)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Attributable<br />
to Verizon</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Noncontrolling<br />
Interest</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Total<br />
Equity</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Attributable<br />
to Verizon</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Noncontrolling<br />
Interest</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>Total<br />
Equity</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Balance at beginning of
period</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">41,706</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">37,199</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">78,905</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">50,581</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">32,288</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">82,869</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Spin-off of local exchange businesses in
Maine, New Hampshire and Vermont</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">44</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">44</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"21"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Adjusted balance at beginning of
period</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">41,706</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">37,199</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">78,905</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">50,625</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">32,288</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">82,913</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,128</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,242</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,370</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,524</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,929</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,453</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other comprehensive income
(loss)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">630</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">82</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">712</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">312</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">310</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"21"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Comprehensive income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,758</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,324</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,082</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,836</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,927</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,763</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Contributed capital</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(189</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(155</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(344</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(26</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(26</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Acquisition of noncontrolling
interests</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">266</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">266</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Dividends declared</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2,613</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2,613</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2,450</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2,450</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Common stock in treasury</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1,101</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">–</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1,101</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Distributions and other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(485</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(478</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(583</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(580</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"21"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Balance at end of
period</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">42,672</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">40,149</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">82,821</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">50,887</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">34,633</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">85,520</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"21"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Noncontrolling interest
included in our condensed consolidated financial statements
primarily include Vodafone’s 45% ownership interest in our
Verizon Wireless joint venture.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Comprehensive Income</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Comprehensive income (loss)
consists of net income and other gains and losses affecting equity
that, under generally accepted accounting principles, are excluded
from net income. Significant changes in the components of Other
comprehensive income (loss), net of income tax expense (benefit),
are described below.</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
<font size="+0"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="76%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right" colspan="5"><font face=
"Times New Roman" size="2"><b>Three Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" align="right" colspan="5"><font face=
"Times New Roman" size="2"><b>Six Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(dollars in
millions)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Net Income</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,160</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,404</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,370</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,453</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Other Comprehensive Income (Loss),
Net of Taxes</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign currency translation
adjustments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">188</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(28</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">149</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net unrealized gain on cash flow
hedges</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">47</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">85</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Unrealized gain (loss) on marketable
securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">39</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(12</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">24</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(44</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Defined benefit pension and
postretirement plans</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">371</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">102</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">491</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">206</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"11"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other comprehensive income attributable
to Verizon</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">645</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">63</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">630</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">312</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other comprehensive income (loss)
attributable to noncontrolling interest</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">46</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">82</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"11"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Total Comprehensive
Income</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,851</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,464</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,082</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,763</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"11"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Comprehensive income attributable to
noncontrolling interest</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,723</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,519</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,324</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,927</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Comprehensive income attributable to
Verizon</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,128</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,945</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,758</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,836</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"11"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Total Comprehensive
Income</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,851</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,464</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,082</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,763</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"11"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Other comprehensive income
attributable to noncontrolling interest primarily reflects activity
related to the cross currency swap (see Note 5).</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The components of Accumulated other
comprehensive loss were as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
<font size="+0"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="76%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap"><font face="Times New Roman" size="2">(dollars in
millions)</font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>At June 30,<br />
2009</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"right" colspan="2"><font face="Times New Roman" size=
"2"><b>At December 31,<br />
2008</b></font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<font size="1"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign currency translation
adjustments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">966</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">936</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net unrealized gain (loss) on cash flow
hedges</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(50</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Unrealized loss on marketable
securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(13</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(37</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Defined benefit pension and
postretirement plans</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(13,730</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(14,221</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom" colspan=
"5"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr bgcolor="#E5E5E5">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Accumulated Other Comprehensive
Loss</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(12,742</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(13,372</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 2px solid" valign="bottom" colspan=
"5"><font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Foreign Currency Translation
Adjustments</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The change in foreign
currency translation adjustments for the three and six months ended
June 30, 2009 was primarily driven by the devaluation in the
U.S. dollar against the Euro.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Unrealized Loss on Marketable
Securities</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Gross unrealized gains and
losses on marketable securities and other investments were not
significant during the three and six months ended June 30,
2009.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Defined Benefit Pension and
Postretirement Plans</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The change in defined benefit
pension and postretirement plans for the three and six months ended
June 30, 2009 was attributable to pension settlement losses
recorded during the second quarter of 2009 and the amortization of
prior service cost and actuarial loss (see Note 8).</font></p>
</div>
<div>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2"><b>1.</b></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size="2"><b>Basis
of Presentation</b></font></p>
</td>
</tr>
</tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; LINE-HEIGHT: 3px; BORDER-BOTTOM: #000000 1pt solid">
<font size="+0"> </font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The accompanying unaudited
condensed consolidated financial statements have been prepared
based upon Securities and Exchange Commission (SEC) rules that
permit reduced disclosure for interim periods. For a more complete
discussion of significant accounting policies and certain other
information, you should refer to the financial statements included
in the Verizon Communications Inc. (Verizon, or the Company) Annual
Report on Form 10-K for the year ended December 31, 2008.
