Half-yearly Report

Verizon Delivers Sixth Consecutive Quarter of Double-Digit Operating Income and Earnings Growth NEW YORK, July 22, 2014 -- 2Q 2014 HIGHLIGHTS Consolidated * $1.01 in earnings per share (EPS), compared with 78 cents per share in 2Q 2013. * 91 cents in adjusted EPS (non-GAAP), compared with 73 cents in adjusted EPS in 2Q 2013, excluding non-operational gains in both periods. Wireless * Added 1.4 million net retail connections; low retail postpaid churn of 0.94 percent; 104.6 million total retail connections; 98.6 million total retail postpaid connections. * 5.9 percent year-over-year increase in service revenues; 5.3 percent year-over-year increase in retail service revenues; 32.5 percent operating income margin; 50.3 percent segment EBITDA margin on service revenues (non-GAAP). Wireline * 5.3 percent year-over-year increase in consumer revenues, the eighth consecutive quarter of more than 4 percent growth; consumer ARPU (average revenue per user) up 11.0 percent. * 14.4 percent year-over-year increase in FiOS revenues; 139,000 FiOS Internet and 100,000 FiOS Video net additions. Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported its sixthconsecutive quarter of double-digit percentage growth in operating income andearnings per share. In second-quarter 2014, the company delivered consolidatedtop-line growth, driven by strong wireless and FiOS revenues, and continuedmargin expansion. Chairman and CEO Lowell McAdam said: "Verizon's second-quarter results continueto demonstrate our ability to deliver strong customer growth, with equallystrong financial performance, in a dynamic and competitive environment. We havegreat momentum heading into the second half of the year. We remain focused onprofitable growth and on meaningful network investments that provide ourcustomers with the best, and with a continuously improving, overallexperience." Verizon has posted double-digit year-over-year percentage growth in reportedand adjusted EPS in nine of the last 10 quarters. Verizon reported $1.01 in EPS in second-quarter 2014, compared with 78 centsper share in second-quarter 2013. Second-quarter 2014 results included anafter-tax gain of $434 million (10 cents per share) related to the sale of 700MHz A Block spectrum licenses. On an adjusted basis (non-GAAP), Verizon posted EPS of 91 cents insecond-quarter 2014, a 24.7 percent increase compared with 73 cents per sharein second-quarter 2013. Consolidated Highlights * Verizon recorded its highest quarterly revenue growth rate in the past six quarters. Total operating revenues in second-quarter 2014 were $31.5 billion, a 5.7 percent increase compared with second-quarter 2013. * Continued effective cost management drove second-quarter 2014 operating income to $7.7 billion, a 17.2 percent increase compared with second-quarter 2013. * Consolidated operating income margin was 24.4 percent for second-quarter 2014, compared with 22.0 percent for second-quarter 2013. * Consolidated EBITDA margin (non-GAAP, based on earnings before interest, taxes, depreciation and amortization) was 37.6 percent for second-quarter 2014, compared with 35.9 percent for second-quarter 2013. Verizon Wireless Delivers Strong Customer Additions, Revenue Growth and Profitability In second-quarter 2014, Verizon Wireless delivered strong growth in retailpostpaid net connections and revenues, company-record tablet additions, anincrease in smartphone penetration, and continued high segment EBITDA margin onservice revenues (non-GAAP). Wireless Financial Highlights * Total revenues were $21.5 billion in second-quarter 2014, up 7.5 percent year over year. Service revenues in the quarter totaled $18.1 billion, up 5.9 percent year over year. Retail service revenues grew 5.3 percent year over year, to $17.3 billion. * Retail postpaid ARPA (average revenue per account) increased 4.7 percent over second-quarter 2013, to $159.73 per month. * In second-quarter 2014, wireless operating income margin was 32.5 percent and segment EBITDA margin on service revenues was 50.3 percent. This compares with 32.4 percent and 49.8 percent, respectively, in second-quarter 2013. Wireless Operational Highlights * Verizon Wireless added 1.4 million retail net connections, all of which were postpaid, in the second quarter. These additions exclude acquisitions and adjustments. * At the end of the second quarter, the company had 104.6 million retail