VERIZON COMMUNICATIONS INC (Form: 10-Q, Received: 04/28/2010 13:27:48)

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Commission file number: 1-8606

Verizon Communications Inc.

(Exact name of registrant as specified in its charter)


Delaware		23-2259884
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes x No

At March 31, 2010, 2,826,732,438 shares of the registrant’s common stock were outstanding, after deducting 140,877,681 shares held in treasury.

Table of Contents


		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income Three months ended March 31, 2010 and 2009	2

	Condensed Consolidated Balance Sheets At March 31, 2010 and December 31, 2009	3

	Condensed Consolidated Statements of Cash Flows Three months ended March 31, 2010 and 2009	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

Item 4.	Controls and Procedures	33

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 6.	Exhibits	34

Signature		35

Certifications

Part I - Financial Information

Item 1. Financial Statements

Condensed Consolidated Statements of Income

Verizon Communications Inc. and Subsidiaries


	Three Months Ended March 31,
(dollars in millions, except per share amounts) (unaudited)	2010		2009

Operating Revenues	$ 26,913		$ 26,591

Operating Expenses
Cost of services and sales (exclusive of items shown below)	10,717		10,308
Selling, general and administrative expense	7,724		7,561
Depreciation and amortization expense	4,121		4,028

Total Operating Expenses	22,562		21,897

Operating Income	4,351		4,694
Equity in earnings of unconsolidated businesses	133		128
Other income and (expense), net	45		53
Interest expense	(680	)	(925	)

Income Before Provision For Income Taxes	3,849		3,950
Provision for income taxes	(1,565	)	(740	)

Net Income	$ 2,284		$ 3,210


Net income attributable to noncontrolling interest	$ 1,875		$ 1,565
Net income attributable to Verizon	409		1,645

Net Income	$ 2,284		$ 3,210


Basic Earnings Per Common Share
Net income attributable to Verizon	$ .14		$ .58
Weighted-average shares outstanding (in millions)	2,836		2,841

Diluted Earnings Per Common Share
Net income attributable to Verizon	$ .14		$ .58
Weighted-average shares outstanding (in millions)	2,837		2,841

Dividends declared per common share	$ .475		$ .460

See Notes to Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets

Verizon Communications Inc. and Subsidiaries


(dollars in millions, except per share amounts) (unaudited)	At March 31, 2010		At December 31, 2009

Assets
Current assets
Cash and cash equivalents	$ 3,037		$ 2,009
Short-term investments	520		490
Accounts receivable, net of allowances of $995 and $976	11,969		12,573
Inventories	1,113		1,426
Prepaid expenses and other	5,766		5,247

Total current assets	22,405		21,745


Plant, property and equipment	231,771		229,381
Less accumulated depreciation	139,937		137,052

	91,834		92,329


Investments in unconsolidated businesses	3,685		3,535
Wireless licenses	72,256		72,067
Goodwill	22,472		22,472
Other intangible assets, net	6,510		6,764
Other assets	8,185		8,339

Total assets	$ 227,347		$ 227,251


Liabilities and Equity
Current liabilities
Debt maturing within one year	$ 7,129		$ 7,205
Accounts payable and accrued liabilities	14,569		15,223
Other	6,365		6,708

Total current liabilities	28,063		29,136


Long-term debt	54,424		55,051
Employee benefit obligations	31,770		32,622
Deferred income taxes	21,665		19,310
Other liabilities	6,773		6,765

Equity
Series preferred stock ($.10 par value; none issued)	0		0
Common stock ($.10 par value; 2,967,610,119 shares issued in both periods)	297		297
Contributed capital	40,108		40,108
Reinvested earnings	16,658		17,592
Accumulated other comprehensive loss	(11,442	)	(11,479	)
Common stock in treasury, at cost	(5,277	)	(5,000	)
Deferred compensation – employee stock ownership plans and other	118		88
Noncontrolling interest	44,190		42,761

Total equity	84,652		84,367

Total liabilities and equity	$ 227,347		$ 227,251

See Notes to Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Cash Flows

Verizon Communications Inc. and Subsidiaries


	Three Months Ended March 31,
(dollars in millions) (unaudited)	2010		2009

Cash Flows from Operating Activities
Net Income	$ 2,284		$ 3,210
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	4,121		4,028
Employee retirement benefits	667		502
Deferred income taxes	2,389		604
Provision for uncollectible accounts	371		358
Equity in earnings of unconsolidated businesses, net of dividends received	(120	)	(117	)
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses	(1,043	)	(393	)
Other, net	(1,552	)	(1,570	)

Net cash provided by operating activities	7,117		6,622


Cash Flows from Investing Activities
Capital expenditures (including capitalized software)	(3,456	)	(3,707	)
Acquisitions of licenses, investments and businesses, net of cash acquired	(274	)	(5,118	)
Net change in short-term investments	(40	)	80
Other, net	114		(14	)

Net cash used in investing activities	(3,656	)	(8,759	)


Cash Flows from Financing Activities
Proceeds from long-term borrowings	0		7,052
Repayments of long-term borrowings and capital lease obligations	(519	)	(16,865	)
Increase (decrease) in short-term obligations, excluding current maturities	(97	)	7,908
Dividends paid	(1,347	)	(1,307	)
Other, net	(470	)	(454	)

Net cash used in financing activities	(2,433	)	(3,666	)


Increase (decrease) in cash and cash equivalents	1,028		(5,803	)
Cash and cash equivalents, beginning of period	2,009		9,782

Cash and cash equivalents, end of period	$ 3,037		$ 3,979

See Notes to Condensed Consolidated Financial Statements

Notes to Condensed Consolidated Financial Statements

Verizon Communications Inc. and Subsidiaries

(Unaudited)

1.	Basis of Presentation

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, 2009. 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. The results for the interim periods are not necessarily indicative of results for the full year.

We have reclassified prior year amounts to conform to the current year presentation.

Recently Adopted Accounting Standards

In January 2010, we adopted the accounting standard regarding consolidation accounting for variable interest entities. This standard requires an enterprise to perform an analysis to determine whether the entity’s variable interest or interests give it a controlling interest in a variable interest entity. The adoption of this accounting standard update did not have a material impact on our condensed consolidated financial statements.

In January 2010, we adopted the accounting standard update regarding fair value measurements and disclosures, which requires additional disclosures regarding assets and liabilities measured at fair value. The adoption of this accounting standard update did not have a material impact on our condensed consolidated financial statements.

Recent Accounting Standards

In September 2009, the accounting standard update regarding revenue recognition for multiple deliverable arrangements was issued. This update requires the use of the relative selling price method when allocating revenue in these types of arrangements. This method allows a vendor to use its best estimate of selling price if neither vendor specific objective evidence nor third party evidence of selling price exists when evaluating multiple deliverable arrangements. This standard update is effective January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. We are currently evaluating the impact that this standard update will have on our consolidated financial statements.

In September 2009, the accounting standard update regarding revenue recognition for arrangements that include software elements was issued. This update requires tangible products that contain software and non-software elements that work together to deliver the products essential functionality to be evaluated under the accounting standard regarding multiple deliverable arrangements. This standard update is effective January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. We are currently evaluating the impact that this standard update will have on our consolidated financial statements.

Earnings Per Common Share

There were a total of approximately 1 million stock options and restricted stock units outstanding to purchase shares included in the computation of diluted earnings per common share for the three months ended March 31, 2010. There were no dilutive stock options outstanding to purchase shares included in the computation of diluted earnings per common share for the three months ended March 31, 2009. 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 90 million weighted-average shares and 120 million weighted-average shares for the three months ended March 31, 2010 and 2009, respectively.

2.	Dispositions and Other

Telephone Access Line Spin-off

On May 13, 2009, we announced plans to 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 plans to 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 merger will result in Frontier acquiring approximately 4 million access lines and certain related businesses from Verizon, which collectively generated annual revenues of approximately $4 billion for Verizon’s Wireline segment during 2009.

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 34% and 29% 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, which is a ceiling and floor on the trading price) and other closing adjustments. Verizon will not own any shares of Frontier after the merger.

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.

In connection with the spin-off, Verizon expects to receive approximately $3.3 billion in value through a combination of cash payments to Verizon and a reduction in Verizon’s consolidated indebtedness. In the merger, Verizon stockholders are expected to receive approximately $5.3 billion of Frontier common stock, assuming the average trading price of Frontier common stock during the pre-closing measuring period is within the collar and no closing adjustments.

On April 12, 2010, Spinco completed a financing of $3.2 billion in principal amount of notes. The gross proceeds of the offering were deposited into an escrow account. Spinco intends to use the net proceeds from the offering to fund the special cash payment to Verizon in connection with the spin-off of Spinco to Verizon’s shareholders and the subsequent merger of Spinco with and into Frontier. The net proceeds from the offering are sufficient to fund the entire special cash payment, which is one of the conditions to closing the merger. If, for some reason, the merger agreement is terminated or the spin-off and the merger are not completed on or before October 1, 2010, the gross proceeds, plus accrued and unpaid interest will be returned to the investors.

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 by the end of the second quarter of 2010.

During the three months ended March 31, 2010, we recorded charges of $145 million for costs incurred related to network, non-network software and other activities to enable the markets to be divested to operate on a stand-alone basis subsequent to the closing of the transaction with Frontier.

Alltel Divestiture Markets

As a condition of the regulatory approvals by the Department of Justice and the Federal Communications Commission to complete the Alltel Corporation (Alltel) acquisition, Verizon Wireless is required to divest overlapping properties in 105 operating markets in 24 states (Alltel Divestiture Markets). As of March 31, 2010, total assets and total liabilities to be divested of $2.6 billion and $0.1 billion, respectively, principally comprised of network assets, wireless licenses and customer relationships, are included in Prepaid expenses and other current assets and Other current liabilities, respectively, on the accompanying condensed consolidated balance sheets.

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 approximately $2.4 billion in cash. 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 including licenses and network assets, for $200 million in cash. During April 2010, Verizon Wireless received the regulatory approvals necessary to complete the sale of the markets to ATN and completed the transaction. Verizon Wireless expects to close the transaction with AT&T Mobility during the second quarter of 2010 subject to receipt of regulatory approval.

During the three months ended March 31, 2010, we recorded merger integration charges of $105 million, primarily related to the Alltel acquisition, primarily comprised of trade name amortization and the decommissioning of overlapping cell sites. During the three months ended March 31, 2009, we recorded merger integration and acquisition charges of $456 million, primarily related to the Alltel acquisition, for transaction fees and costs associated with the acquisition, including fees related to the bridge facility that was entered into and utilized to complete the acquisition. Additionally, the charges included trade name amortization, contract terminations and the decommissioning of overlapping cell sites.

3.	Wireless Licenses, Goodwill and Other Intangible Assets

Wireless Licenses

Changes in the carrying amount of Wireless licenses are as follows:


(dollars in millions)
Balance at December 31, 2009		$ 72,067
Capitalized interest on wireless licenses		182
Reclassifications, adjustments and other		7

Balance at March 31, 2010		$ 72,256

As of March 31, 2010, and December 31, 2009, $12.1 billion and $12.2 billion, respectively, of wireless licenses were under development for commercial service for which we are capitalizing interest costs.

Goodwill

There were no changes in the carrying amount of goodwill during the three months ended March 31, 2010.

Other Intangible Assets

The following table displays the composition of Other intangible assets:


	At March 31, 2010			At December 31, 2009

(dollars in millions)	Gross Amount	Accumulated Amortization	Net Amount	Gross Amount	Accumulated Amortization	Net Amount
Other intangible assets:
Customer lists (6 to 8 years)	$ 3,124	$ (1,142)	$ 1,982	$ 3,134	$ (1,012)	$ 2,122
Non-network internal-use software (2 to 7 years)	8,159	(4,141)	4,018	8,455	(4,346)	4,109
Other (1 to 25 years)	884	(374)	510	865	(332)	533

Total	$ 12,167	$ (5,657)	$ 6,510	$ 12,454	$ (5,690)	$ 6,764

The amortization expense for Other intangible assets was as follows:


Three Months Ended March 31,		(dollars in millions)
2010		$ 457
2009		475

Estimated annual amortization expense for Other intangible assets is as follows:


Years		(dollars in millions)
2010		$ 1,398
2011		1,527
2012		1,235
2013		998
2014		614

Debt

The table that follows presents changes during the three months ended March 31, 2010 related to Debt maturing within one year and Long-term debt.


(dollars in millions)	Debt Maturing within One Year		Long-term Debt		Total
Balance at January 1, 2010	$ 7,205		$ 55,051		$ 62,256
Repayments of long-term borrowings and capital leases obligations	(519	)	–		(519	)
Decrease in short-term obligations, excluding current maturities	(97	)	–		(97	)
Reclassifications of long-term debt	500		(500	)	–
Other	40		(127	)	(87	)

Balance at March 31, 2010	$ 7,129		$ 54,424		$ 61,553

During the first quarter of 2010, $0.3 billion of 6.125% Verizon New York Inc. and $0.2 billion of 6.375% Verizon North Inc. debentures matured and were repaid.

Verizon Wireless

On April 16, 2010, Verizon Wireless repaid $0.8 billion of borrowings under a three-year term loan facility, reducing the outstanding borrowings under this facility to approximately $3.2 billion.

Guarantees

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. As of March 31, 2010, $1.7 billion principal amount of these obligations remain outstanding.

Debt Covenants

We and our consolidated subsidiaries are in compliance with all of our debt covenants.

Credit Facility

On April 14, 2010, we terminated all commitments under our previous $5.3 billion 364-day credit facility with a syndicate of lenders and entered into a new $6.2 billion three-year credit facility with a group of major financial institutions. As of March 31, 2010, the unused borrowing capacity under the 364-day credit facility was approximately $5.2 billion. Approximately $0.1 billion of stand-by letters of credit are outstanding under the new credit facility.

5.	Fair Value Measurements

The following table presents the balances of assets measured at fair value on a recurring basis as of March 31, 2010:


	(dollars in millions)
Asset Category	Level 1 ⁽¹⁾	Level 2 ⁽²⁾	Level 3 ⁽³⁾	Total
Short-term investments:
Equity securities	$ 248	$ –	$ –	$ 248
Fixed income securities	17	255	–	272
Investments in unconsolidated businesses:
Equity securities	263	–	–	263
Fixed income securities	194	–	–	194
Other Assets:
Fixed income securities	–	766	–	766
Derivative contracts:
Interest rate swaps	–	230	–	230
Cross currency swaps	–	170	–	170

Total	$ 722	$ 1,421	$ –	$ 2,143

⁽¹⁾ – quoted prices in active markets for identical assets or liabilities

⁽²⁾ – observable inputs other than quoted prices in active markets for identical assets and liabilities

⁽³⁾ – no observable pricing inputs in the market

Equity securities consist of investments in common stock of domestic and international corporations in a variety of industry sectors and are generally measured using quoted prices in active markets and are classified as Level 1.

Fixed income securities consist primarily of investments in U.S. Treasuries and agencies, as well as municipal bonds. We use quoted prices in active markets for our U.S. Treasury securities, and therefore these securities are classified as Level 1. For all other fixed income securities that do not have quoted prices in active markets, we use alternative matrix pricing as a practical expedient resulting in these debt securities being classified as Level 2.

Derivative contracts primarily include interest rate swaps and cross currency swaps. Derivative contracts are valued using models based on readily observable market parameters for all substantial terms of our derivative contracts and thus are classified within Level 2. We use mid-market pricing for fair value measurements of our derivative instruments.

We recognize transfers of assets between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers of assets within the fair value hierarchy during the three months ended March 31, 2010.

Fair Value of Short-term and Long-term Debt

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 short-term and long-term debt, excluding capital leases, was as follows:


(dollars in millions)	At March 31, 2010		At December 31, 2009
	Carrying Amount	Fair Value	Carrying Amount	Fair Value

Short- and long-term debt, excluding capital leases	$ 61,180	$ 66,942	$ 61,859	$ 67,359

Derivative Instruments

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, interest rate and commodity swap agreements and interest rate locks. We do not hold derivatives for trading purposes.

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. 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.

Interest Rate Swaps

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 consolidated balance sheets 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 $230 million and $171 million at March 31, 2010 and December 31, 2009, respectively, and are included in Other assets and Long-term debt. As of March 31, 2010, the total notional amount of these interest rate swaps was $6.0 billion.

Cross Currency Swaps

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 co-issued 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 was approximately $170 million and $315 million at March 31, 2010 and December 31, 2009, respectively. The change in the fair value of the swaps during the three months ended March 31, 2010 offset the change in the carrying value of the underlying debt obligations due to the impact of foreign currency exchange movements.