These financial statements reflect all adjustments that are
necessary for a fair presentation of results of operations and
financial condition for the interim periods shown including normal
recurring accruals and other items. We have evaluated subsequent
events through July 30, 2009, the date these condensed
consolidated financial statements were filed with the SEC. The
results for the interim periods are not necessarily indicative of
results for the full year.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">We have reclassified prior year amounts
to conform to the current year presentation.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Recently Adopted Accounting
Pronouncements</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On January 1, 2009, we
adopted the accounting pronouncement on noncontrolling interests in
consolidated financial statements, which establishes accounting and
reporting standards for the noncontrolling interest in a subsidiary
and for the retained interest and gain or loss when a subsidiary is
deconsolidated. As required by this pronouncement, we
retrospectively changed the classification and presentation of
noncontrolling interest in our financial statements for all prior
periods, which we previously referred to as minority interest. The
adoption of this pronouncement also resulted in a lower effective
income tax rate for the Company due to the inclusion of income
attributable to Vodafone Group Plc.’s (Vodafone),
noncontrolling partnership interest in Income before the provision
for income taxes. However, the income tax provision was not
adjusted as a result of adopting this pronouncement.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">The adoption of the following
accounting pronouncements during the first six months of 2009 did
not result in a significant impact to our condensed consolidated
financial statements:</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On January 1, 2009, we
adopted the accounting pronouncements relating to business
combinations, including assets acquired and liabilities assumed
arising from contingencies. These pronouncements require the use of
the acquisition method of accounting, define the acquirer,
establish the acquisition date and apply to all transactions and
other events in which one entity obtains control over one or more
other businesses. These pronouncements also amend the accounting
and disclosure requirements for assets and liabilities in a
business combination that arise from contingencies. Upon our
adoption of these pronouncements, we were required to expense
certain transaction costs and related fees associated with business
combinations that were previously capitalized. In addition, with
the adoption of these pronouncements, changes to valuation
allowances for deferred income tax assets and adjustments to
unrecognized tax benefits generally are to be recognized as
adjustments to income tax expense rather than goodwill.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On January 1, 2009, we
adopted the accounting pronouncement relating to disclosures about
derivative instruments and hedging activities, which requires
additional disclosures that include how and why an entity uses
derivatives, how these instruments and the related hedged items are
accounted for and how derivative instruments and related hedged
items affect the entity’s financial position, results of
operations and cash flows.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On January 1, 2009, we
adopted the accounting pronouncement regarding the determination of
the useful life of intangible assets that removes the requirement
to consider whether an intangible asset can be renewed without
substantial cost or material modifications to the existing terms
and conditions, and replaces it with a requirement that an entity
consider its own historical experience in renewing similar
arrangements, or a consideration of market participant assumptions
in the absence of historical experience. This pronouncement also
requires entities to disclose information that enables users of
financial statements to assess the extent to which the expected
future cash flows associated with the asset are affected by the
entity’s intent and/or ability to renew or extend the
arrangements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On June 15, 2009, we
adopted the accounting pronouncement regarding the general
standards of accounting for, and disclosure of, events that occur
after the balance sheet date but before the financial statements
are issued. This pronouncement was effective prospectively for
interim and annual reporting periods ending after June 15,
2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On June 15, 2009, we
adopted the accounting pronouncement that amends the requirements
for disclosures about fair value of financial instruments,
regarding the fair value of financial instruments for annual, as
well as interim, reporting periods. This pronouncement was
effective prospectively for all interim and annual reporting
periods ending after June 15, 2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On June 15, 2009, we
adopted the accounting pronouncement that provides additional
guidance designed to create greater clarity and consistency in
accounting for, and presenting impairment losses on, debt
securities. This pronouncement was effective prospectively for
interim and annual reporting periods ending after June 15,
2009.</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">On June 15, 2009, we
adopted the accounting pronouncement that provides additional
guidance for estimating fair value in accordance with the
accounting standard for fair value measurements when the volume and
level of activity for the asset or liability has significantly
decreased. This pronouncement also provides guidance for
identifying transactions that are not orderly. This pronouncement
was effective prospectively for all interim and annual reporting
periods ending after June 15, 2009.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Other Recent Accounting
Pronouncements</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">In December 2008, an
accounting pronouncement was issued regarding employers’
disclosures about postretirement benefit plan assets which requires
us, as a plan sponsor, to provide disclosures about plan assets,
including categories of plan assets, the nature of concentrations
of risk and disclosures about fair value measurements of plan
assets. This pronouncement is effective for fiscal years ending
after December 15, 2009. The adoption of this
pronouncement is not expected to have a significant impact on our
consolidated financial statements.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Earnings Per Common
Share</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">There were no dilutive stock
options outstanding to purchase shares included in the computation
of diluted earnings per common share for the three and six months
ended June 30, 2009. There were 1 million and
2 million weighted-average dilutive shares included in the
computation of diluted earnings per common share for the three and
six months ended June 30, 2008, respectively. Certain
outstanding options to purchase shares were not included in the
computation of diluted earnings per common share because to do so
would have been anti-dilutive for the period, including
approximately 115 million weighted-average shares and
118 million weighted-average shares for the three and six
months ended June 30, 2009, respectively, and approximately
154 million weighted-average shares and 144 million
weighted-average shares, for the three and six months ended
June 30, 2008, respectively.</font></p>
</div>
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