connections. This includes 98.6 million retail postpaid connections, a 4.6 percent increase year over year. * Verizon Wireless had 35.2 million retail postpaid accounts at the end of the second quarter, up 0.7 percent over second-quarter 2013, and 2.80 connections per account, up 3.7 percent year over year. * During second-quarter 2014, the company added 304,000 postpaid phone net additions and 1.15 million postpaid tablets. At the end of the quarter, smartphones accounted for nearly 75 percent of the Verizon Wireless retail postpaid customer phone base, up from 72 percent in first-quarter 2014. This was also the third straight quarter of company-record net additions for tablets. * Retail postpaid churn was 0.94 percent in the second quarter, down 13 basis points sequentially and up 1 basis point year over year. Retail churn was 1.25 percent in the second quarter, down 12 basis points sequentially and up 2 basis points year over year. * The company continued to enhance its 4G LTE smartphone lineup. In the second quarter, Verizon Wireless launched the Samsung Galaxy S 5 and ATIV SE, the Lucid 3 by LG and the HTC One (M8). The company also launched the Samsung Galaxy Tab 4 8.0 tablet and announced the Samsung Galaxy Tab 4 10.1 and Galaxy Tab S. Earlier this month, Verizon Wireless launched the Sony Xperia Z2 tablet and the LG G3 smartphone. * During the second quarter, Verizon Wireless continued to add capacity to its 4G LTE network, the largest in the United States, using AWS spectrum. The additional bandwidth, called XLTE, is now available in more than 350 markets across the country. Wireline Consumer Revenue Growth Remains Strong Verizon's wireline segment reported continued strong results for consumerservices, where year-over-year quarterly revenues now have grown by more than 4percent for eight consecutive quarters. Wireline Financial Highlights * Total revenues were $9.8 billion in second-quarter 2014, up 0.3 percent year over year. This is the first quarterly year-over-year increase in total wireline revenues in more than seven years. * In second-quarter 2014, consumer revenues were $3.9 billion, up 5.3 percent compared with second-quarter 2013, with FiOS revenues representing 75 percent of the total. Consumer ARPU for wireline services increased to $122.57 in second-quarter 2014, up 11.0 percent compared with second-quarter 2013. * Total FiOS revenues grew 14.4 percent, to $3.1 billion, comparing second-quarter 2014 with second-quarter 2013. * Wireline operating income margin was 2.7 percent in second-quarter 2014, up from 0.8 percent in second-quarter 2013. Segment EBITDA margin (non-GAAP) was 23.2 percent in second-quarter 2014, compared with 22.2 percent in second-quarter 2013. * Sales of strategic services to enterprise customers increased 3.0 percent compared with second-quarter 2013. Strategic services include private IP, Ethernet, data center, cloud, security and managed services. Wireline Operational Highlights * In second-quarter 2014, Verizon added 139,000 net new FiOS Internet connections and 100,000 net new FiOS Video connections. Verizon had totals of 6.3 million FiOS Internet and 5.4 million FiOS Video connections at the end of the second quarter, representing year-over-year increases of 9.3 percent and 7.6 percent, respectively. * FiOS Internet penetration (subscribers as a percentage of potential subscribers) was 40.1 percent at the end of second-quarter 2014, compared with 38.6 percent at the end of second-quarter 2013. In the same periods, FiOS Video penetration was 35.3 percent, compared with 34.5 percent. The FiOS network passed 19.3 million premises by the end of second-quarter 2014. * By the end of second-quarter 2014, 55 percent of consumer FiOS Internet customers subscribed to FiOS Quantum, which provides speeds ranging from 50 to 500 megabits per second, up from 51 percent at the end of first-quarter 2014. * Beginning this week, existing and new FiOS customers are receiving upload speeds that mirror download speeds. Verizon is the first provider to offer symmetrical broadband speeds at no additional charge, enhancing the ability of FiOS customers to upload to the cloud, share videos and photos, and video chat. * Broadband connections totaled 9.1 million at the end of second-quarter 2014, a 1.5 percent year-over-year increase. Net broadband connections increased by 46,000 in second-quarter 2014, as FiOS Internet net