Prepaid Forward Agreements

During the first quarter of 2009, we entered into a privately negotiated prepaid forward agreement for 14 million shares of Verizon common stock at a cost of approximately $390 million. We terminated the prepaid forward agreement with respect to 5 million shares of Verizon common stock during the fourth quarter of 2009 and the remaining 9 million shares of Verizon common stock during the first quarter of 2010, which resulted in the delivery of those shares to Verizon upon termination.

6.	Stock-Based Compensation

Verizon Communications Long-Term Incentive Plan

The 2009 Verizon Communications Inc. Long-Term Incentive Plan (the Plan) permits the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other awards. The maximum number of shares available for awards from the Plan is 115 million shares.

Restricted Stock Units

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 outstanding at January 1, 2010 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 common stock. The RSUs granted during the first quarter of 2010 are classified as equity awards because these RSUs will be paid in Verizon common stock upon vesting. Compensation expense for RSUs classified as equity awards is measured based on the market price of Verizon common stock at the date of grant and is recognized over the vesting period. Dividend equivalent units are also paid to participants at the time the RSU award is paid, and in the same proportion as the RSU award.

The following table summarizes Verizon’s Restricted Stock Unit activity:


(shares in thousands)	Restricted Stock Units		Weighted-Average Grant-Date Fair Value
Outstanding, beginning of year	19,443		$ 35.50
Granted	6,082		28.99
Payments	(6,737	)	38.00
Cancelled/Forfeited	(26	)	34.52

Outstanding, March 31, 2010	18,762		32.49

Performance Stock Units

The Plan also provides for grants of Performance Stock Units (PSUs) that generally vest at the end of the third year after the grant. As defined by the Plan, the Human Resources Committee of the Board of Directors determines the number of PSUs a participant earns based on the extent to which the corresponding goals have been achieved over the three-year performance cycle. All payments are subject to approval by the Human Resources Committee. The PSUs are classified as liability awards because the PSU awards are paid in cash upon vesting. The PSU award liability is measured at its fair value at the end of each reporting period and, therefore, will fluctuate based on the price of Verizon common stock as well as performance relative to the targets. 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.

The following table summarizes Verizon’s Performance Stock Unit activity:


(shares in thousands)	Performance Stock Units		Weighted-Average Grant-Date Fair Value
Outstanding, beginning of year	29,895		$ 35.52
Granted	13,735		31.62
Payments	(14,364	)	38.00
Cancelled/Forfeited	(114	)	36.82

Outstanding, March 31, 2010	29,152		32.46

As of March 31, 2010, unrecognized compensation expense related to the unvested portion of Verizon’s RSUs and PSUs was approximately $586 million and is expected to be recognized over a weighted-average period of approximately two years.

Stock Options

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 common 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.

The following table summarizes Verizon’s stock option activity:


(shares in thousands)	Stock Options		Weighted-Average Exercise Price
Outstanding, beginning of year	103,620		$ 46.29
Cancelled/Forfeited	(15,634	)	55.68

Outstanding, March 31, 2010	87,986		44.63

All stock options outstanding at March 31, 2010 were exercisable.

Verizon Wireless Long-Term Incentive Plan

The 2000 Verizon Wireless Long-Term Incentive Plan (the Wireless Plan) provides compensation opportunities to eligible employees of Verizon Wireless (the Partnership). The Wireless Plan provides rewards that are tied to the long-term performance of the Partnership. Under the Wireless Plan, Value Appreciation Rights (VARs) were granted to eligible employees. As of March 31, 2010, all VARs were fully vested.

The following table summarizes the Value Appreciation Rights activity:


(shares in thousands)	Value Appreciation Rights		Weighted-Average Grant-Date Fair Value
Outstanding, beginning of year	16,591		$ 16.54
Exercised	(738	)	22.88

Outstanding, March 31, 2010	15,853		16.24

7.	Employee Benefits

We maintain non-contributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for 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.

Net Periodic Benefit (Income) Cost

The following table summarizes the benefit (income) cost related to our pension and postretirement health care and life insurance plans:


(dollars in millions)			Pension		Health Care and Life

Three Months Ended March 31,	2010		2009		2010		2009
Service cost	$ 91		$ 96		$ 78		$ 78
Interest cost	453		481		412		441
Expected return on plan assets	(653	)	(734	)	(76	)	(76)
Amortization of prior service cost	28		28		94		100
Actuarial loss, net	60		28		44		60

Net periodic benefit (income) cost	(21	)	(101	)	552		603
Settlement loss	136		–		–		–

Total (income) cost	$ 115		$ (101	)	$ 552		$ 603

Severance, Pension and Benefit Charges

During the three months ended March 31, 2010, we recorded non-cash pension settlement losses of $136 million related to employees that received lump-sum distributions, primarily resulting from our previously announced separation plans in which prescribed payment thresholds were reached.

Employer Contributions

During the three months ended March 31, 2010, we contributed $1 million to our qualified pension trusts, $50 million to our nonqualified pension plans and $446 million to our other postretirement benefit plans. The anticipated qualified pension trust contributions for 2010 disclosed in Verizon’s Annual Report on Form 10-K for the year ended December 31, 2009 have not changed. Our estimate of the amount and timing of required qualified pension trust contributions for 2010 is based on current proposed Internal Revenue Service regulations under the Pension Protection Act of 2006.

Severance Benefits

During the three months ended March 31, 2010, we paid severance benefits of $164 million. At March 31, 2010, we had a remaining severance liability of $1,500 million, a portion of which includes future contractual payments to employees separated as of March 31, 2010.

Medicare Part D Subsidy

Under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, both of which became law in March 2010 (collectively the Health Care Act), beginning in 2013, Verizon and other companies that receive a subsidy under Medicare Part D to provide retiree prescription drug coverage will no longer receive a federal income tax deduction for the expenses incurred in connection with providing the subsidized coverage to the extent of the subsidy received. Because future anticipated retiree prescription drug plan liabilities and related subsidies are already reflected in Verizon’s financial statements, this change requires Verizon to reduce the value of the related tax benefits recognized in its financial statements in the period during which the Health Care Act was enacted. As a result, Verizon recorded a one-time, non-cash income tax charge of $962 million in the first quarter of 2010 to reflect the impact of this change.

8.	Equity and Comprehensive Income

Equity

Changes in the components of Total equity were as follows:


	Three Months Ended March 31, 2010

(dollars in millions)	Attributable to Verizon		Noncontrolling Interest		Total Equity
Balance at beginning of period	$ 41,606		$ 42,761		$ 84,367

Net income	409		1,875		2,284
Other comprehensive income	37		4		41

Comprehensive income	446		1,879		2,325

Dividends declared	(1,343	)	–		(1,343)
Common stock in treasury (Note 5)	(277	)	–		(277)
Distributions and other	30		(450	)	(420)

Balance at end of period	$ 40,462		$ 44,190		$ 84,652

Noncontrolling interests included in our condensed consolidated financial statements primarily include Vodafone Group Plc.’s 45% ownership interest in our Verizon Wireless joint venture.

Comprehensive Income

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.


	Three Months Ended March 31,
(dollars in millions)	2010		2009
Net income	$ 2,284		$ 3,210
Other Comprehensive Income (Loss), Net of Taxes
Foreign currency translation adjustments	(194	)	(158)
Net unrealized gain on cash flow hedges	3		38
Unrealized gain (loss) on marketable securities	16		(15)
Defined benefit pension and postretirement plans	212		120

Other comprehensive income (loss) attributable to Verizon	37		(15)
Other comprehensive income attributable to noncontrolling interest	4		36

Total Comprehensive Income	$ 2,325		$ 3,231


Comprehensive income attributable to noncontrolling interest	$ 1,879		$ 1,601
Comprehensive income attributable to Verizon	446		1,630

Total Comprehensive Income	$ 2,325		$ 3,231

Other comprehensive income attributable to noncontrolling interest primarily reflects activity related to the cross currency swaps (see Note 5).

The components of Accumulated other comprehensive loss were as follows:


(dollars in millions)	At March 31, 2010		At December 31, 2009
Foreign currency translation adjustments	$ 820		$ 1,014
Net unrealized gain on cash flow hedges	40		37
Unrealized gain on marketable securities	66		50
Defined benefit pension and postretirement plans	(12,368	)	(12,580)

Accumulated Other Comprehensive Loss	$ (11,442	)	$ (11,479)

Foreign Currency Translation Adjustments

The change in Foreign currency translation adjustments was primarily driven by the strengthening of the U.S. dollar against the Euro.

Unrealized Gain on Marketable Securities

Gross unrealized gains and losses on marketable securities were not significant during the three months ended March 31, 2010 and 2009, respectively.

Defined Benefit Pension and Postretirement Plans

The change in Defined benefit pension and postretirement plans was attributable to the change in the funded status of the plans in connection with the required annual pension and postretirement valuation. The funded status was impacted by amortization of prior service cost and actuarial losses as well as settlement losses (see Note 7).

9.	Segment Information

Reportable Segments

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, consistent with the chief operating decision maker’s assessment of segment performance.

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-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, as these items are included in the chief operating decision maker’s assessment of segment performance.

Our segments and their principal activities consist of the following:


Segment		Description
Domestic Wireless		Domestic Wireless’s products and services include wireless voice and data services and equipment sales across the U.S.

Wireline		Wireline’s communications products and services include voice, Internet access, broadband video and data, next generation Internet protocol (IP) network services, network access, long distance and other services. We provide these products and services to consumers in the U.S., as well as to carriers, businesses and government customers both in the U.S. and in 150 other countries around the world.

The following table provides operating financial information for our two reportable segments:


	Three Months Ended March 31,
(dollars in millions)	2010		2009
External Operating Revenues
Domestic Wireless
Service revenue	$ 13,825		$ 13,057
Equipment and other	1,932		2,039

Total Domestic Wireless	15,757		15,096

Wireline
Mass Markets	4,582		4,586
Global Enterprise	3,993		4,049
Global Wholesale	2,011		2,113
Other	292		491

Total Wireline	10,878		11,239

Total segments	26,635		26,335
Corporate, eliminations and other	278		256

Total consolidated – reported	$ 26,913		$ 26,591


Intersegment Revenues
Domestic Wireless	$ 26		$ 26
Wireline	354		328

Total segments	380		354
Corporate, eliminations and other	(380	)	(354)

Total consolidated – reported	$ –		$ –


Total Operating Revenues
Domestic Wireless	$ 15,783		$ 15,122
Wireline	11,232		11,567

Total segments	27,015		26,689
Corporate, eliminations and other	(102	)	(98)

Total consolidated – reported	$ 26,913		$ 26,591


Operating Income
Domestic Wireless	$ 4,554		$ 4,271
Wireline	172		691

Total segments	4,726		4,962
Reconciling items	(375	)	(268)

Total consolidated – reported	$ 4,351		$ 4,694


(dollars in millions)	At March 31, 2010		At December 31, 2009
Assets
Domestic Wireless	$ 134,704		$ 135,162
Wireline	92,003		91,778

Total segments	226,707		226,940
Reconciling items	640		311

Total consolidated – reported	$ 227,347		$ 227,251

A reconciliation of the total of the reportable segments’ operating income to consolidated Income before provision for income taxes is as follows:


	Three Months Ended March 31,
(dollars in millions)	2010		2009
Total segment operating income	$ 4,726		$ 4,962
Severance, pension and benefit charges (Note 7)	(136	)	–
Merger integration and acquisition costs (Note 2)	(105	)	(246)
Access line spin-off related charges (Note 2)	(145	)	–
Corporate and other	11		(22)

Total consolidated operating income	4,351		4,694

Equity in earnings of unconsolidated businesses	133		128
Other income and (expense), net	45		53
Interest expense	(680	)	(925)

Income Before Provision For Income Taxes	$ 3,849		$ 3,950

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 months ended March 31, 2010 and 2009.

10.

Commitments and Contingencies

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 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.

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 this or any other site requiring remediation.

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.

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.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Verizon Communications Inc. (Verizon, or the Company), is one of the world’s leading providers of communications services. Our domestic wireless business, operating as Verizon Wireless, provides wireless voice and data products and services across the United States (U.S.) using one of the most extensive and reliable wireless networks. Our wireline business provides communications products and services, including voice, broadband data and video services, network access, long distance and other communications products and services, and also owns and operates one of the most expansive end-to-end global Internet Protocol (IP) networks. Stressing diversity and commitment to the communities in which we operate, we have a highly diverse workforce of approximately 217,100 employees.

In the sections that follow, we provide information about the important aspects of our operations and investments, both at the consolidated and segment levels, and discuss our results of operations, financial position and sources and uses of cash. In addition, we highlight key trends and uncertainties to the extent practicable. We also monitor several key economic indicators as well as the state of the economy in general, primarily in the United States where the majority of our operations are located, in evaluating our operating results and assessing the potential impacts of these trends on our businesses. While most key economic indicators, including gross domestic product, affect our operations to some degree, we historically have noted higher correlations to non-farm employment, personal consumption expenditures and capital spending, as well as more general economic indicators such as inflationary or recessionary trends and housing starts.

On May 13, 2009, we announced plans to 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 plans to merge with Frontier Communications Corporation (Frontier) pursuant to a definitive agreement with Frontier, and Frontier will be the surviving corporation. Consummation of the transactions contemplated in the agreements is subject to the satisfaction of certain conditions, including the receipt of state and federal telecommunications regulatory approvals. The merger will result in Frontier acquiring approximately 4 million access lines and certain related businesses from Verizon, which collectively generated annual revenues of approximately $4 billion for Verizon’s Wireline segment during 2009.

Our results of operations, financial position and sources and uses of cash in the current and future periods reflect our focus on the following strategic imperatives:

Revenue Growth – To generate revenue growth we are devoting our resources to higher growth markets such as the wireless voice and data markets, the broadband and video markets, and the provision of strategic services to business markets, rather than to the traditional wireline voice market. During the three months ended March 31, 2010, consolidated revenue grew 1.2% compared to the similar period in 2009, primarily due to higher revenues in growth markets partially offset by lower revenue in the Wireline segment, due to switched access line losses and decreased minutes of use (MOUs). We continue developing and marketing innovative product bundles to include local, long distance, wireless, broadband data and video services for consumer and general business retail customers. We anticipate that these efforts will help counter the effects of competition and technology substitution that have resulted in access line losses, and will enable us to continue to grow consolidated revenues.

Market Share Gains – In our wireless business, our goal is to continue to be the market leader in providing wireless voice and data communication services in the U.S. We are focused on providing the highest network reliability and innovative products and services. We also continue to expand our wireless data offerings for both consumer and business customers. In our wireline business, our goal is to become the leading broadband provider in every market in which we operate.

During the three months ended March 31, 2010, as compared to the similar period in 2009, in Domestic Wireless:

•

total customers increased 7.2% to 92.8 million; and

•

total data average revenue per customer per month (ARPU) grew by 18.0% to $16.71.

As of March 31, 2010, we passed 15.6 million premises with our high-capacity fiber optics network operated under the FiOS service mark. During the three months ended March 31, 2010, in Wireline:

•

we added 90,000 net wireline broadband connections, including 185,000 net new FiOS Internet subscribers, for a total of 9.3 million connections, including 3.6 million FiOS Internet subscribers;

•

we added 168,000 net new FiOS TV subscribers, for a total of 3.0 million FiOS TV subscribers; and

•

total broadband and video revenues exceeded $1.7 billion.

With FiOS, we have created the opportunity to increase revenue per customer as well as improve Wireline profitability as the traditional fixed-line telephone business continues to decline due to customer migration to wireless, cable and other newer technologies.

We are also focused on gaining market share in the enterprise business through the deployment of strategic enterprise service offerings, including expansion of our Voice over Internet Protocol (VoIP) and international Ethernet capabilities, the introduction of video and web-based conferencing capabilities, and enhancements to our virtual private network portfolio. During the three months ended March 31, 2010, revenues from strategic enterprise services grew 4.2% compared to the similar period in 2009.

Profitability Improvement – Our goal is to increase operating income and margins. Strong wireless data and FiOS revenue growth continue to positively impact operating results. In addition, early indications of an economic recovery, particularly in the business markets, should positively impact our revenue performance in future quarters. However, we remain focused on cost controls with the objective of driving efficiencies to offset business volume declines, as we expect the pressures of the economy to continue throughout the remainder of 2010.

