Verizon posts $5.7 billion Q2 profit on $28.6 billion in sales, smartphone penetration hits 50%

Verizon Reports Continued Double-Digit Earnings Growth and Strong Operating Cash Flow in Second-Quarter 2012

Verizon Wireless Posts Record-High Margin, Strong Increase in Service Revenues; Wireline Consumer Revenue Growth Accelerates

2Q 2012 HIGHLIGHTS

Consolidated

Wireless

Wireline

NEW YORK – Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported a second consecutive quarter of double-digit percentage growth in year-over-year earnings results and significant increases in operating cash flow. Verizon Wireless generated record-high margins and strong operational results, and Verizon’s Wireline segment generated continued increases in revenues from FiOS fiber-optic services and strategic business services.

Verizon reported 64 cents in EPS in second-quarter 2012, an increase of 12.3 percent compared with second-quarter 2011 earnings of 57 cents per share. There were no adjustments in either period.

On Track for ‘Solid Double-Digit Earnings Growth’ in 2012

“Verizon delivered another strong quarter of earnings growth and cash generation, and we remain on track to meet our financial objectives and produce solid double-digit earnings growth for the year,” said Lowell McAdam, Verizon chairman and CEO. “Verizon Wireless has once again demonstrated its industry leadership, combining strong revenue growth with record margins and high customer loyalty. We reported sequential improvement in second-quarter Wireline margins, and we expect to see that improving trend carry through the second half of the year. We also look forward to the closing of strategic transactions and to the integration of process improvements that will set the stage for continued long-term profitable growth across all our business units.”

Consolidated Results: Strong Gains in Cash Flow

In second-quarter 2012, Verizon’s total operating revenues were $28.6 billion on a consolidated basis, an increase of 3.7 percent compared with second-quarter 2011.

Consolidated operating income was $5.7 billion in second-quarter 2012, compared with $4.9 billion in second-quarter 2011. Consolidated EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled $9.8 billion in second-quarter 2012, compared with $9.0 billion in second-quarter 2011.

Cash flow from operating activities totaled $15.3 billion in first-half 2012, compared with $12.8 billion in first-half 2011. In second-quarter 2012 alone, cash flow from operating activities totaled $9.3 billion, a 20.1 percent increase compared with second-quarter 2011.

With capital expenditures of $7.4 billion in first-half 2012, free cash flow (non-GAAP, cash flow from operations less capex) was $7.8 billion in first-half 2012, compared with $3.9 billion in first-half 2011.

For full-year 2012, capital expenditures are expected to be flat to down compared with 2011 capital expenditures of $16.2 billion.

Verizon Wireless Results: Record Profitability, Strong Operational Metrics

In second-quarter 2012, Verizon Wireless delivered strong growth in revenues and retail customers; an increase in smartphone penetration; record-high retail postpaid ARPU; and the highest segment EBITDA margin on service revenues (non-GAAP) in the company’s history.

Wireless Financial Highlights

Wireless Operational Highlights

Wireline Results: FiOS Sales Help Grow Consumer Revenue

In second-quarter 2012 in the Wireline segment, revenue growth for FiOS led to overall revenue growth among U.S. consumer customers. Increased sales of strategic services helped mitigate lower revenues resulting from global economic impacts, including the adverse effects of foreign exchange rates compared with last year.

Wireline Financial Highlights

· Second-quarter 2012 operating revenues were $9.9 billion, a decline of 3.1 percent compared with second-quarter 2011. Wireline operating income margin was 1.9 percent, compared with 1.6 percent in first-quarter 2012 and 3.1 percent in second-quarter 2011. Segment EBITDA margin (non-GAAP) was 23.1 percent in second-quarter 2012, compared with 22.6 percent in first-quarter 2012 and 23.8 percent in second-quarter 2011.

Wireline Operational Highlights

Verizon Enterprise Solutions Highlights

Verizon Enterprise Solutions continued to expand and enhance its capabilities in the U.S. and abroad. In second-quarter 2012, Verizon announced an agreement to acquire Hughes Telematics Inc. This will expand Verizon’s machine-to-machine and telematics capabilities and accelerate revenue growth across key vertical segments of Verizon Enterprise Solutions, including automotive and transportation, energy, health care and manufacturing. The transaction is expected to close in the third quarter.

Verizon Enterprise Solutions is a global sales and marketing organization that harnesses all of Verizon’s cloud, mobility and other platforms to serve the rapidly transforming enterprise market with integrated solutions. Among other second-quarter highlights:

NOTE: See the accompanying schedules and www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.