additions more than offset declines in DSL-based High Speed Internet connections. * Verizon has been replacing high-maintenance portions of its residential copper network with fiber optics to provide customers with more resilient infrastructure and reduce repairs, which improves customer satisfaction and reduces costs. In second-quarter 2014, Verizon migrated an additional 70,000 customers to fiber. * In the second quarter, Verizon Enterprise Solutions began deploying innovative cloud, security, M2M (machine-to-machine), networking and other technology solutions for a variety of clients around the globe, including healthcare clients Avera, Cardinal Health, Cerner, iCare and Molina Healthcare; as well as 1-800-Flowers, Anadarko Petroleum Corporation, Commonwealth Bank of Australia, Ferrellgas, Johnson Controls, KG Inicis, Northgate Information Solutions, Peninsula Light Corporation and the state of Colorado's Statewide Internet Portal Authority. Guidance Reiterated Verizon continues to target 2014 investments in the range of $16.5 billion to$17 billion, with a decrease in capital spending as a percentage of totalrevenues for the full year. Verizon continues to target consolidated top-line growth of 4 percent andadjusted consolidated EBITDA margin expansion in 2014, with positivecontributions to profitable growth from both wireless and wireline. NOTE: See the accompanying schedules and www.verizon.com/investor forreconciliations to generally accepted accounting principles (GAAP) for non-GAAPfinancial measures cited in this document. Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is aglobal leader in delivering broadband and other wireless and wirelinecommunications services to consumer, business, government and wholesalecustomers. Verizon Wireless operates America's most reliable wireless network,with 104.6 million retail connections nationwide. Verizon also providesconverged communications, information and entertainment services over America'smost advanced fiber-optic network, and delivers integrated business solutionsto customers in more than 150 countries. A Dow 30 company with more than $120billion in 2013 revenues, Verizon employs a diverse workforce of 177,800. Formore information, visit www.verizon.com. VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches andbiographies, media contacts and other information are available at Verizon'sonline News Center at newscenter.verizon.com. The news releases are availablethrough an RSS feed. To subscribe, visit newscenter.verizon.com/corporate/feeds. Forward-Looking Statements In this communication we have made forward-looking statements. Thesestatements are based on our estimates and assumptions and are subject to risksand uncertainties. Forward-looking statements include the informationconcerning our possible or assumed future results of operations.Forward-looking statements also include those preceded or followed by the words"anticipates," "believes," "estimates," "hopes" or similar expressions. Forthose statements, we claim the protection of the safe harbor forforward-looking statements contained in the Private Securities LitigationReform Act of 1995. The following important factors, along with those discussedin our filings with the Securities and Exchange Commission (the "SEC"), couldaffect future results and could cause those results to differ materially fromthose expressed in the forward-looking statements: the ability to realize theexpected benefits of our transaction with Vodafone in the timeframe expected orat all; an adverse change in the ratings afforded our debt securities bynationally accredited ratings organizations or adverse conditions in the creditmarkets affecting the cost, including interest rates, and/or availability offurther financing; significantly increased levels of indebtedness as a resultof the Vodafone transaction; changes in tax laws or treaties, or in theirinterpretation; adverse conditions in the U.S. and international economies;material adverse changes in labor matters, including labor negotiations, andany resulting financial and/or operational impact; material changes intechnology or technology substitution; disruption of our key suppliers'provisioning of products or services; changes in the regulatory environment inwhich we operate, including any increase in restrictions on our ability tooperate our networks; breaches of network or information technology