Operational Efficiency – While focusing resources on revenue growth and market share gains, we are continually challenging our management team to lower expenses, particularly through technology-assisted productivity improvements, including self-service initiatives. These and other efforts, such as real estate consolidation, call center routing improvements, a centralized shared services organization, information technology and marketing efforts, have led to changes in our cost structure with a goal of maintaining and improving operating income margins. Through our deployment of the FiOS network, we expect to realize savings annually in our ongoing operating expenses as a result of efficiencies gained from fiber network facilities. As the deployment of the FiOS network gains scale, we seek to decrease the average cost of content per subscriber.

Customer Service – Our goal is to be the leading company in customer service in every market we serve. We view superior product offerings and customer service experiences as a competitive differentiator and a catalyst to growing revenues and gaining market share. We are committed to providing high-quality customer service and continually monitor customer satisfaction in all facets of our business. During 2009, Consumer Reports ranked Verizon Wireless #1 in customer satisfaction and surveys by J.D. Power and Associates and PCMag.com consistently rate FiOS as the #1 service in the marketplace.

Performance-Based Culture – We embrace a culture of accountability, based on individual and team objectives that are performance-based and tied to Verizon’s strategic imperatives. Key objectives of our compensation programs are pay-for-performance and the alignment of executives’ and shareowners’ long-term interests. We also employ a highly diverse workforce as respect for diversity is an integral part of Verizon’s culture and a critical element of our competitive success.

Trends

Information related to trends affecting our business was disclosed under Item 7 to Part II of our Annual Report on Form 10-K for the year ended December 31, 2009. There have been no significant changes to these previously discussed trends.

Consolidated Results of Operations

In this section, we discuss our overall results of operations and highlight items of a non-operational nature that are not included in our business segment results. We have two reportable segments, which we operate and manage as strategic business units and organize by products and services. Our segments are Domestic Wireless and Wireline. In the “Segment Results of Operations” section, we review the performance of our two reportable segments.

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-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, as these items are included in the chief operating decision maker’s assessment of segment performance. We believe that this presentation assists readers in better understanding our results of operations and trends from period to period.

Consolidated Revenues


	Three Months Ended March 31,
(dollars in millions)	2010			2009			% Change
Domestic Wireless
Service revenue	$	13,845		$	13,075		5.9
Equipment and other		1,938			2,047		(5.3	)

Total		15,783			15,122		4.4
Wireline
Mass Markets		4,585			4,590		(0.1	)
Global Enterprise		3,993			4,050		(1.4	)
Global Wholesale		2,347			2,416		(2.9	)
Other		307			511		(39.9	)

Total		11,232			11,567		(2.9	)
Corporate, eliminations and other		(102	)		(98	)	4.1

Consolidated Revenues		$ 26,913			$ 26,591		1.2

Consolidated revenues during the three months ended March 31, 2010 increased by $322 million, or 1.2%, compared to the similar period in 2009, primarily due to higher revenues in our growth markets. These revenue increases were partially offset by declines in revenues at our Wireline segment due to switched access line losses and decreased MOUs in traditional voice products.

Domestic Wireless’s revenues during the three months ended March 31, 2010 increased by $661 million, or 4.4%, compared to the similar period in 2009, due to growth in service revenue. Service revenue during the three months ended March 31, 2010 increased by $770 million, or 5.9%, compared to the similar period in 2009 primarily due to a 6.2 million, or 7.2%, increase in total customers since April 1, 2009, as well as continued growth from data services, partially offset by a decline in wireless voice ARPU.

Total wireless data revenue was $4,612 million and accounted for 33.3% of service revenue during the three months ended March 31, 2010, compared to $3,649 million and 27.9% during the similar period in 2009. Total data revenue continues to increase as a result of growth of our e-mail, Mobile Broadband and messaging services . Voice revenue decreased overall as a result of continued declines in our voice ARPU, partially offset by an increase in the number of customers. We expect that total service revenue and data revenue will continue to grow as we grow our customer base, increase the penetration of our data offerings and continue to increase the proportion of our customer base using third generation (3G) multimedia phones or 3G smartphone devices. Equipment and other revenue during the three months ended March 31, 2010 decreased by $109 million, or 5.3%, compared to the similar period in 2009, primarily due to the decrease in gross retail customer additions and a decrease in average revenue per equipment unit as a result of promotional activities, partially offset by an increase in the number of equipment units sold to existing customers upgrading their devices. Retail (non-wholesale) customers are customers who are directly served and managed by Verizon Wireless and who buy its branded services.

Wireline’s revenues during the three months ended March 31, 2010 decreased by $335 million, or 2.9%, compared to the similar period in 2009. Mass Markets revenues decreased by $5 million, or 0.1%, during the three months ended March 31, 2010, compared to the similar period in 2009, primarily due to a continued decline of local exchange revenues principally as a result of switched access line losses, partially offset by a continued growth in consumer and business FiOS services (Voice, Internet and TV). Global Enterprise revenues decreased by $57 million, or 1.4%, during the three months ended March 31, 2010 compared to the similar period in 2009, primarily due to lower long distance and traditional circuit-based data revenues. This decrease was partially offset by increases in Private IP and customer premise equipment revenues and the positive effects of movements in foreign exchange rates versus the U.S. dollar. Global Wholesale revenues during the three months ended March 31, 2010 decreased by $69 million, or 2.9%, compared to the similar period in 2009, due to decreased MOUs in traditional voice products and continued rate compression in the marketplace, partially offset by the positive effects of movements in foreign exchange rates versus the U.S. dollar. Other revenue during the three months ended March 31, 2010 decreased by $204 million, or 39.9%, compared to the similar period in 2009, primarily due to reduced business volumes, including former MCI mass markets customer losses.

Consolidated Operating Expenses


	Three Months Ended March 31,
(dollars in millions)	2010	2009	% Change
Cost of services and sales	$ 10,717	$ 10,308	4.0
Selling, general and administrative expense	7,724	7,561	2.2
Depreciation and amortization expense	4,121	4,028	2.3

Consolidated Operating Expenses	$ 22,562	$ 21,897	3.0

Cost of Services and Sales

Consolidated cost of services and sales during the three months ended March 31, 2010 increased by $409 million, or 4.0%, compared to the similar period in 2009, primarily due to an increase in content costs and pension expenses, higher customer premise and professional service costs and unfavorable foreign exchange impacts, partially offset by lower headcount and productivity improvements at our Wireline segment. Also contributing to the increase were higher wireless network costs as a result of an increase in international long distance costs, operating lease expense, as well as increased use of data services such as e-mail and messaging, partially offset by a decrease in roaming costs realized primarily by moving more traffic to our own network as a result of the acquisition of Alltel Corporation (Alltel). Also contributing to the increase in Cost of services and sales were non-operational charges noted in the table below.

Selling, General and Administrative Expense

Consolidated selling, general and administrative expense during the three months ended March 31, 2010 increased by $163 million, or 2.2%, compared to the similar period in 2009. This increase was primarily due to the impact in our Wireless segment of an increase in sales commission expense in our indirect channel, related to increases in both equipment upgrades leading to contract renewals and the average commission per unit, as the mix of units and service plans sold continues to shift toward data devices and bundled data plans. Partially offsetting these increases was the impact of cost reduction initiatives in our Wireline segment. Also contributing to the increase in Selling, general and administrative expense were non-operational charges noted in the table below.

Depreciation and Amortization Expense

Depreciation and amortization expense during the three months ended March 31, 2010 increased by $93 million, or 2.3%, compared to the similar period in 2009. This increase was primarily driven by growth in net depreciable assets through the three months ended March 31, 2010, partially offset by an increase in the average remaining lives of certain asset classes. Partially offsetting the increase in Depreciation and amortization expense were non-operational charges noted in the table below.

Non-operational Charges

Non-operational charges included in operating expenses were as follows:


	Three Months Ended March 31,
(dollars in millions)	2010	2009
Merger Integration and Acquisition Costs
Cost of services and sales	$ 37	$ 61
Selling, general and administrative expense	40	140
Depreciation and amortization expense	28	45

Total Merger Integration and Acquisition Costs	$ 105	$ 246


Severance, Pension and Benefit Charges
Cost of services and sales	$ 100	$ –
Selling, general and administrative expense	36	–

Total Severance, Pension and Benefit Charges	$ 136	$ –


Access Line Spin-off Related Charges
Cost of services and sales	$ 15	$ –
Selling, general and administrative expense	130	–

Total Access Line Spin-off Related Charges	$ 145	$ –

See “Other Items” for a description of the non-operational items above and the Medicare Part D subsidy charge.

Other Consolidated Results

Equity in Earnings of Unconsolidated Businesses

Additional information relating to Equity in earnings of unconsolidated businesses is as follows:


	Three Months Ended March 31,
(dollars in millions)	2010		2009		% Change
Vodafone Omnitel N.V.	$ 153		$ 142		7.7
Other	(20	)	(14	)	42.9

Total	$ 133		$ 128		3.9

Other Income and (Expense), Net

Additional information relating to Other income and (expense), net is as follows:


	Three Months Ended March 31,
(dollars in millions)	2010	2009	% Change
Interest income	$ 27	$ 23	17.4
Foreign exchange gains, net	14	29	(51.7	)
Other, net	4	1	nm

Total	$ 45	$ 53	(15.1	)

nm – not meaningful

Interest Expense


	Three Months Ended March 31,
(dollars in millions)	2010		2009		% Change
Total interest costs on debt balances	$ 906		$ 1,160		(21.9	)
Less capitalized interest costs	226		235		(3.8	)

Total	$ 680		$ 925		(26.5	)


Average debt outstanding	$ 61,859		$ 63,917
Effective interest rate	5.86	%	7.26	%

Total interest costs on debt balances decreased by $254 million during the three months ended March 31, 2010, compared to the similar period in 2009, primarily due to declines in interest rates and average debt. Interest costs during the three months ended March 31, 2009 included fees related to the bridge facility that was entered into and utilized to complete the acquisition of Alltel, which contributed to the higher effective interest rate in the prior year.

Provision for Income Taxes


	Three Months Ended March 31,
(dollars in millions)	2010		2009		% Change
Provision for income taxes	$ 1,565		$ 740		nm
Effective income tax rate	40.7	%	18.7	%

nm – not meaningful

The effective income tax rate is calculated by dividing the provision for income taxes by income before the provision for income taxes. Our annual effective tax rate is significantly lower than the statutory federal income tax rate due to the inclusion of income attributable to Vodafone Group Plc.’s (Vodafone) noncontrolling interest in the Verizon Wireless partnership within our Income before the provision for income taxes.

The effective income tax rate for the three months ended March 31, 2010 compared to the similar period in 2009 increased to 40.7% from 18.7%. The increase was primarily driven by a one-time, non-cash income tax charge of $962 million, resulting in a 25 percentage point increase to our effective tax rate, as a result of the enactment of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, both of which became law in March 2010 (collectively the Health Care Act). Under the Health Care Act, beginning in 2013, Verizon and other companies that receive a subsidy under Medicare Part D to provide retiree prescription drug coverage will no longer receive a federal income tax deduction for the expenses incurred in connection with providing the subsidized coverage to the extent of the subsidy received. Because future anticipated retiree prescription drug plan liabilities and related subsidies are already reflected in Verizon’s financial statements, this change required Verizon to reduce the value of the related tax benefits recognized in its financial statements in the period during which the Health Care Act was enacted. The ongoing impact on our 2010 effective tax rate from the lower federal income tax deduction is not expected to be significant. The increase in the effective income tax rate for the three months ended March 31, 2010 compared to the similar period in 2009 was partially offset by a decrease in tax rate due to higher earnings attributable to the noncontrolling interest.

Unrecognized Tax Benefits

Unrecognized tax benefits were $3,305 million and $3,400 million at March 31, 2010 and December 31, 2009, respectively. Interest and penalties related to unrecognized tax benefits were $505 million (after-tax) and $552 million (after-tax) at March 31, 2010 and December 31, 2009, respectively. The Internal Revenue Service (IRS) is currently examining the Company’s U.S. income tax returns for tax years 2004 through 2006. As a large taxpayer, we are under continual audit by the IRS and multiple state and foreign jurisdictions on numerous open tax positions. Significant foreign examinations are ongoing in Canada, Australia and Italy for tax years as early as 2002. It is reasonably possible that the amount of the liability for unrecognized tax benefits could change by a significant amount during the next twelve-month period. An estimate of the range of the possible change cannot be made until issues are further developed or examinations close.

Net Income Attributable to Noncontrolling Interest


	Three Months Ended March 31,
(dollars in millions)	2010	2009	% Change
Net income attributable to noncontrolling interest	$ 1,875	$ 1,565	19.8

The increase in Net income attributable to noncontrolling interest during the three months ended March 31, 2010, compared to the similar period in 2009, was due to higher earnings in our Domestic Wireless segment, which has a 45% noncontrolling partnership interest attributable to Vodafone.

Segment Results of Operations

We have two reportable segments, Domestic Wireless and Wireline, 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.

Segment earnings before interest, taxes, depreciation and amortization (Segment EBITDA), which is presented below, is a non-GAAP measure and does not purport to be an alternative to operating income as a measure of operating performance. Management believes that this measure is useful to investors and other users of our financial information in evaluating operating profitability on a more variable cost basis, as it excludes the depreciation and amortization expenses related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to Verizon’s competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income.

Verizon Wireless Segment EBITDA service margin, also presented below, is calculated by dividing Verizon Wireless Segment EBITDA by Verizon Wireless service revenues. Verizon Wireless Segment EBITDA service margin utilizes service revenues rather than total revenues. Service revenues exclude primarily equipment revenues (as well as other non-service revenues) in order to capture the impact of providing service to the wireless customer base on an ongoing basis.

It is management’s intent to provide non-GAAP financial information to enhance understanding of Verizon’s GAAP financial statements and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies.

Domestic Wireless

Our Domestic Wireless segment provides wireless voice and data services and equipment sales across the U.S. This segment primarily represents the operations of the Verizon joint venture with Vodafone, operating as Verizon Wireless. We own a 55% interest in the joint venture and Vodafone owns the remaining 45%. All financial results included in the tables below reflect the consolidated results of Verizon Wireless.

Operating Revenue and Selected Operating Statistics


	Three Months Ended March 31,
(dollars in millions, except ARPU)	2010		2009		% Change
Service revenue	$ 13,845		$ 13,075		5.9
Equipment and other	1,938		2,047		(5.3	)

Total Operating Revenue	$ 15,783		$ 15,122		4.4


Total customers (‘000)	92,801		86,552		7.2
Retail customers (‘000)	87,811		84,095		4.4

Total customer net additions in period (including acquisitions and adjustments) (‘000)	1,552		14,496		(89.3	)
Retail customer net additions in period (including acquisitions and adjustments) (‘000)	288		14,074		(98.0	)

Total churn rate	1.40	%	1.47	%
Retail postpaid churn rate	1.07	%	1.14	%

Service ARPU	$ 50.15		$ 50.74		(1.2	)
Retail service ARPU	50.95		50.97		–
Total data ARPU	16.71		14.16		18.0

Domestic Wireless’s total operating revenue during the three months ended March 31, 2010 increased by $661 million, or 4.4%, compared to the similar period in 2009, primarily due to growth in service revenue.

Service Revenue

Service revenue during the three months ended March 31, 2010 increased by $770 million, or 5.9%, compared to the similar period in 2009, primarily due to a 6.2 million, or 7.2%, increase in total customers since April 1, 2009, as well as continued growth from data services, partially offset by a decline in wireless voice revenue.

Excluding acquisitions, Domestic Wireless added approximately 284 thousand net retail customers during the three months ended March 31, 2010, compared to approximately 1.3 million during the similar period in 2009. The decline in net retail customer additions during the three months ended March 31, 2010, compared to the similar period in 2009, was due to a decrease in gross retail customer additions. The decline in our gross retail customer additions was primarily attributable to a marketplace shift in customer activations within the period toward unlimited prepaid offerings of the type being sold by a number of our resellers. However, we expect to continue to experience retail customer growth based on the strength of our product offerings and network service quality. Our churn rate, the rate at which customers disconnect individual lines of service, during the three months ended March 31, 2010, compared to the similar period in 2009, improved as a result of successful customer retention efforts, in part due to the simplification of our pricing structure.

Excluding acquisitions, Domestic Wireless added approximately 1.5 million net total customers during the three months ended March 31, 2010, compared to approximately 1.3 million during the similar period in 2009. The increase in net total customer additions during the three months ended March 31, 2010, compared to the similar period in 2009, was due to an increase in net customer additions from our reseller channel, as a result of the marketplace shift in customer activations mentioned above.

Total data revenue was $4,612 million and accounted for 33.3% of service revenue during the three months ended March 31, 2010, compared to $3,649 million and 27.9% during the similar period in 2009. Total data revenue continues to increase as a result of growth of our e-mail, Mobile Broadband and messaging services. Voice revenue decreased overall as a result of continued declines in our voice ARPU, as discussed below, partially offset by an increase in the number of customers. We expect that total service revenue and data revenue will continue to grow as we grow our customer base, increase the penetration of our data offerings and increase the proportion of our customer base using 3G multimedia phones or 3G smartphone devices.

The declines in both our service ARPU and retail service ARPU were due to a continued reduction in voice ARPU, partially offset by an increase in total data ARPU. Additionally, the decline in our service ARPU was impacted by changes in our customer mix as a result of increased reseller net customer additions. Total voice ARPU declined $3.14, or 8.6%, during the three months ended March 31, 2010, compared to the similar period in 2009, due to the on-going impact of customers seeking to optimize the value of our offerings by moving to bundled minute and Family Share plans. Total data ARPU increased by $2.55, or 18.0%, during the three months ended March 31, 2010, compared to the similar period in 2009, as a result of continued growth and penetration of our data offerings, primarily as a result of data packages attached to our 3G multimedia phones and 3G smartphone devices.

Customers from acquisitions for the three months ended March 31, 2009 included approximately 13.2 million net total customer additions, after conforming adjustments but before the impact of required divestitures, resulting from our acquisition of Alltel on January 9, 2009.

Equipment and Other Revenue

Equipment and other revenue during the three months ended March 31, 2010 decreased by $109 million, or 5.3%, compared to the similar period in 2009. Equipment revenue decreased primarily due to the decrease in gross retail customer additions and a decrease in average revenue per equipment unit as a result of promotional activities, partially offset by an increase in the number of wireless handsets sold to existing customers upgrading their devices.

Operating Expenses


	Three Months Ended March 31,
(dollars in millions)	2010	2009	% Change
Cost of services and sales	$ 4,775	$ 4,660	2.5
Selling, general and administrative expense	4,642	4,442	4.5
Depreciation and amortization expense	1,812	1,749	3.6

Total Operating Expenses	$ 11,229	$ 10,851	3.5

Cost of Services and Sales

Cost of services and sales increased by $115 million, or 2.5%, during the three months ended March 31, 2010, compared to the similar period in 2009. The increase in cost of services was primarily attributable to higher wireless network costs as a result of an increase in international long distance costs, operating lease expense, as well as increased use of data services such as e-mail and messaging. These increases were partially offset by a decrease in roaming costs that was realized primarily by moving more traffic to our own network as a result of the acquisition of Alltel. Cost of equipment sales increased by $33 million, or 1.2% during the three months ended March 31, 2010, compared to the similar period in 2009, primarily due to an increase in the number of wireless devices sold to existing customers upgrading their wireless devices and an increase in the average cost per unit, offset by a decrease in gross retail customer additions.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $200 million, or 4.5%, during the three months ended March 31, 2010, compared to the similar period in 2009 primarily due to an increase in sales commission expense in our indirect channel as well as an increase in regulatory fees. Indirect sales commission expense increased $117 million as a result of increases in both equipment upgrades leading to contract renewals and the average commission per unit as the mix of units and service plans sold continues to shift toward data devices and bundled data plans. Regulatory fees increased $77 million due to both the growth in our revenues subject to fees and an increase in the federal universal service fund rate. We also experienced increases in other selling, general and administrative expense primarily as a result of supporting a larger customer base as of March 31, 2010 compared to March 31, 2009. These increases were partially offset by a decrease in advertising and promotion expense, as a result of converting the retained Alltel markets to the Verizon Wireless brand starting in the second quarter of 2009.

Depreciation and Amortization Expense

Depreciation and amortization expense increased by $63 million, or 3.6%, during the three months ended March 31, 2010, compared to the similar period in 2009. This increase was primarily driven by growth in depreciable assets through the first quarter of 2010.

Segment Operating Income and EBITDA


	Three Months Ended March 31,
(dollars in millions)	2010		2009		% Change
Segment Operating Income	$ 4,554		$ 4,271		6.6
Add Depreciation and amortization expense	1,812		1,749		3.6

Segment EBITDA	$ 6,366		$ 6,020		5.7


Segment operating income margin	28.9	%	28.2	%
Segment EBITDA service margin	46.0	%	46.0	%

The increases in Domestic Wireless’s Operating income and Segment EBITDA during the three months ended March 31, 2010, compared to the similar period in 2009, were primarily as a result of the impact of factors described above.

Wireline

The Wireline segment provides customers with communication products and services, including voice, broadband video and data, network access, long distance, and other services, to residential and small business customers and carriers, as well as next-generation IP network services and communications solutions to medium and large businesses and government customers globally.

Operating Revenues and Selected Operating Statistics


	Three Months Ended March 31,
(dollars in millions)	2010	2009	% Change
Mass Markets	$ 4,585	$ 4,590	(0.1	)
Global Enterprise	3,993	4,050	(1.4	)
Global Wholesale	2,347	2,416	(2.9	)
Other	307	511	(39.9	)

Total Operating Revenues	$ 11,232	$ 11,567	(2.9	)


Switched access line in service (‘000)	31,849	35,197	(9.5	)

Broadband connections (‘000)	9,310	8,925	4.3
FiOS Internet subscribers (‘000)	3,618	2,779	30.2
FiOS TV subscribers (‘000)	3,029	2,217	36.6

Mass Markets

Mass Markets revenue includes local exchange (basic service and end-user access), long distance (including regional toll), broadband services (including high-speed Internet and FiOS Internet) and FiOS TV services for residential and small business subscribers.

Mass Markets revenue during the three months ended March 31, 2010 decreased by $5 million, or 0.1%, compared to the similar period in 2009. The decrease was primarily driven by a decline in local exchange revenues principally due to a 9.5% decline in switched access lines as of March 31, 2010 compared to the similar period in 2009, primarily as a result of competition and technology substitution. The majority of the decrease was sustained in the residential retail market, which experienced a 10.8% access line loss primarily due to substituting traditional landline services with wireless, VoIP, broadband and cable services. Also contributing to the decrease was a decline of nearly 3.7% in small business retail access lines, primarily reflecting economic conditions, competition and a shift to both IP and high-speed circuits. Partially offsetting these decreases was the expansion of FiOS services (Voice, Internet and TV).

As we continue to expand the number of premises eligible to order FiOS services and extend our sales and marketing efforts to attract new FiOS subscribers, we have continued to grow our subscriber base and consistently improved penetration rates within our FiOS service areas. Our bundled pricing strategy allows us to provide competitive offerings to our customers and potential customers. Consequently, we added 90,000 net new broadband connections, including 185,000 net new FiOS Internet subscribers during the three months ended March 31, 2010. In addition, we added 168,000 net new FiOS TV subscribers during the three months ended March 31, 2010. As of March 31, 2010, we achieved penetration rates of 28.8% and 25.2% for FiOS Internet and FiOS TV, respectively, compared to penetration rates of 26.8% and 22.9% for FiOS Internet and FiOS TV, respectively, at March 31, 2009.

Global Enterprise

Global Enterprise offers voice, data and Internet communications services to medium and large business customers, multi-national corporations, and state and federal government customers. In addition to traditional voice and data services, Global Enterprise offers managed and advanced products and solutions including IP services and value-added solutions that make communications more secure, reliable and efficient. Global Enterprise also provides managed network services for customers that outsource all or portions of their communications and information processing operations and data services such as private IP, private line, frame relay and asynchronous transfer mode (ATM) services, both domestically and internationally. In addition, Global Enterprise offers professional services in more than 30 countries supporting a range of solutions including network service, managing a move to IP-based unified communications and providing application performance support.

Global Enterprise revenues during the three months ended March 31, 2010 decreased by $57 million, or 1.4%, compared to the similar period in 2009. The revenue decline was due to lower long distance and traditional circuit-based data revenues, offset by higher customer premises equipment revenue and the positive effect of movements in foreign exchange rates versus the U.S. dollar. The decline in long distance revenue is due to the negative effects of the continuing global economic conditions and competitive rate pressures. Traditional circuit-based services such as frame relay, private line and ATM services declined compared to the similar period last year as our customer base continues its migration to next generation IP services. Partially offsetting the decline was a $63 million, or 4.2%, increase in strategic enterprise services revenue during the three months ended March 31, 2010, compared to the similar period in 2009, that was primarily driven by higher information technology, security solution and strategic networking revenues. Strategic enterprise services continues to be Global Enterprise’s fastest growing suite of offerings. Revenues from sales of customer premise equipment also increased during the three months ended March 31, 2010, compared to the similar period in 2009.

Global Wholesale

Global Wholesale revenues are primarily earned from long distance and other carriers who use our facilities to provide services to their customers. Switched access revenues are generated from fixed and usage-based charges paid by carriers for access to our local network, interexchange wholesale traffic sold in the U.S., as well as internationally destined traffic that originates in the U.S. Special access revenues are generated from carriers that buy dedicated local exchange capacity to support their private networks. Wholesale services also include local wholesale revenues from unbundled network elements and interconnection revenues from competitive local exchange carriers and wireless carriers. A portion of Global Wholesale revenues are generated by a few large telecommunication companies, many of whom compete directly with us.

Global Wholesale revenues during the three months ended March 31, 2010 decreased by $69 million, or 2.9%, compared to the similar period in 2009, primarily due to decreased MOUs in traditional voice products, and continued rate compression due to competition in the marketplace. Switched access and interexchange wholesale MOUs declined primarily as a result of wireless substitution and access line losses. Domestic wholesale lines declined by 17.5% during the three months ended March 31, 2010 as compared to the similar period in 2009 due to the continued impact of competitors deemphasizing their local market initiatives coupled with the impact of technology substitution as well as the continued level of economic pressure. Voice and local loop services declined, partially offset by positive movements in foreign exchange rates versus the U.S. dollar during the three months ended March 31, 2010, compared to the similar period in 2009. Continuing demand for high-capacity, high-speed digital services was partially offset by lower demand for older, low-speed data products and services. As of March 31, 2010, customer demand, as measured in DS1 and DS3 circuits, for high-capacity and digital data services increased 2.7% compared to the similar period in 2009.

Other

Other revenues include such services as local exchange and long distance services from former MCI mass market customers, operator services, pay phone, card services and supply sales. Revenues from other services during the three months ended March 31, 2010 decreased $204 million, or 39.9%, compared to the similar period in 2009, primarily due to reduced business volumes, including former MCI mass market customer losses.

Operating Expenses


	Three Months Ended March 31,
(dollars in millions)	2010	2009	% Change
Cost of services and sales	$ 6,114	$ 5,895	3.7
Selling, general and administrative expense	2,678	2,766	(3.2	)
Depreciation and amortization expense	2,268	2,215	2.4

Total Operating Expenses	$ 11,060	$ 10,876	1.7

Cost of Services and Sales

Cost of services and sales during the three months ended March 31, 2010 increased by $219 million, or 3.7%, compared to the similar period in 2009. The increase was primarily due to higher content costs associated with continued FiOS subscriber growth. Also contributing to the increase were higher professional services costs, which support our strategic services suite of offerings, as well as increased pension expenses, higher customer premise equipment costs and an unfavorable foreign exchange impact. Offsetting the increase were lower costs associated with compensation and installation expenses as a result of lower headcount and productivity improvements.

Selling, General and Administrative Expense

Selling, general and administrative expense during the three months ended March 31, 2010 decreased by $88 million, or 3.2%, compared to the similar period in 2009. The decrease was primarily due to the decline in compensation expense as a result of lower headcount and cost reduction initiatives, partially offset by unfavorable foreign exchange movements.

Depreciation and Amortization Expense

Depreciation and amortization expense during the three months ended March 31, 2010 increased by $53 million, or 2.4%, compared to the similar period in 2009. The increase was driven by growth in net depreciable assets, partially offset by an increase in the average remaining lives of certain asset classes.

Segment Operating Income and EBITDA


	Three Months Ended March 31,
(dollars in millions)	2010	2009	% Change
Segment Operating Income	$ 172	$ 691	(75.1	)
Add Depreciation and amortization expense	2,268	2,215	2.4

Segment EBITDA	$ 2,440	$ 2,906	(16.0	)

The decreases in Wireline’s Operating income and Segment EBITDA during the three months ended March 31, 2010, compared to the similar period in 2009, were primarily a result of the impact of factors described in connection with operating revenue and operating expenses above.

Other Items

Merger Integration and Acquisition Costs

During the three months ended March 31, 2009, we recorded merger integration and acquisition charges of $456 million, primarily related to the Alltel acquisition, for transaction fees and costs associated with the acquisition, including fees related to the bridge facility that was entered into and utilized to complete the acquisition. Additionally, the charges included trade name amortization, contract terminations and the decommissioning of overlapping cell sites.

Severance, Pension and Benefit Charges

Medicare Part D Subsidy Charges

Under the Health Care Act, beginning in 2013, Verizon and other companies that receive a subsidy under Medicare Part D to provide retiree prescription drug coverage will no longer receive a federal income tax deduction for the expenses incurred in connection with providing the subsidized coverage to the extent of the subsidy received. Because future anticipated retiree prescription drug plan liabilities and related subsidies are already reflected in Verizon’s financial statements, this change requires Verizon to reduce the value of the related tax benefits recognized in its financial statements in the period during which the Health Care Act was enacted. As a result, Verizon recorded a one-time, non-cash income tax charge of $962 million in the first quarter of 2010 to reflect the impact of this change.

Access Line Spin-off Related Charges

Consolidated Financial Condition


Three Months Ended March 31,
(dollars in millions)	2010		2009		Change
Cash Flows Provided By (Used In)
Operating activities	$ 7,117		$ 6,622		$ 495
Investing activities	(3,656	)	(8,759	)	5,103
Financing activities	(2,433	)	(3,666	)	1,233

Increase (Decrease) In Cash and Cash Equivalents	$ 1,028		$ (5,803	)	$ 6,831

We use the net cash generated from our operations to fund network expansion and modernization, repay external financing, pay dividends, repurchase Verizon common stock from time to time and invest in new businesses. While our current liabilities typically exceed current assets, our sources of funds, primarily from operations and, to the extent necessary, from external financing arrangements, are sufficient to meet ongoing operating and investing requirements. We expect that our capital spending requirements will continue to be financed primarily through internally generated funds. Debt or equity financing may be needed to fund additional development activities or to maintain our capital structure to ensure our financial flexibility.

We manage our capital structure to balance our cost of capital and the need for financial flexibility. The mix of debt and equity is intended to allow us to maintain ratings in the “A” category from the primary rating agencies. Although conditions in the credit markets during recent years did not have a significant impact on our ability to obtain financing, such conditions, along with our need to finance acquisitions and our purchase of licenses acquired in the 700 MHz auction, resulted in higher fixed interest rates on borrowings than those we have paid in recent years. We believe that we will continue to have the necessary access to capital markets.

Our available external financing arrangements include the issuance of commercial paper, credit available under credit facilities and other bank lines of credit, vendor financing arrangements, issuances of registered debt or equity securities and privately-placed capital market securities. We currently have a shelf registration available for the issuance of up to $4.0 billion of additional unsecured debt or equity securities. We also issue short-term debt through an active commercial paper program and have a $6.2 billion credit facility to support such commercial paper issuances.

Cash Flows Provided By Operating Activities

Our primary source of funds continues to be cash generated from operations. Net cash provided by operating activities during the three months ended March 31, 2010 increased by $0.5 billion, compared to the similar period in 2009, primarily driven by higher operating cash flows at Domestic Wireless as well as an increase in collections.

We anticipate that we may receive an additional distribution from Vodafone Omnitel N.V. within the next twelve months.

Cash Flows Used In Investing Activities

Capital Expenditures

Capital expenditures continue to be our primary use of capital resources as they facilitate the introduction of new products and services, enhance responsiveness to competitive challenges and increase the operating efficiency and productivity of our networks. We are directing our capital spending primarily toward higher growth markets.

Capital expenditures, including capitalized software, were as follows:


	Three Months Ended March 31,
(dollars in millions)	2010	2009
Domestic Wireless	$ 1,770	$ 1,551
Wireline	1,566	2,003
Other	120	153

	$ 3,456	$ 3,707

Total as a percentage of total revenue	12.8%	13.9%

The increase in capital expenditures at Domestic Wireless during the three months ended March 31, 2010, compared to the similar period in 2009, was primarily due to the continued investment in our wireless EV-DO networks and funding the build-out of our fourth generation network based on Long-Term Evolution technology. The decrease in capital expenditures at Wireline during the three months ended March 31, 2010, compared to the similar period in 2009, was primarily due to lower legacy spending requirements and capital expenditures related to FiOS. We continue to expect 2010 capital expenditures to be in the $16.8 billion to $17.2 billion range.