security,natural disasters, terrorist attacks or acts of war or significant litigationand any resulting financial impact not covered by insurance; the effects ofcompetition in the markets in which we operate; changes in accountingassumptions that regulatory agencies, including the SEC, may require or thatresult from changes in the accounting rules or their application, which couldresult in an impact on earnings; significant increases in benefit plan costs orlower investment returns on plan assets; and the inability to implement ourbusiness strategies. Verizon Communications Inc. Condensed Consolidated Statements of Income (dollars in millions, except per share amounts) 3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. EndedUnaudited 6/30/14 6/30/13 % Change 6/30/14 6/30/13 % Change Operating Revenues $ 31,483 $ 29,786 5.7 $ 62,301 $ 59,206 5.2 Operating Expenses Cost of services and sales 12,087 11,033 9.6 23,276 21,965 6.0 Selling, general and administrative expense 7,550 8,047 (6.2) 15,882 16,195 (1.9) Depreciation and amortization expense 4,161 4,151 0.2 8,298 8,269 0.4Total Operating Expenses 23,798 23,231 2.4 47,456 46,429 2.2 Operating Income 7,685 6,555 17.2 14,845 12,777 16.2Equity in earnings (losses) of unconsolidated businesses (43) 120 * 1,859 115 *Other income and (expense), net 66 25 * (828) 64 *Interest expense (1,164) (514) * (2,378) (1,051) *Income Before Provision for Income Taxes 6,544 6,186 5.8 13,498 11,905 13.4Provision for income taxes (2,220) (988) * (3,188) (1,852) 72.1Net Income $ 4,324 $ 5,198 (16.8) $ 10,310 $ 10,053 2.6 Net income attributable to noncontrolling interests $ 110 $ 2,952 (96.3) $ 2,149 $ 5,855 (63.3)Net income attributable to Verizon 4,214 2,246 87.6 8,161 4,198 94.4Net Income $ 4,324 $ 5,198 (16.8) $ 10,310 $ 10,053 2.6 Basic Earnings per Common ShareNet income attributable to Verizon $ 1.02 $ .78 30.8 $ 2.15 $ 1.46 47.3 Weighted average number of common shares (in millions) 4,147 2,865 3,789 2,866 Diluted Earnings per Common Share (1)Net income attributable to Verizon $ 1.01 $ .78 29.5 $ 2.15 $ 1.46 47.3 Weighted average number of common shares-assuming dilution (in millions) 4,153 2,872 3,795 2,873 Footnotes:(1) Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represents the only potential dilution. Certain reclassifications have been made, where appropriate, to reflect comparable operating results. * Not meaningful Verizon Communications Inc. Condensed Consolidated Balance Sheets (dollars in millions) Unaudited 6/30/14 12/31/13 $ Change AssetsCurrent assets Cash and cash equivalents $ 5,776 $ 53,528 $ (47,752) Short-term investments 648 601 47 Accounts receivable, net 12,966 12,439 527 Inventories 1,073 1,020 53 Prepaid expenses and other 2,424 3,406 (982)Total current assets 22,887 70,994 (48,107)Plant, property and equipment 227,475 220,865 6,610 Less accumulated depreciation 137,763 131,909 5,854 89,712 88,956 756Investments in unconsolidated businesses 852 3,432 (2,580)Wireless licenses 75,270 75,747 (477)Goodwill 24,663 24,634 29Other intangible assets, net 5,781 5,800 (19)Other assets 5,262 4,535 727Total Assets $ 224,427 $ 274,098 $ (49,671) Liabilities and EquityCurrent liabilities Debt maturing within one year $ 2,283 $ 3,933 $ (1,650) Accounts payable and accrued 16,521 16,453 68 liabilities Other 7,689 6,664 1,025Total current liabilities 26,493 27,050 (557)Long-term debt 107,696 89,658 18,038Employee benefit obligations 26,342 27,682 (1,340)Deferred income taxes 42,027 28,639 13,388Other liabilities 5,857 5,653 204 Equity Common stock 424 297 127 Contributed capital 11,038 37,939 (26,901) Reinvested earnings 5,551 1,782 3,769 Accumulated other comprehensive income 1,188 2,358 (1,170) Common stock in treasury, at cost (3,638) (3,961) 323 Deferred compensation - employee stock ownership plans and other 338 421 (83) Noncontrolling interests 1,111 56,580 (55,469)Total equity 16,012 95,416 (79,404)Total Liabilities and Equity $ 224,427 $ 274,098 $ (49,671) Verizon - Selected Financial and Operating Statistics Unaudited 6/30/14 12/31/13 Total debt (in millions) $ 109,979 $ 93,591Net debt (in millions) $ 104,203 $ 40,063Net debt / Adjusted EBITDA(1) 2.4x 1.0xCommon shares outstanding end of period (in millions) 4,145 2,862Total employees 177,800 176,800Quarterly cash dividends declared per common share $ 0.530 $ 0.530 Footnotes: (1) Adjusted EBITDA excludes the effects of non-operational items. The unaudited condensed consolidated balance sheets are based on preliminary information. Verizon Communications Inc. Condensed Consolidated Statements of Cash Flows (dollars in millions) 6 Mos. Ended 6 Mos. EndedUnaudited 6/30/14 6/30/13 $ Change Cash Flows from Operating ActivitiesNet Income $ 10,310 $ 10,053 $ 257Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 8,298 8,269 29 Employee retirement benefits 562 354 208 Deferred income taxes 253 1,812 (1,559) Provision for uncollectible accounts 473 507 (34) Equity in earnings of unconsolidated businesses, net of dividends received (1,841) (95) (1,746) Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses (847) (1,660) 813 Other, net (2,404) (2,092) (312)Net cash provided by operating activities 14,804 17,148 (2,344) Cash Flows from Investing ActivitiesCapital expenditures (including capitalized software) (8,494) (7,616) (878)Acquisitions of investments and businesses, net of cash acquired (179) (76) (103)Acquisitions of wireless licenses (271) (264) (7)Proceeds from dispositions of wireless licenses 2,367 - 2,367Other, net 231 121 110Net cash used in investing activities (6,346) (7,835) 1,489 Cash Flows from Financing ActivitiesProceeds from long-term borrowings 20,245 499 19,746Repayments of long-term borrowings and capital lease obligations (11,317) (2,330) (8,987)Increase (decrease) in short-term obligations, excluding current maturities 279 (432) 711Dividends paid (3,583) (2,946) (637)Proceeds from sale of common stock 34 74 (40)Purchase of common stock for treasury - (153) 153Special distribution to noncontrolling interest - (3,150) 3,150Acquisition of noncontrolling interest (58,886) - (58,886)Other, net (2,982) (2,180) (802)Net cash used in financing activities (56,210) (10,618) (45,592) Decrease in cash and cash equivalents (47,752) (1,305) (46,447)Cash and cash equivalents, beginning of period 53,528 3,093 50,435Cash and cash equivalents, end of period $ 5,776 $ 1,788 $ 3,988 Footnotes: Certain reclassifications have been made, where appropriate, to reflect comparable operating results. Verizon Communications Inc. Wireless - Selected Financial Results (dollars in millions) 3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. EndedUnaudited 6/30/14 6/30/13 % Change 6/30/14 6/30/13 % Change Operating Revenues Retail service $ 17,288 $ 16,422 5.3 $ 34,534 $ 32,591 6.0 Other service 790 656 20.4 1,531 1,215 26.0Service 18,078 17,078 5.9 36,065 33,806 6.7 Equipment 2,387 1,953 22.2 4,257 3,766 13.0Other 1,018 945 7.7 2,040 1,927 5.9Total Operating Revenues 21,483 19,976 7.5 42,362 39,499 7.2 Operating Expenses Cost of services and sales 6,742 5,799 16.3 12,598 11,450 10.0 Selling, general and administrative expense 5,649 5,666 (0.3) 11,293 11,114 1.6 Depreciation and amortization expense 2,107 2,047 2.9 4,168 4,053 2.8Total Operating Expenses 14,498 13,512 7.3 28,059 26,617 5.4 Operating Income $ 6,985 $ 6,464 8.1 $ 14,303 $ 12,882 11.0Operating Income Margin 32.5% 32.4% 33.8% 32.6% Segment EBITDA $ 9,092 $ 8,511 6.8 $ 18,471 $ 16,935 9.1Segment EBITDA Service Margin 50.3% 49.8% 51.2% 50.1% Footnotes: The segment financial results and metrics above are adjusted toexclude the effects of non-operational items, as the Company's chiefoperating decision maker excludes these items in assessing businessunit performance. Intersegment transactions have not been eliminated. Certain reclassifications have been made, where appropriate,to reflect comparable operating results. Verizon Communications Inc. Wireless - Selected Operating Statistics Unaudited 6/30/14 6/30/13 % Change Connections ('000) Retail postpaid 98,593 94,271 4.6 Retail prepaid 6,044 5,853 3.3Retail 104,637 100,124 4.5 3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. EndedUnaudited 6/30/14 6/30/13 % Change 6/30/14 6/30/13 % ChangeNet Add Detail ('000) (1) Retail postpaid 1,441 941 53.1 1,980 1,618 22.4 Retail prepaid (14) 97 * (4) 140 *Retail 1,427 1,038 37.5 1,976 1,758 12.4 Account Statistics Retail Postpaid Accounts ('000) (2) 35,186 34,958 0.7 Retail postpaid ARPA $ 159.73 $ 152.50 4.7 $ 159.70 $ 151.39 5.5 Retail postpaid connections per account (2) 2.80 2.70 3.7 Churn Detail Retail postpaid 0.94% 0.93% 1.00% 0.97% Retail 1.25% 1.23% 1.31% 1.27% Retail Postpaid Connection Statistics Total Smartphone postpaid % of phones activated 90.8% 84.4% 90.4% 84.3% Total Smartphone postpaid phone base (2) 74.6% 64.4% Total Internet postpaid base (2) 12.3% 9.9% Other Operating Statistics Capital expenditures (in millions) $ 2,771 $ 2,278 21.6 $ 5,325 $ 4,270 24.7 Footnotes: (1) Connection net additions exclude acquisitions and adjustments.