Acquisitions

On January 9, 2009, Verizon Wireless paid approximately $5.9 billion for the equity of Alltel, which was partially offset by $1.0 billion of cash acquired at closing.

Cash Flows Used In Financing Activities

During the three months ended March 31, 2010 and 2009, net cash used in financing activities was $2.4 billion and $3.7 billion, respectively. During the three months ended March 31, 2010, $0.3 billion 6.125% Verizon New York Inc. and $0.2 billion 6.375% Verizon North Inc. debentures matured and were repaid. In addition, during the three months ended March 31, 2010, we paid $1.3 billion in dividends.

On April 16, 2010, Verizon Wireless repaid $0.8 billion of borrowings under a three-year term loan facility, reducing the outstanding borrowings under this facility to approximately $3.2 billion.

Credit Facility and Shelf Registration

The credit facility does not require us to comply with financial covenants or maintain specified credit ratings, and it permits us to borrow even if our business has incurred a material adverse change. We use the credit facility to support the issuance of commercial paper, for the issuance of letters of credit and for general corporate purposes.

We have a shelf registration available for the issuance of up to $4.0 billion of additional unsecured debt or equity securities.

Verizon’s ratio of debt to debt combined with Verizon’s equity was 60.3% at March 31, 2010 compared to 59.9% at December 31, 2009.

Credit Ratings

There were no changes to the credit ratings of Verizon Communications and/or Cellco Partnership from those discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Cash Flows Provided by (Used in) Financing Activities” in our Annual Report on Form 10-K for the year ended December 31, 2009. While we do not anticipate a ratings downgrade, the three primary rating agencies have identified factors which they believe could result in a ratings downgrade for Verizon Communications and/or Cellco Partnership in the future including sustained leverage levels at Verizon Communications and/or Cellco Partnership resulting from: (i) diminished wireless operating performance as a result of a weakening economy and competitive pressures; (ii) failure to achieve significant synergies in the Alltel integration; (iii) accelerated wireline losses; (iv) the absence of material improvement in the status of underfunded pensions and other post employment benefits; or (v) an acquisition or sale of operations that causes a material deterioration in its credit metrics. A ratings downgrade may increase the cost of refinancing existing debt and might constrain Verizon Communications’ access to certain short-term debt markets.

Covenants

Our credit agreements contain covenants that are typical for large, investment grade companies. These covenants include requirements to pay interest and principal in a timely fashion, to pay taxes, to maintain insurance with responsible and reputable insurance companies, to preserve our corporate existence, to keep appropriate books and records of financial transactions, to maintain our properties, to provide financial and other reports to our lenders, to limit pledging and disposition of assets and mergers and consolidations, and other similar covenants.

In addition, Verizon Wireless is required to maintain on the last day of any period of four fiscal quarters a leverage ratio of debt to earnings before interest, taxes, depreciation, amortization and other adjustments, as defined in the related credit agreement, not in excess of 3.25 times based on the preceding twelve months. At March 31, 2010, the leverage ratio was 0.9 times.

We and our consolidated subsidiaries are in compliance with all of our debt covenants.

Increase (Decrease) In Cash and Cash Equivalents

Our Cash and cash equivalents at March 31, 2010 totaled $3.0 billion, a $1.0 billion increase compared to Cash and cash equivalents at December 31, 2009 for the reasons discussed above.

Free Cash Flow

Free cash flow is a non-GAAP financial measure that management believes is useful to investors and other users of Verizon’s financial information in evaluating cash available to pay debt and dividends. Free cash flow is calculated by subtracting capital expenditures from net cash provided by operating activities. The following table reconciles net cash provided by operating activities, a GAAP measure, to free cash flow:


Three Months Ended March 31,
(dollars in millions)	2010	2009	Change
Net cash provided by operating activities	$ 7,117	$ 6,622	$ 495
Less Capital expenditures (including capitalized software)	3,456	3,707	(251	)

Free cash flow	$ 3,661	$ 2,915	$ 746

Market Risk

We are exposed to various types of market risk in the normal course of business, including the impact of interest rate changes, foreign currency exchange rate fluctuations, changes in investment, equity and commodity prices and changes in corporate tax rates. 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, interest rate and commodity swap agreements and interest rate locks. We do not hold derivatives for trading purposes.

It is our general policy to enter into interest rate, foreign currency and other derivative transactions only to the extent necessary to achieve our desired objectives in limiting our exposure to various market risks. Our objectives include maintaining a mix of fixed and variable rate debt to lower borrowing costs within reasonable risk parameters and to protect against earnings and cash flow volatility resulting from changes in market conditions. We do not hedge our market risk exposure in a manner that would completely eliminate the effect of changes in interest rates and foreign exchange rates on our earnings. We do not expect that our net income, liquidity and cash flows will be materially affected by these risk management strategies.

The functional currency for our foreign operations is primarily the local currency. The translation of income statement and balance sheet amounts of our foreign operations into U.S. dollars are recorded as cumulative translation adjustments, which are included in Accumulated other comprehensive loss in our consolidated balance sheets. Gains and losses on foreign currency transactions are recorded in the consolidated statements of income in Other income and (expense), net. At March 31, 2010, our primary translation exposure was to the British Pound Sterling, the Euro and the Australian Dollar.

We are exposed to changes in interest rates, primarily on our short-term debt and the portion of long-term debt that carries floating interest rates. As of March 31, 2010, more than two-thirds in aggregate principal amount of our total debt portfolio consisted of fixed rate indebtedness, including the effect of interest rate swap agreements designated as hedges. The impact of a 100 basis point change in interest rates affecting our floating rate debt would result in a change in annual interest expense, including our interest rate swap agreements that are designated as hedges, of approximately $135 million. The interest rates on our existing long-term debt obligations, with the exception of a three-year term loan, are unaffected by changes to our credit ratings.

Interest Rate Swaps

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 sheets 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 $230 million and $171 million at March 31, 2010 and December 31, 2009, respectively, and are included in Other assets and Long-term debt. As of March 31, 2010, the total notional amount of these interest rate swaps was $6.0 billion.

Cross Currency Swaps

Prepaid Forward Agreements

During the first quarter of 2009, we entered into a privately negotiated prepaid forward agreement for 14 million shares of Verizon common stock at a cost of approximately $390 million. We terminated the prepaid forward agreement with respect to 5 million shares of Verizon common stock during the fourth quarter of 2009, and the remaining 9 million shares of Verizon common stock during the first quarter of 2010, which resulted in the delivery of those shares to Verizon upon termination.

Other Factors That May Affect Future Results

Recent Developments

Telephone Access Lines Spin-off

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 34% and 29% 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 which is a ceiling and floor on the trading price) and other closing adjustments. Verizon will not own any shares of Frontier after the merger.

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.

Alltel Divestiture Markets

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 approximately $2.4 billion in cash. 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 including licenses and network assets, for $200 million in cash. In April 2010, Verizon Wireless received the regulatory approvals necessary to complete the sale of the markets to ATN and completed the transaction. Verizon Wireless expects to close the transaction with AT&T Mobility during the second quarter of 2010 subject to receipt of regulatory approval.

Environmental Matters

Other

In April 2010, we reached an agreement with certain unions on temporary enhancements to the separation programs contained in their existing collective bargaining agreements. These temporary enhancements are intended to help address a previously declared surplus of employees and to help reduce the need for layoffs. The ultimate financial impact of the enhanced offer, which may be significant, will depend on the number of volunteers who accept the offer.

Regulatory and Competitive Trends

Information related to Regulatory and Competitive Trends is disclosed in Part I, Item 1. “Business” in our Annual Report on Form 10-K for the year ended December 31, 2009.

Recent Accounting Standards

In September 2009, the accounting standard update regarding revenue recognition for arrangements that include software elements was issued. This update requires tangible products that contain software and non-software elements that work together to deliver the products’ essential functionality to be evaluated under the accounting standard regarding multiple deliverable arrangements. This standard update is effective January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. We are currently evaluating the impact that this standard update will have on our consolidated financial statements.

Cautionary Statement Concerning Forward-Looking Statements

In this Quarterly Report on Form 10-Q we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning 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. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

The following important factors, along with those discussed elsewhere in this Quarterly Report and those disclosed in Part 1, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009, could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements:

•

the effects of adverse conditions in the U.S. and international economies;

•

the effects of competition in our markets;

•

materially adverse changes in labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments;

•

the effect of material changes in available technology;

•

any disruption of our suppliers’ provisioning of critical products or services;

•

significant increases in benefit plan costs or lower investment returns on plan assets;

•

the impact of natural or man-made disasters or existing or future litigation and any resulting financial impact not covered by insurance;

•

technology substitution;

•

an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing;

•

any changes in the regulatory environments in which we operate, including any loss of or inability to renew wireless licenses, and the final results of federal and state regulatory proceedings and judicial review of those results;

•

the timing, scope and financial impact of our deployment of fiber-to-the-premises broadband technology;

•

changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings;

•

our ability to complete acquisitions and dispositions;

•

our ability to successfully integrate Alltel Corporation into Verizon Wireless’s business and achieve anticipated benefits of the acquisition; and

•

the inability to implement our business strategies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information relating to market risk is included in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations under the caption “Market Risk.”

Item 4. Controls and Procedures

Our chief executive officer and chief financial officer have evaluated the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934), as of the end of the period covered by this quarterly report. Based on this evaluation, our chief executive officer and chief financial officer have concluded that the registrant’s disclosure controls and procedures were effective as of March 31, 2010.

There were no changes in the registrant’s internal control over financial reporting during the first quarter of 2010 that have materially affected, or are reasonably likely to materially affect the registrant’s internal control over financial reporting.

Part II - Other Information

Item 1. Legal Proceedings

Verizon, and a number of other telecommunications companies, have been the subject of multiple class action suits concerning its alleged participation in intelligence-gathering activities allegedly carried out by the federal government, at the direction of the President of the United States, as part of the government’s post-September 11 program to prevent terrorist attacks. Plaintiffs generally allege that Verizon has participated by permitting the government to gain access to the content of its subscribers’ telephone calls and/or records concerning those calls and that such action violates federal and/or state constitutional and statutory law. Relief sought in the cases includes injunctive relief, attorneys’ fees, and statutory and punitive damages. On August 9, 2006, the Judicial Panel on Multidistrict Litigation (“Panel”) ordered that these actions be transferred, consolidated and coordinated in the U.S. District Court for the Northern District of California. The Panel subsequently ordered that a number of “tag along” actions also be transferred to the Northern District of California. Verizon believes that these lawsuits are without merit. On July 10, 2008, the President signed into law the FISA Amendments Act of 2008, which provides for dismissal of these suits by the court based on submission by the Attorney General of the United States of a specified certification. On September 19, 2008, the Attorney General made such a submission in the consolidated proceedings. Based on this submission, the court ordered dismissal of the complaints on June 3, 2009. Plaintiffs have appealed this dismissal, and the appeal remains pending in the United States Court of Appeals for the Ninth Circuit.

Item 1A. Risk Factors

There have been no material changes to our risk factors as previously disclosed in Part I, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2009, except as set forth below.

Increases in costs for pension benefits and active and retiree healthcare benefits may reduce our profitability and increase our funding commitments.

With approximately 217,100 employees and approximately 214,300 retirees as of March 31, 2010 participating in Verizon’s benefit plans, the costs of pension benefits and active and retiree healthcare benefits have a significant impact on our profitability. Our costs of maintaining these plans, and the future funding requirements for these plans, are affected by several factors including the recently enacted Patient Protection and Affordable Care Act and the Health Care Education Reconciliation Act of 2010, the enactment of any similar health care reform measures at the state level, increases in healthcare costs, decreases in investment returns on funds held by our pension and other benefit plan trusts and changes in the discount rate used to calculate pension and other postretirement expenses. If we are unable to limit future increases in the costs of our benefit plans, those costs could reduce our profitability and increase our funding commitments.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Verizon did not repurchase any shares of Verizon common stock during the three months ended March 31, 2010. At March 31, 2010, the maximum number of shares that may be purchased by Verizon or any “affiliated purchaser” of Verizon, as defined by Rule 10b-18(a)(3) under the Exchange Act, under our share buyback program was 60,015,938.

Item 6. Exhibits


Exhibit Number

10a		Verizon Communications Inc. Long-Term Incentive Plan - Performance Stock Unit Agreement 2010-12 Award Cycle.

10b		Form of Addendum to Verizon Communications Inc. Long-Term Incentive Plan - Performance Stock Unit Agreement.

10c		Verizon Communications Inc. Long-Term Incentive Plan - Restricted Stock Unit Agreement 2010-12 Award Cycle.

10d		Verizon Senior Manager Severance Plan.

10e		Form of Amendment to Employment Agreement between Verizon and Band 1 Senior Manager.

12		Computation of Ratio of Earnings to Fixed Charges.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.PRE		XBRL Taxonomy Presentation Linkbase Document.

101.CAL		XBRL Taxonomy Calculation Linkbase Document.

101.LAB		XBRL Taxonomy Label Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

Signature

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


	VERIZON COMMUNICATIONS INC.
Date: April 28, 2010
	By	/s/ Robert J. Barish
		Robert J. Barish
		Senior Vice President and Controller
		(Principal Accounting Officer)

Exhibit Index


Exhibit Number		Description

10a		Verizon Communications Inc. Long-Term Incentive Plan - Performance Stock Unit Agreement 2010-12 Award Cycle.

10b		Form of Addendum to Verizon Communications Inc. Long-Term Incentive Plan - Performance Stock Unit Agreement.

10c		Verizon Communications Inc. Long-Term Incentive Plan - Restricted Stock Unit Agreement 2010-12 Award Cycle.

10d		Verizon Senior Manager Severance Plan.

10e		Form of Amendment to Employment Agreement between Verizon and Band 1 Senior Manager.

12		Computation of Ratio of Earnings to Fixed Charges.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.PRE		XBRL Taxonomy Presentation Linkbase Document.

101.CAL		XBRL Taxonomy Calculation Linkbase Document.

101.LAB		XBRL Taxonomy Label Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

Exhibit 10a

VERIZON COMMUNICATIONS INC. LONG-TERM INCENTIVE PLAN

PERFORMANCE STOCK UNIT AGREEMENT

2010–12 AWARD CYCLE

AGREEMENT between Verizon Communications Inc. (“Verizon” or the “Company”) and you (the “Participant”) and your heirs and beneficiaries.

1. Purpose of Agreement. The purpose of this Agreement is to provide a grant of performance stock units (“PSUs”) to the Participant.

2. Agreement. This Agreement is entered into pursuant to the 2009 Verizon Communications Inc. Long-Term Incentive Plan (the “Plan”), and evidences the grant of a performance stock unit award in the form of PSUs pursuant to the Plan. In consideration of the benefits described in this Agreement, which Participant acknowledges are good, valuable and sufficient consideration, the Participant agrees to comply with the terms and conditions of this Agreement, including the participant’s obligations and restrictions set forth in Exhibit A to this Agreement (the “Participant’s Obligations”), which are incorporated into and are a part of the Agreement. The PSUs and this Agreement are subject to the terms and provisions of the Plan. By executing this Agreement, the Participant agrees to be bound by the terms and provisions of the Plan and this Agreement, including but not limited to the Participant’s Obligations. In addition, the Participant agrees to be bound by the actions of the Human Resources Committee of Verizon Communication’s Board of Directors or any successor thereto (the “Committee”), and any designee of the Committee (to the extent that such actions are exercised in accordance with the terms of the Plan and this Agreement). If there is a conflict between the terms of the Plan and the terms of this Agreement, the terms of this Agreement shall control.

3. Contingency. The grant of PSUs is contingent on the Participant’s timely acceptance of this Agreement and satisfaction of the other conditions contained in it. Acceptance shall be through execution of the Agreement as set forth in paragraph 21. If the Participant does not accept this Agreement by the close of business on May 15, 2010, the Participant shall not be entitled to this grant of PSUs regardless of the extent to which the vesting requirements in paragraph 5 (“Vesting”) are satisfied. In addition, to the extent a Participant is on a Company approved leave of absence, including but not limited to short-term disability leave, at the time this grant of PSUs is accepted by the Participant, he or she will not be entitled to this grant of PSUs until such time as he or she returns to active employment with Verizon or a Related Company (as defined in paragraph 13).