(2) Statistics presented as of end of period. The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company's chief operating decision maker excludes these items in assessing business unit performance. Intersegment transactions have not been eliminated. Certain reclassifications have been made, where appropriate, to reflect comparable operating results. * Not meaningful Verizon Communications Inc. Wireline - Selected Financial Results (dollars in millions) 3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. EndedUnaudited 6/30/14 6/30/13 % Change 6/30/14 6/30/13 % Change Operating Revenues Consumer retail $ 3,864 $ 3,669 5.3 $ 7,704 $ 7,285 5.8 Small business 621 635 (2.2) 1,245 1,273 (2.2) Mass Markets 4,485 4,304 4.2 8,949 8,558 4.6 Strategic services 2,120 2,059 3.0 4,230 4,132 2.4 Core 1,459 1,590 (8.2) 2,955 3,287 (10.1) Global Enterprise 3,579 3,649 (1.9) 7,185 7,419 (3.2) Global Wholesale 1,570 1,662 (5.5) 3,161 3,361 (6.0) Other 125 119 5.0 254 226 12.4Total Operating Revenues 9,759 9,734 0.3 19,549 19,564 (0.1) Operating Expenses Cost of services and sales 5,461 5,407 1.0 10,920 10,864 0.5 Selling, general and administrative expense 2,034 2,168 (6.2) 4,185 4,433 (5.6) Depreciation and amortization expense 2,005 2,085 (3.8) 4,038 4,180 (3.4)Total Operating Expenses 9,500 9,660 (1.7) 19,143 19,477 (1.7) Operating Income $ 259 $ 74 * $ 406 $ 87 *Operating Income Margin 2.7% 0.8% 2.1% 0.4% Segment EBITDA $ 2,264 $ 2,159 4.9 $ 4,444 $ 4,267 4.1Segment EBITDA Margin 23.2% 22.2% 22.7% 21.8% Footnotes: The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company's chief operating decision maker excludes these items in assessing business unit performance. Intersegment transactions have not been eliminated. Certain reclassifications have been made, where appropriate, to reflect comparable operating results. * Not meaningful Verizon Communications Inc. Wireline - Selected Operating Statistics Unaudited 6/30/14 6/30/13 % Change Connections ('000) FiOS Video Subscribers 5,419 5,035 7.6 FiOS Internet Subscribers 6,309 5,773 9.3 FiOS Digital Voice residence connections 4,440 3,817 16.3FiOS Digital connections 16,168 14,625 10.6 HSI 2,768 3,166 (12.6)Total Broadband connections 9,077 8,939 1.5 Primary residence switched access connections 6,007 7,200 (16.6)Primary residence connections 10,447 11,017 (5.2) Total retail residence voice connections 10,903 11,583 (5.9)Total voice connections 20,391 21,828 (6.6) 3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. EndedUnaudited 6/30/14 6/30/13 % Change 6/30/14 6/30/13 % Change Net Add Detail ('000) FiOS Video Subscribers 100 140 (28.6) 157 309 (49.2) FiOS Internet Subscribers 139 161 (13.7) 237 349 (32.1) FiOS Digital Voice residence connections 90 286 (68.5) 192 590 (67.5)FiOS Digital connections 329 587 (44.0) 586 1,248 (53.0) HSI (93) (116) (19.8) (175) (205) (14.6)Total Broadband connections 46 45 2.2 62 144 (56.9) Primary residence switched access connections (217) (393) (44.8) (474) (782) (39.4)Primary residence connections (127) (107) 18.7 (282) (192) 46.9 Total retail residence voice connections (145) (142) 2.1 (326) (266) 22.6Total voice connections (342) (363) (5.8) (694) (675) 2.8 Revenue and ARPU Statistics Consumer ARPU $ 122.57 $ 110.46 11.0 $ 121.28 $ 109.26 11.0FiOS revenues (in millions) $ 3,125 $ 2,731 14.4 $ 6,166 $ 5,364 15.0Strategic services as a % of total Enterprise revenues 59.2% 56.4% 58.9% 55.7% Other Operating StatisticsCapital expenditures (in millions) $ 1,345 $ 1,515 (11.2) $ 2,730 $ 2,949 (7.4) Wireline employees ('000) 80.6 84.7FiOS Video Open for Sale ('000) 15,372 14,607FiOS Video penetration 35.3% 34.5%FiOS Internet Open for Sale ('000) 15,722 14,943FiOS Internet penetration 40.1% 38.6% Footnotes: The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company's chief operating decision maker excludes these items in assessing business unit performance. Intersegment transactions have not been eliminated. Certain reclassifications have been made, where appropriate, to reflect comparable operating results. SOURCE Verizon Communications Inc. CONTACT: Bob Varettoni, 908-559-6388, [email protected]; RayMcConville, 908-559-3504, [email protected]