4. Number of Units. The Participant is granted the number of PSUs as specified in the Participant’s account under the 2010 PSU grant, administered by Fidelity Investments or any successor thereto (“Fidelity”). A PSU is a hypothetical share of Verizon’s common stock. The value of a PSU on any given date shall be equal to the closing price of Verizon’s common stock on the New York Stock Exchange (“NYSE”) as of such date. A Dividend Equivalent Unit (“DEU”) or fraction thereof shall be added to each PSU each time that a dividend is paid on Verizon’s common stock. The amount of each DEU shall be equal to the corresponding dividend paid on a share of Verizon’s common stock. The DEU shall be converted into PSUs or fractions thereof based upon the closing price of Verizon’s common stock traded on the NYSE on the dividend payment date of each declared dividend on Verizon’s common stock, and such PSUs or fractions thereof shall be added to the Participant’s PSU balance. To the extent that Fidelity or the Company makes an error, including but not limited to an administrative error with respect to the number or value of the PSUs granted to the Participant under this Agreement, the DEUs credited to the Participant’s account or the amount of the final award payment, the Company or Fidelity specifically reserves the right to correct such error at any time and the Participant agrees that he or she shall be legally bound by any corrective action taken by the Company or Fidelity.

5. Vesting.

(a) General. The Participant shall vest in the PSUs to the extent provided in paragraph 5(b) (“Performance Requirement”) only if the Participant satisfies the requirements of paragraph 5(c) (“Three-Year Continuous Employment Requirement”), except as otherwise provided in paragraph 7 (“Early Cancellation/Accelerated Vesting of PSUs”).

(b) Performance Requirement.

(1) General. The PSUs shall become payable based on the total shareholder return (“TSR”) of Verizon’s common stock during the three-year period beginning January 1, 2010, and ending at the close of business on December 31, 2012 (the “Award Cycle”), relative to the TSR of the companies (other than Verizon) in the Dow Jones Industrial Average (Dow) Index and also including the four largest industry companies that are not in the Dow during the same three-year period. The companies (other than Verizon) in the Dow, together with the four largest industry companies that are not in the Dow, are collectively referred to as the “Related Dow Peers.” No PSUs shall become payable unless the Committee determines that certain threshold performance requirements have been satisfied. The formula for determining the total number of PSUs that may become payable (the “Payout Formula”) will equal the number of PSUs that the Participant is granted as described in paragraph 4 (plus any additional PSUs added with respect to DEUs credited over the Award Cycle) times the Verizon Vested Percentage (as defined below). For example, if (a) the Participant is granted 1,000 PSUs, and (b) those PSUs are credited with an additional 200 PSUs as a result of DEUs paid over the Award Cycle, and (c) the Verizon Vested Percentage is 75%, the Participant will vest in (1,000 PSUs + 200 PSUs from DEUs) times 75%, or 900 PSUs, which shall be payable in cash as described in paragraph 6.

(2) Definitions. For purposes of the performance requirement and Payout Formula set forth in paragraph 5(b)(1)—

(i) “Verizon Vested Percentage” shall be an amount (between 0% and 200%), which is based on Verizon’s Relative TSR Position, as provided in the following table:

Verizon Relative TSR Position

Verizon Vested Percentage

1 through 4

200%

5 through 8

175%

9 through 12

150%

13 through 16

100%

17 through 21

75%

22 through 25

50%

26 through 34

(ii) “Verizon Relative TSR Position” shall be based upon Verizon’s rank during the Award Cycle among the Related Dow Peers in terms of TSR. The Committee retains the discretion to determine the Verizon Vested Percentage and the Verizon Relative TSR Position for any period and the Committee also retains the discretion to substitute, add or eliminate the additional industry companies that are not in the Dow but are included in the Related Dow Peers. The Committee will make adjustments for any changes made to the Dow during the Award Cycle.

(iii) “TSR” or “Total Shareholder Return” shall mean the change in the price of a share of common stock from the beginning of a period until the end of such period (the “Measurement Period”), adjusted to reflect the reinvestment of dividends (if any) and as may be necessary to take into account stock splits or other events similar to those described in Section 4.3 of the Plan. Measurement Periods may vary between and/or during an Award Cycle, and may or may not be coextensive with the Award Cycle. The Committee retains the discretion to determine and to change the Measurement Periods which shall be used to calculate TSRs for the Award Cycle, both before and during the Award Cycle.

(c) Three-Year Continuous Employment Requirement. Except as otherwise determined by the Committee, or except as otherwise provided in paragraph 7(b) or 7(c), the PSUs shall vest only if the Participant is continuously employed by the Company or a Related Company (as defined in paragraph 13) from the date the PSUs are granted through the end of the Award Cycle.

(d) Transfer. Transfer of employment from Verizon to a Related Company, from a Related Company to Verizon, or from one Related Company to another Related Company shall not constitute a separation from employment hereunder, and service with a Related Company shall be treated as service with the Company for purposes of the three-year continuous employment requirement in paragraph 5(c). If the Participant transfers employment pursuant to this paragraph 5(d), the Participant will still be required to satisfy the definition of “Retire” under paragraph 7 of this Agreement in order to be eligible for the accelerated vesting provisions in connection with a retirement.

6. Payment. All payments under this Agreement shall be made in cash. As soon as practicable after the end of the Award Cycle (but in no event later than March 15, 2013), the value of the vested PSUs (minus any withholding for taxes) shall be paid to the Participant (subject, however, to any deferral application that the Participant has made under the deferral plan (if any) then available to the Participant). The amount of cash that shall be paid (plus withholding for taxes and any applicable deferral amount) shall equal the number of vested PSUs (as provided in paragraph 5(b)) times the closing price of Verizon’s common stock on the NYSE as of the last trading day in the Award Cycle. If the Participant dies before any payment due hereunder is made, such payment shall be made to the Participant’s beneficiary, as designated under paragraph 11. Once a payment has been made with respect to a PSU, the PSU shall be canceled; however, all other terms of the Agreement, including but not limited to the Participant’s Obligations, shall remain in effect.

7. Early Cancellation/Accelerated Vesting of PSUs. Subject to the provisions of paragraph 5, PSUs may vest or be forfeited before vesting as follows:

(a) Retirement Before July 1, 2010, Voluntary Separation On or Before December 31, 2012 or Discharge for Cause On or Before December 31, 2012.

(1) If the Participant (i) Retires (as defined in paragraph 7(b)(4)) before July 1, 2010, (ii) quits on or before December 31, 2012, (iii) is terminated for Cause (as defined below) on or before December 31, 2012 (even if otherwise eligible to Retire), or (iv) separates from employment on or before December 31, 2012 under circumstances not described in paragraph 7(b), all then-unvested PSUs shall be canceled immediately and shall not be payable.

determined by the Executive Vice President – Human Resources of Verizon (or his or her designee) in his or her discretion, or (ii) commission of any felony of which the Participant is finally adjudged guilty by a court of competent jurisdiction.

(b) Retirement After June 30, 2010, Involuntary Termination Without Cause On or Before December 31, 2012, Termination Due to Death or Disability On or Before December 31, 2012.

(1) This paragraph 7(b) shall apply if the Participant:

(i) Retires (as defined below) after June 30, 2010, or

(ii) Separates from employment by reason of an involuntary termination without Cause (as determined by the Executive Vice President – Human Resources of Verizon (or his or her designee)), death, or disability (as defined below) on or before the last day of the Award Cycle. “Disability” shall mean the total and permanent disability of the Participant as defined by, or determined under, the Company’s long-term disability benefit plan.

(2) If the Participant separates from employment prior to the end of the Award Cycle under circumstances described in paragraph 7(b)(1), the Participant’s then-unvested PSUs shall be subject to the vesting provisions set forth in paragraph 5(a) (without prorating the award), except that the three-year continuous employment requirement set forth in paragraph 5(c) shall not apply, provided that the Participant has not and does not commit a material breach of any of the Participant’s Obligations and provided that the Participant executes, within the time prescribed by Verizon, a release satisfactory to Verizon waiving any claims he or she may have against Verizon and any Related Company.

(3) Any PSUs that vest pursuant to paragraph 7(b)(2) shall be payable as soon as practicable after the end of the Award Cycle (but in no event later than March 15, 2013).

(4) For purposes of this Agreement, “Retire” means (i) to retire after having attained at least 15 years of vesting service (as defined under the applicable Verizon tax-qualified 401(k) savings plan) and a combination of age and years of vesting service that equals or exceeds 75 points, or (ii) retirement under any other circumstances determined in writing by the Executive Vice President – Human Resources of Verizon (or his or her designee), provided that, in the case of either (i) or (ii) in this paragraph, the retirement was not occasioned by a discharge for Cause.

(c) Change in Control. If a Participant is involuntarily terminated without Cause within twelve (12) months following the occurrence of a Change in Control of Verizon (as defined in the Plan), all then-unvested PSUs shall vest and become payable (without prorating the award) by applying a Verizon Vested Percentage of no less than 100% to all then-unvested PSUs without regard to the performance requirement in paragraph 5(b) or the three-year continuous employment requirement in paragraph 5(c); however, all other terms of the Agreement, including but not limited to the Participant’s Obligations, shall remain in effect. A Change in Control or an involuntary termination without Cause that occurs after the end of the Award Cycle shall have no effect on whether any PSUs vest or become payable under this paragraph 7(c). All payments provided in this paragraph 7(c) shall be made at their regularly scheduled time as specified in paragraph 6.

(d) Vesting Schedule. Except and to the extent provided in paragraphs 7(b) and (c), nothing in this paragraph 7 shall alter the vesting schedule prescribed by paragraph 5.

8. Shareholder Rights. The Participant shall have no rights as a shareholder with respect to the PSUs. Except as provided in the Plan or in this Agreement, no adjustment shall be made for dividends or other rights for which the record date occurs while the PSUs are outstanding.

9. Amendment of Agreement. Except to the extent required by law or specifically contemplated under this Agreement, neither the Committee nor the Executive Vice President – Human Resources of Verizon (or his or her designee) may, without the written consent of the Participant, change any term, condition or provision affecting the PSUs if the change would have a material adverse effect upon the PSUs or the Participant’s rights thereto. Nothing in the preceding sentence shall preclude the Committee or the Executive Vice President – Human Resources of Verizon (or his or her designee) from exercising administrative discretion with respect to the Plan or this Agreement, and the exercise of such discretion shall be final, conclusive and binding. This discretion includes, but is not limited to, corrections of any errors, including but not limited to any administrative errors, determining the total percentage of PSUs that become payable, and determining whether the Participant has been discharged for Cause, has a disability, has Retired, has breached any of the Participant’s Obligations set forth in Exhibit A or has satisfied the three-year continuous employment requirement.

10. Assignment. The PSUs shall not be assigned, pledged or transferred except by will or by the laws of descent and distribution. During the Participant’s lifetime, the PSUs may be deferred only by the Participant or by the Participant’s guardian or legal representative in accordance with the deferral regulations, if any, established by the Company.

11. Beneficiary. The Participant shall designate a beneficiary in writing and in such manner as is acceptable to the Executive Vice President – Human Resources of Verizon (or his or her designee). If the Participant fails to so designate a beneficiary, or if no such designated beneficiary survives the Participant, the Participant’s beneficiary shall be the Participant’s estate.

12. Other Plans and Agreements. Any payment received (or deferred) by the Participant pursuant to this Agreement shall not be taken into account as compensation in the determination of the Participant’s benefits under any pension, savings, life insurance, severance or other benefit plan maintained by Verizon or a Related Company. The Participant acknowledges that this Agreement or any prior PSU agreement shall not entitle the Participant to any other benefits under the Plan or any other plans maintained by the Company or Related Company.

13. Company and Related Company. For purposes of this Agreement, “Company” means Verizon Communications Inc. “Related Company” means (a) any corporation, partnership, joint venture, or other entity in which Verizon Communications Inc. holds a direct or indirect ownership or proprietary interest of 50 percent or more, or (b) any corporation, partnership, joint venture, or other entity in which Verizon Communications Inc. holds a direct or indirect ownership or other proprietary interest of less than 50 percent but which, in the discretion of the Committee, is treated as a Related Company for purposes of this Agreement.

14. Employment Status. The grant of the PSUs shall not be deemed to constitute a contract of employment for a particular term between the Company or a Related Company and the Participant, nor shall it constitute a right to remain in the employ of any such Company or Related Company.

15. Withholding. The Participant acknowledges that he or she shall be responsible for any taxes that arise in connection with this grant of PSUs, and the Company shall make such arrangements as it deems necessary for withholding of any taxes it determines are required to be withheld pursuant to any applicable law or regulation.

16. Securities Laws. The Company shall not be required to make payment with respect to any shares of common stock prior to the admission of such shares to listing on any stock exchange on which the stock may then be listed and the completion of any registration or qualification of such shares under any federal or state law or rulings or regulations of any government body that the Company, in its discretion, determines to be necessary or advisable.

17. Committee Authority. The Committee shall have complete discretion in the exercise of its rights, powers, and duties under this Agreement. Any interpretation or construction of any provision of, and the determination of any question arising under, this Agreement shall be made by the Committee in its discretion, as described in paragraph 9. The Committee and the Audit Committee may designate any individual or individuals to perform any of its functions hereunder and utilize experts to assist in carrying out their duties hereunder.

18. Successors. This Agreement shall be binding upon, and inure to the benefit of, any successor or successors of the Company and the person or entity to whom the PSUs may have been transferred by will, the laws of descent and distribution, or beneficiary designation. All terms and conditions of this Agreement imposed upon the Participant shall, unless the context clearly indicates otherwise, be deemed, in the event of the Participant’s death, to refer to and be binding upon the Participant’s heirs and beneficiaries.

19. Construction. In the event that any provision of this Agreement is held invalid or unenforceable, such provision shall be considered separate and apart from the remainder of this Agreement, which shall remain in full force and effect. In the event that any provision, including any of the Participant’s Obligations, is held to be unenforceable for being unduly broad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision enforceable according to applicable law and shall be enforced as amended.

20. Defined Terms. Except where the context clearly indicates otherwise, all capitalized terms used herein shall have the definitions ascribed to them by the Plan, and the terms of the Plan shall apply where appropriate.

21. Execution of Agreement. The Participant shall indicate his or her consent and acknowledgment to the terms of this Agreement (including the Participant’s Obligations in Exhibit A) and the Plan by executing this Agreement pursuant to the instructions provided and otherwise shall comply with the requirements of paragraph 3. In addition, by consenting to the terms of this Agreement and the Participant’s Obligations, the Participant expressly agrees and acknowledges that Fidelity may deliver all documents, statements and notices associated with the Plan and this Agreement to the Participant in electronic form. The Participant and Verizon hereby expressly agree that the use of electronic media to indicate confirmation, consent, signature, acceptance, agreement and delivery shall be legally valid and have the same legal force and effect as if the Participant and Verizon executed this Agreement (including the Participant’s Obligations in Exhibit A) in paper form.

22. Confidentiality. Except to the extent otherwise required by law, the Participant shall not disclose, in whole or in part, any of the terms of this Agreement. This paragraph 22 does not prevent the Participant from disclosing the terms of this Agreement to the Participant’s spouse or beneficiary or to the Participant’s legal, tax, or financial adviser, provided that the Participant take all reasonable measures to assure that the individual to whom disclosure is made does not disclose the terms of this Agreement to a third party except as otherwise required by law.

23. Applicable Law. The validity, construction, interpretation and effect of this Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws provisions thereof.

24. Notice. Any notice to the Company provided for in this Agreement shall be addressed to the Company in care of the Executive Vice President – Human Resources of Verizon at 140 West Street, 29 ^th Floor, New York, New York 10007 and any notice to the Participant shall be addressed to the Participant at the current address shown on the payroll of the Company, or to such other address as the Participant may designate to the Company in writing. Any notice shall be delivered by hand, sent by telecopy, sent by overnight carrier, or enclosed in a properly sealed envelope as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

25. Dispute Resolution.

(a) General. Except as otherwise provided in paragraph 26 below, all disputes arising under or related to the Plan or this Agreement and all claims in which a Participant seeks damages or other relief that relate in any way to PSUs or other benefits of the Plan are subject to the dispute resolution procedure described below in this paragraph 25.

(i) For purposes of this Agreement, the term “Units Award Dispute” shall mean any claim against the Company or a Related Company, other than Employment Claims described in paragraph (a)(ii) below, regarding (A) the interpretation of the Plan or this Agreement, (B) any of the terms or conditions of the PSUs issued under this Agreement, or (C) allegations of entitlement to PSUs or additional PSUs, or any other benefits, under the Plan or this Agreement; provided, however, that any dispute relating to the Participant’s Obligations in Exhibit A or to the forfeiture of an award as a result of a breach of any of the Participant’s Obligations shall not be subject to the dispute resolution procedures provided for in this paragraph 25.

(ii) For purposes of this Agreement, the term “Units Damages Dispute” shall mean any claims between the Participant and the Company or a Related Company (or against the past or present directors, officers, employees, representatives, or agents of the Company or a Related Company, whether acting in their capacity as such or otherwise), that are related in any way to the Participant’s employment or former employment, including claims of alleged employment discrimination, wrongful termination, or violations of Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, 42 U.S.C. § 1981, the Fair Labor Standards Act, the Family Medical Leave Act, the Sarbanes-Oxley Act, or any other U.S. federal, state or local law, statute, regulation, or ordinance relating to employment or any common law theories of recovery relating to employment, such as breach of contract, tort, or public policy claims (“Employment Claims”), in which the damages or other relief sought relate in any way to PSUs or other benefits of the Plan or this Agreement.

full power, discretion, and authority to interpret the Plan and this Agreement and to decide all Plan Disputes brought under this Plan and Agreement. Determinations made by the EB Committee shall be final, conclusive and binding, subject only to review by arbitration pursuant to paragraph (c) below under the arbitrary and capricious standard of review.

(c) Arbitration. All appeals from determinations by the EB Committee as described in paragraph (b) above, and any Units Damages Dispute, shall be fully and finally settled by arbitration administered by the American Arbitration Association (“AAA”) on an individual basis (and not on a collective or class action basis) before a single arbitrator pursuant to the AAA’s Commercial Arbitration Rules in effect at the time any such arbitration is initiated. Any such arbitration must be initiated in writing pursuant to the aforesaid rules of the AAA no later than one year from the date that the claim accrues, except where a longer limitations period is required by applicable law. Decisions about the applicability of the limitations period contained herein shall be made by the arbitrator. A copy of the AAA’s Commercial Arbitration Rules may be obtained from Human Resources. The Participant agrees that the arbitration shall be held at the office of the AAA nearest the place of the Participant’s most recent employment by the Company or a Related Company, unless the parties agree in writing to a different location. All claims by the Company or a Related Company against the Participant, except for breaches of any of the Participant’s Obligations in Exhibit A hereto, may also be raised in such arbitration proceedings.

(i) The arbitrator shall have the authority to determine whether any dispute submitted for arbitration hereunder is arbitrable. The arbitrator shall decide all issues submitted for arbitration according to the terms of the Plan, this Agreement, existing Company policy, and applicable substantive New York State and U.S. federal law and shall have the authority to award any remedy or relief permitted by such laws. The final decision of the EB Committee with respect to a Plan Dispute shall be upheld unless such decision was arbitrary or capricious. The decision of the arbitrator shall be final, conclusive, not subject to appeal, and binding and enforceable in any applicable court.

(ii) The Participant understands and agrees that, pursuant to this Agreement, both the Participant and the Company or a Related Company waive any right to sue each other in a court of law or equity, to have a trial by jury, or to resolve disputes on a collective or class basis, and that the sole forum available for the resolution of Units Award Disputes and Units Damages Disputes is arbitration as provided in this paragraph 25. If an arbitrator or court finds that the arbitration provisions of this Agreement are not enforceable, both Participant and the Company or a Related Company understand and agree to waive their right to trial by jury of any Units Award Dispute or Units Damages Dispute. This dispute resolution procedure shall not prevent either the Participant or the Company or a Related Company from commencing an action in any court of competent jurisdiction for the purpose of obtaining injunctive relief to prevent irreparable harm pending and in aid of arbitration hereunder; in such event, both the Participant and the Company or a Related Company agree that the party who commences the action may proceed without necessity of posting a bond.

(iii) In consideration of the Participant’s agreement in paragraph (ii) above, the Company or a Related Company will pay all filing, administrative and arbitrator’s fees incurred in connection with the arbitration proceedings. If the AAA requires the Participant to pay the initial filing fee, the Company or a Related Company will reimburse the Participant for that fee. All other fees incurred in connection with the arbitration proceedings,

including but not limited to each party’s attorney’s fees, will be the responsibility of such party.

(iv) The parties intend that the arbitration procedure to which they hereby agree shall be the exclusive means for resolving all Units Award Disputes (subject to the mandatory EB Committee procedure provided for in paragraph 25(b) above) and Units Damages Disputes. Their agreement in this regard shall be interpreted as broadly and inclusively as reason permits to realize that intent.

(v) The Federal Arbitration Act (“FAA”) shall govern the enforceability of this paragraph 25. If for any reason the FAA is held not to apply, or if application of the FAA requires consideration of state law in any dispute arising under this Agreement or subject to this dispute resolution provision, the laws of the State of New York shall apply without giving effect to the conflicts of laws provisions thereof.

(vi) To the extent an arbitrator determines that the Participant was not terminated for Cause and is entitled to the PSUs or any other benefits under the Plan pursuant to the provisions applicable to an involuntary termination without Cause, the Participant’s obligation to execute a release satisfactory to Verizon as provided under paragraph 7(b)(2) shall remain applicable in order to receive the benefit of any PSUs pursuant to this Agreement.

26. Additional Remedies. Notwithstanding the dispute resolution procedures, including arbitration, of paragraph 25 of this Agreement, and in addition to any other rights or remedies, whether legal, equitable, or otherwise, that each of the parties to this Agreement may have (including the right of the Company to terminate the Participant for Cause or to involuntarily terminate the Participant without Cause), the Participant acknowledges that—

(a) The Participant’s Obligations in Exhibit A to this Agreement are essential to the continued goodwill and profitability of the Company and any Related Company;

(b) The Participant has broad-based skills that will serve as the basis for other employment opportunities that are not prohibited by the Participant’s Obligations in Exhibit A;

(c) When the Participant’s employment with the Company or any Related Company terminates, the Participant shall be able to earn a livelihood without violating any of the Participant’s Obligations in Exhibit A;

(d) Irreparable damage to the Company or any Related Company shall result in the event that the Participant’s Obligations in Exhibit A are not specifically enforced and that monetary damages will not adequately protect the Company and any Related Company from a breach of these Participant’s Obligations;

(e) If any dispute arises concerning the violation or anticipated or threatened violation by the Participant of any of the Participant’s Obligations in Exhibit A, an injunction may be issued restraining such violation pending the determination of such controversy, and no bond or other security shall be required in connection therewith;

(f) The Participant’s Obligations in Exhibit A shall continue to apply after any expiration, termination, or cancellation of this Agreement;

(g) The Participant’s breach of any of the Participant’s Obligations in Exhibit A shall result in the Participant’s immediate forfeiture of all rights and benefits, including all PSUs and DEUs, under this Agreement; and

(h) All disputes relating to the Participant’s Obligations in Exhibit A, including their interpretation and enforceability and any damages (including but not limited to damages resulting in the forfeiture of an award or benefits under this Agreement) that may result from the breach of such Participant’s Obligations shall not be subject to the dispute resolution procedures, including arbitration, of paragraph 25 of this Agreement, but shall instead be determined in a court of competent jurisdiction.

Exhibit A - Participant’s Obligations

As part of the Agreement to which this Exhibit A is attached, you, the Participant, agree to the following obligations:

1. Noncompetition —

(a) Prohibited Conduct — During the period of your employment with the Company or any Related Company, and for a period ending twelve (12) months following a termination of your employment for any reason with the Company or any Related Company, you shall not, without the prior written consent of the Executive Vice President – Human Resources of Verizon (or his or her designee):

(1) personally engage in Competitive Activities (as defined below); or

(2) work for, own, manage, operate, control, or participate in the ownership, management, operation, or control of, or provide consulting or advisory services to, any person, partnership, firm, corporation, institution or other entity engaged in Competitive Activities, or any company or person affiliated with such person, partnership, firm, corporation, institution or other entity engaged in Competitive Activities; provided that your purchase or holding, for investment purposes, of securities of a publicly traded company shall not constitute “ownership” or “participation in the ownership” for purposes of this paragraph so long as your equity interest in any such company is less than a controlling interest;

provided that this paragraph (a) shall not prohibit you from (i) being employed by, or providing services to, a consulting firm, provided that you do not personally engage in Competitive Activities or provide consulting or advisory services to any person, partnership, firm, corporation, institution or other entity engaged in Competitive Activities, or any person or entity affiliated with such person, partnership, firm, corporation, institution or other entity engaged in Competitive Activities, or (ii) engaging in the practice of law as an in-house counsel, sole practitioner or as a partner in (or as an employee of or counsel to) a corporation or law firm in accordance with applicable legal and professional standards. Exception (ii), however, does not apply to any Participant that may be engaging in Competitive Activities or providing services to any person, partnership, firm, corporation, institution or other entity engaged in Competitive Activities, wherein such engagement or services being provided are not solely the practice of law.

(b) Competitive Activities — For purposes of the Agreement, to which this Exhibit A is attached, “Competitive Activities” means any activities relating to products or services of the same or similar type as the products or services (1) which were or are sold (or, pursuant to an existing business plan, will be sold) to paying customers of the Company or any Related Company, and (2) for which you have responsibility or any involvement to plan, develop, manage, market, oversee or perform, or had any such responsibility or involvement within your most recent 24 months of employment with the Company or any Related Company. Notwithstanding the previous sentence, an activity shall not be treated as a Competitive Activity if the geographic marketing area of such same or similar products or services does not overlap with the geographic marketing area for the applicable products and services of the Company or any Related Company.

employment for any reason with the Company or any Related Company, you shall not, without the prior written consent of the Executive Vice President – Human Resources of Verizon (or his or her designee):

(a) recruit, induce or solicit, directly or indirectly, any employee of the Company or Related Company for employment or for retention as a consultant or service provider to any person or entity;

(b) hire or participate (with another person or entity) in the process of recruiting, soliciting or hiring, directly or indirectly, (other than for the Company or any Related Company) any person who is then an employee of the Company or any Related Company, or provide, directly or indirectly, names or other information about any employees of the Company or Related Company to any person or entity (other than to the Company or any Related Company under circumstances that could lead to the use of any such information for purposes of recruiting, soliciting or hiring any such employee for any person or entity;

(c) interfere, directly or indirectly, with any relationship of the Company or any Related Company with any of its employees, agents, or representatives;

(d) solicit or induce, or in any manner attempt to solicit or induce, directly or indirectly, any client, customer, or prospect of the Company or any Related Company (1) to cease being, or not to become, a customer of the Company or any Related Company, or (2) to divert any business of such customer or prospect from the Company or any Related Company; or

(e) otherwise interfere with, disrupt, or attempt to interfere with or disrupt, directly or indirectly, the relationship, contractual or otherwise, between the Company or any Related Company and any of its customers, clients, prospects, suppliers, consultants, employees, agents, or representatives.

3. Effect of a Material Restatement of Financial Results — Notwithstanding anything in this Agreement to the contrary, you agree that, with respect to all PSUs granted to you on or after January 1, 2007 and all short-term incentive awards made to you on or after January 1, 2007, to the extent the Company or any Related Company is required to materially restate any financial results based upon your willful misconduct or gross negligence while employed by the Company or any Related Company (and where such restatement would have resulted in a lower payment being made to you), you will be required to repay all previously paid or deferred (i) PSUs and (ii) short-term incentive awards that were provided to you during the performance periods that are the subject of the restated financial results, plus a reasonable rate of interest. For purposes of this paragraph, “willful misconduct” and “gross negligence” shall be as determined by the Committee. The Audit Committee of the Verizon Board of Directors shall determine whether a material restatement of financial results has occurred. If you do not repay the entire amount required under this paragraph, the Company may, to the extent permitted by applicable law, offset your obligation to repay against any source of income available to it, including but not limited to any money you may have in your nonqualified deferral accounts.

4. Return Of Company Property; Ownership of Intellectual Property Rights — You agree that on or before termination of your employment for any reason with the Company or any Related Company, you shall return to the Company all property owned by the Company or any Related Company or in which the Company or any Related Company has an interest or to which the Company or any Related Company has any obligation, including files, documents, data, records and any other non-public information (whether on paper or in tapes, disks, memory devices, or other machine-readable form), office equipment, credit cards, and employee identification cards. You acknowledge that the Company (or, as applicable, a Related Company) is the rightful owner of, and you hereby do grant and assign, all right, title and interest in and to any programs, ideas, inventions, discoveries, works of authorship, data, information, patentable, unpatentable, or copyrightable material, or trademarks that you may have originated or developed, or

assisted or participated in originating or developing, during your period of employment with the Company or a Related Company, including all intellectual property rights in or based on the foregoing, where any such origination or development (a) involved any use of Company or Related Company time, information or resources, (b) was made in the exercise of your duties or responsibilities for or on behalf of the Company or a Related Company, or (c) was related to (i) the Company’s or a Related Company’s past, present or future business, or (ii) the Company’s or a Related Company’s actual or demonstrably anticipated research, development or procurement activities. You shall at all times, both before and after termination of your employment, cooperate with the Company (or, as applicable, any Related Company) in executing and delivering documents requested by the Company or a Related Company, and taking any other actions, that are necessary or requested by the Company or a Related Company to assist the Company or any Related Company in patenting, copyrighting, protecting, registering, or enforcing any programs, ideas, inventions, discoveries, works of authorship, data, information, patentable, unpatentable or copyrightable material, trademarks or other intellectual property rights, and to vest title thereto solely in the Company (or, as applicable, a Related Company).

5. Proprietary And Confidential Information — You shall at all times, including after any termination of your employment with the Company or any Related Company, preserve the confidentiality of all Proprietary Information (defined below) and trade secrets of the Company or any Related Company, and you shall not use for the benefit of yourself or any person, other than the Company or a Related Company, or disclose to any person, except and to the extent that disclosure of such information is legally required, any Proprietary Information or trade secrets of the Company or any Related Company. “Proprietary Information” means any information or data related to the Company or any Related Company, including information entrusted to the Company or a Related Company by others, which has not been fully disclosed to the public by the Company or a Related Company, which is treated as confidential or otherwise protected within the Company or any Related Company or is of value to competitors, such as strategic or tactical business plans; undisclosed business, operational or financial data; ideas, processes, methods, techniques, systems, models, devices, programs, computer software, or related information; documents relating to regulatory matters or correspondence with governmental entities; information concerning any past, pending, or threatened legal dispute; pricing or cost data; the identity, reports or analyses of business prospects; business transactions that are contemplated or planned; research data; personnel information or data; identities of suppliers to the Company or any Related Company or users or purchasers of the Company’s or Related Company’s products or services; the Agreement to which this Exhibit A is attached; and any other non-public information pertaining to or known by the Company or a Related Company, including confidential or non-public information of a third party that you know or should know the Company or a Related Company is obligated to protect.

6. Definitions — Except where clearly provided to the contrary or as otherwise defined in this Exhibit A, all capitalized terms used in this Exhibit A shall have the definitions given to those terms in the Agreement to which this Exhibit A is attached.

7. Agreement to Participant’s Obligations. You shall indicate your agreement to these Participant’s Obligations in accordance with the instructions provided in the Agreement, and your acceptance of the Agreement shall include your acceptance of these Participant’s Obligations. As stated in paragraph 21 of the Agreement, you and Verizon hereby expressly agree that the use of electronic media to indicate confirmation, consent, signature, acceptance, agreement and delivery shall be legally valid and have the same legal force and effect as if you and Verizon executed these Participant’s Obligations in paper form.

Exhibit 10b

FORM OF ADDENDUM TO

VERIZON COMMUNICATIONS INC. LONG-TERM INCENTIVE PLAN

PERFORMANCE STOCK UNIT AGREEMENT

This is an addendum to the Performance Stock Unit Agreement (the “Agreement”) entered into between Verizon Communications Inc. (“Verizon” or the “Company”) and (the “Participant”). The effective date of this addendum is , and it shall remain in effect through .

1. Purpose. The purpose of this addendum is to describe the terms of an arrangement between the Participant and the Company wherein the Participant can earn a long-term incentive payout under the Agreement, based on the extent to which the Company achieves certain strategic initiatives (as defined in paragraph 3 below) during the Award Cycle. Except as modified by this addendum, all of the terms and conditions of the Agreement shall remain in effect.

2. Payment. Subject to the limitation set forth in paragraph 4 below, the Committee shall have the sole discretion to determine the size of any additional payment pursuant to this addendum, based on the Company’s achievement of the strategic initiatives referred to in paragraph 3 below. This addendum and any payment made in accordance with this addendum are not intended to comply with the Performance-Based Exception to the tax deductibility limitation imposed by Code Section 162(m).

3. Achievement of Initiatives. The Committee shall have the sole discretion to determine whether the Participant is entitled to a payout pursuant to this addendum and the size of any such payout (subject to the limitations contained in paragraph 4 below), based on the Company’s achievement during the Award Cycle of certain strategic initiatives related to: (i) developing Verizon’s executive talent pool and preparing for Verizon’s succession plan; (ii) maintaining Verizon Wireless’ market leadership position; (iii) sustaining Verizon’s top line consolidated revenue growth at a level above Verizon’s industry peers; (iv) achieving FiOS platform customer growth of 50%; and (v) participating in and providing leadership to various industry forums and policy initiatives. No payment shall be made pursuant to this addendum unless the Committee determines that, at the end of the three-year Award Cycle specified in paragraph 5 of the Agreement, Verizon’s relative total shareholder return during the Award Cycle met the specific threshold performance requirement specified in said paragraph 5.

4. Aggregate Limitation. The amount of any payment made under paragraph 6 of the Agreement (including any amount attributable to stock appreciation and dividend equivalent units payable under the terms of the Agreement and disregarding any deferral election) plus the amount of any payment under this addendum (disregarding any deferral election) shall not exceed the amount that would be payable under the Agreement assuming that Verizon’s Vested Percentage under paragraph 5 of the Agreement was equal to 200%.

5. Payment. Any payment pursuant to this addendum shall be made in cash. As soon as practicable after the end of the calendar year (but no later than ), the Committee shall determine whether an amount is to be paid pursuant to this addendum and the amount of any such payment. Any such amount (minus any withholding for taxes) shall be paid to the Participant no later than (subject, however, to any valid deferral election that the Participant has made under the deferral plan (if any) then available to the Participant). If the Participant dies before any payment due hereunder is made, such payment shall be made to the Participant’s beneficiary.

6. Defined Terms. Except where the context clearly indicates otherwise, all capitalized terms used herein shall have the definitions ascribed to them by the Plan or the Agreement, and the terms of the Plan or Agreement shall apply where appropriate.

Exhibit 10c

VERIZON COMMUNICATIONS INC. LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

2010–12 AWARD CYCLE

AGREEMENT between Verizon Communications Inc. (“Verizon” or the “Company”) and you (the “Participant”) and your heirs and beneficiaries.

1. Purpose of Agreement. The purpose of this Agreement is to provide a grant of restricted stock units (“RSUs”) to the Participant.

2. Agreement. This Agreement is entered into pursuant to the 2009 Verizon Communications Inc. Long-Term Incentive Plan (the “Plan”), and evidences the grant of a restricted stock unit award in the form of RSUs pursuant to the Plan. In consideration of the benefits described in this Agreement, which Participant acknowledges are good, valuable and sufficient consideration, the Participant agrees to comply with the terms and conditions of this Agreement, including the participant’s obligations and restrictions set forth in Exhibit A to this Agreement (the “Participant’s Obligations”), which are incorporated into and are a part of the Agreement. The RSUs and this Agreement are subject to the terms and provisions of the Plan. By executing this Agreement, the Participant agrees to be bound by the terms and provisions of the Plan and this Agreement, including but not limited to the Participant’s Obligations. In addition, the Participant agrees to be bound by the actions of the Human Resources Committee of Verizon Communication’s Board of Directors or any successor thereto (the “Committee”), and any designee of the Committee (to the extent that such actions are exercised in accordance with the terms of the Plan and this Agreement). If there is a conflict between the terms of the Plan and the terms of this Agreement, the terms of this Agreement shall control.

3. Contingency. The grant of RSUs is contingent on the Participant’s timely acceptance of this Agreement and satisfaction of the other conditions contained in it. Acceptance shall be through execution of the Agreement as set forth in paragraph 21. If the Participant does not accept this Agreement by the close of business on May 15, 2010, the Participant shall not be entitled to this grant of RSUs regardless of the extent to which the vesting requirements in paragraph 5 (“Vesting”) are satisfied. In addition, to the extent a Participant is on a Company approved leave of absence, including but not limited to short-term disability leave, at the time this grant of RSUs is accepted by the Participant, he or she will not be entitled to this grant of RSUs until such time as he or she returns to active employment with Verizon or a Related Company (as defined in paragraph 13).

4. Number of Units. The Participant is granted the number of RSUs as specified in the Participant’s account under the 2010 RSU grant, administered by Fidelity Investments or any successor thereto (“Fidelity”). A RSU is a hypothetical share of Verizon’s common stock. The value of a RSU on any given date shall be equal to the closing price of Verizon’s common stock on the New York Stock Exchange (“NYSE”) as of such date. A Dividend Equivalent Unit (“DEU”) or fraction thereof shall be added to each RSU each time that a dividend is paid on Verizon’s common stock. The amount of each DEU shall be equal to the corresponding dividend paid on a share of Verizon’s common stock. The DEU shall be converted into RSUs or fractions thereof based upon the closing price of Verizon’s common stock traded on the NYSE on the dividend payment date of each declared dividend on Verizon’s common stock, and such RSUs or fractions thereof shall be added to the Participant’s RSU balance. To the extent that Fidelity or the Company makes an error, including but not limited to an administrative error with respect to the number or value of the RSUs granted to the Participant under this Agreement, the DEUs credited to the Participant’s account or the amount of the final award payment, the Company or Fidelity specifically reserves the right to correct such error at any time and the Participant agrees that he or she shall be legally bound by any corrective action taken by the Company or Fidelity.

5. Vesting.

(a) General. The Participant shall vest in the RSUs only if the Participant is continuously employed by the Company or a Related Company (as defined in paragraph 13) from the date the RSUs are granted through the end of the Award Cycle, except as otherwise provided in paragraph 7 (“Early Cancellation/Accelerated Vesting of RSUs”) or as otherwise provided by the Committee. For purposes of these RSUs, “Award Cycle” shall mean the three-year period beginning on January 1, 2010, and ending at the close of business on December 31, 2012.

(b) Transfer. Transfer of employment from Verizon to a Related Company, from a Related Company to Verizon, or from one Related Company to another Related Company shall not constitute a separation from employment hereunder, and service with a Related Company shall be treated as service with the Company for purposes of the three-year continuous employment requirement in paragraph 5(a). If the Participant transfers employment pursuant to this paragraph 5(b), the Participant will still be required to satisfy the definition of “Retire” under paragraph 7 of this Agreement in order to be eligible for the accelerated vesting provisions in connection with a retirement.

6. Payment. All payments under this Agreement shall be made in shares of Verizon common stock, except for any fractional shares, which shall be paid in cash. As soon as practicable after the end of the Award Cycle (but in no event later than March 15, 2013), the number of shares of the vested RSUs (minus any withholding for taxes) shall be paid to the Participant (subject, however, to any deferral application that the Participant has made under the deferral plan (if any) then available to the Participant). The number of shares that shall be paid (plus withholding for taxes and any applicable deferral amount) shall equal the number of vested RSUs. If the Participant dies before any payment due hereunder is made, such payment shall be made to the Participant’s beneficiary, as designated under paragraph 11. Once a payment has been made with respect to a RSU, the RSU shall be canceled; however, all other terms of the Agreement, including but not limited to the Participant’s Obligations, shall remain in effect.

7. Early Cancellation/Accelerated Vesting of RSUs. Subject to the provisions of paragraph 5, RSUs may vest or be forfeited before vesting as follows:

(a) Retirement Before July 1, 2010, Voluntary Separation On or Before December 31, 2012 or Discharge for Cause On or Before December 31, 2012.

(1) If the Participant (i) Retires (as defined in paragraph 7(b)(4)) before July 1, 2010, (ii) quits on or before December 31, 2012, (iii) is terminated for Cause (as defined below) on or before December 31, 2012 (even if otherwise eligible to Retire), or (iv) separates from employment on or before December 31, 2012 under circumstances not described in paragraph 7(b), all then-unvested RSUs shall be canceled immediately and shall not be payable.

(2) For purposes of this Agreement, “Cause” means (i) grossly incompetent performance or substantial or continuing inattention to or neglect of the duties and responsibilities assigned to the Participant; fraud, misappropriation or embezzlement; or a material breach of the Verizon Code of Conduct (as may be amended) or any of the Participant’s Obligations set forth in Exhibit A to this Agreement, all as determined by the Executive Vice President – Human Resources of Verizon (or his or her designee) in his or her discretion, or (ii) commission of any felony of which the Participant is finally adjudged guilty by a court of competent jurisdiction.

(b) Retirement After June 30, 2010, Involuntary Termination Without Cause On or Before December 31, 2012, Termination Due to Death or Disability On or Before December 31, 2012.

(1) This paragraph 7(b) shall apply if the Participant:

(i) Retires (as defined below) after June 30, 2010, or

(2) If the Participant separates from employment prior to the end of the Award Cycle under circumstances described in paragraph 7(b)(1), the Participant’s then-unvested RSUs shall vest (without prorating the award) without regard to the three-year continuous employment requirement set forth in paragraph 5(a), provided that the Participant has not and does not commit a material breach of any of the Participant’s Obligations and provided that the Participant executes, within the time prescribed by Verizon, a release satisfactory to Verizon waiving any claims he or she may have against Verizon and any Related Company.

(3) Any RSUs that vest pursuant to paragraph 7(b)(2) shall be payable as soon as practicable after the end of the Award Cycle (but in no event later than March 15, 2013).

(c) Change in Control. If a Participant is involuntarily terminated without Cause within twelve (12) months following the occurrence of a Change in Control of Verizon (as defined in the Plan), all then-unvested RSUs shall vest and become payable (without prorating the award) without regard to the three-year continuous employment requirement in paragraph 5(a); however, all other terms of the Agreement, including but not limited to the Participant’s Obligations, shall remain in effect. A Change in Control or an involuntary termination without Cause that occurs after the end of the Award Cycle shall have no effect on whether any RSUs vest or become payable under this paragraph 7(c). All payments provided in this paragraph 7(c) shall be made at their regularly scheduled time as specified in paragraph 6.

(d) Vesting Schedule. Except and to the extent provided in paragraphs 7(b) and (c), nothing in this paragraph 7 shall alter the vesting schedule prescribed by paragraph 5.

8. Shareholder Rights. The Participant shall have no rights as a shareholder with respect to the RSUs until the date on which the Participant becomes the holder of record with respect to any shares of Verizon common stock to which this grant relates. Except as provided in the Plan or in this Agreement, no adjustment shall be made for dividends or other rights for which the record date occurs while the RSUs are outstanding.

Participant’s rights thereto. Nothing in the preceding sentence shall preclude the Committee or the Executive Vice President – Human Resources of Verizon (or his or her designee) from exercising administrative discretion with respect to the Plan or this Agreement, and the exercise of such discretion shall be final, conclusive and binding. This discretion includes, but is not limited to, corrections of any errors, including but not limited to any administrative errors, and determining whether the Participant has been discharged for Cause, has a disability, has Retired, has breached any of the Participant’s Obligations set forth in Exhibit A or has satisfied the three-year continuous employment requirement.

10. Assignment. The RSUs shall not be assigned, pledged or transferred except by will or by the laws of descent and distribution. During the Participant’s lifetime, the RSUs may be deferred only by the Participant or by the Participant’s guardian or legal representative in accordance with the deferral regulations, if any, established by the Company.

12. Other Plans and Agreements. Any payment received (or deferred) by the Participant pursuant to this Agreement shall not be taken into account as compensation in the determination of the Participant’s benefits under any pension, savings, life insurance, severance or other benefit plan maintained by Verizon or a Related Company. The Participant acknowledges that this Agreement or any prior RSU agreement shall not entitle the Participant to any other benefits under the Plan or any other plans maintained by the Company or a Related Company.

14. Employment Status. The grant of the RSUs shall not be deemed to constitute a contract of employment for a particular term between the Company or a Related Company and the Participant, nor shall it constitute a right to remain in the employ of any such Company or Related Company.

15. Withholding. The Participant acknowledges that he or she shall be responsible for any taxes that arise in connection with this grant of RSUs, and the Company shall make such arrangements as it deems necessary for withholding of any taxes it determines are required to be withheld pursuant to any applicable law or regulation.

discretion, as described in paragraph 9. The Committee and the Audit Committee may designate any individual or individuals to perform any of its functions hereunder and utilize experts to assist in carrying out their duties hereunder.

18. Successors. This Agreement shall be binding upon, and inure to the benefit of, any successor or successors of the Company and the person or entity to whom the RSUs may have been transferred by will, the laws of descent and distribution, or beneficiary designation. All terms and conditions of this Agreement imposed upon the Participant shall, unless the context clearly indicates otherwise, be deemed, in the event of the Participant’s death, to refer to and be binding upon the Participant’s heirs and beneficiaries.

25. Dispute Resolution.

(a) General. Except as otherwise provided in paragraph 26 below, all disputes arising under or related to the Plan or this Agreement and all claims in which a Participant seeks damages or other relief that relate in any way to RSUs or other benefits of the Plan are subject to the dispute resolution procedure described below in this paragraph 25.

(i) For purposes of this Agreement, the term “Units Award Dispute” shall mean any claim against the Company or a Related Company, other than Employment Claims described in paragraph (a)(ii) below, regarding (A) the interpretation of the Plan or this Agreement, (B) any of the terms or conditions of the RSUs issued under this Agreement, or (C) allegations of entitlement to RSUs or additional RSUs, or any other benefits, under the Plan or this Agreement; provided, however, that any dispute relating to the Participant’s Obligations in Exhibit A or to the forfeiture of an award as a result of a breach of any of the Participant’s Obligations shall not be subject to the dispute resolution procedures provided for in this paragraph 25.

(ii) For purposes of this Agreement, the term “Units Damages Dispute” shall mean any claims between the Participant and the Company or a Related Company (or against the past or present directors, officers, employees, representatives, or agents of the Company or a Related Company, whether acting in their capacity as such or otherwise), that are related in any way to the Participant’s employment or former employment, including claims of alleged employment discrimination, wrongful termination, or violations of Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, 42 U.S.C. § 1981, the Fair Labor Standards Act, the Family Medical Leave Act, the Sarbanes-Oxley Act, or any other U.S. federal, state or local law, statute, regulation, or ordinance relating to employment or any common law theories of recovery relating to employment, such as breach of contract, tort, or public policy claims (“Employment Claims”), in which the damages or other relief sought relate in any way to RSUs or other benefits of the Plan or this Agreement.

(b) Internal Dispute Resolution Procedure. All Units Award Disputes, and all Units Damages Dispute alleging breach of contract, tort, or public policy claims with respect to the Plan or this Agreement (collectively, “Plan Disputes”), shall be referred in the first instance to the Verizon Employee Benefits Committee (“EB Committee”) for resolution internally within Verizon. Except where otherwise prohibited by law, all Plan Disputes must be filed in writing with the EB Committee no later than one year from the date that the dispute accrues. Consistent with paragraph 25(c)(i) of this Agreement, all decisions relating to the enforceability of the limitations period contained herein shall be made by the arbitrator. To the fullest extent permitted by law, the EB Committee shall have full power, discretion, and authority to interpret the Plan and this Agreement and to decide all Plan Disputes brought under this Plan and Agreement. Determinations made by the EB Committee shall be final, conclusive and binding, subject only to review by arbitration pursuant to paragraph (c) below under the arbitrary and capricious standard of review.

that the claim accrues, except where a longer limitations period is required by applicable law. Decisions about the applicability of the limitations period contained herein shall be made by the arbitrator. A copy of the AAA’s Commercial Arbitration Rules may be obtained from Human Resources. The Participant agrees that the arbitration shall be held at the office of the AAA nearest the place of the Participant’s most recent employment by the Company or a Related Company, unless the parties agree in writing to a different location. All claims by the Company or a Related Company against the Participant, except for breaches of any of the Participant’s Obligations in Exhibit A hereto, may also be raised in such arbitration proceedings.

(i) The arbitrator shall have the authority to determine whether any dispute submitted for arbitration hereunder is arbitrable. The arbitrator shall decide all issues submitted for arbitration according to the terms of the Plan, this Agreement, existing Company policy, and applicable substantive New York State and U.S. federal law and shall have the authority to award any remedy or relief permitted by such laws. The final decision of the EB Committee with respect to a Plan Dispute shall be upheld unless such decision was arbitrary or capricious. The decision of the arbitrator shall be final, conclusive, not subject to appeal and binding and enforceable in any applicable court.

(ii) The Participant understands and agrees that, pursuant to this Agreement, both the Participant and the Company or a Related Company waive any right to sue each other in a court of law or equity, to have a trial by jury, or to resolve disputes on a collective, or class, basis, and that the sole forum available for the resolution of Units Award Disputes and Units Damages Disputes is arbitration as provided in this paragraph 25. If an arbitrator or court finds that the arbitration provisions of this Agreement are not enforceable, both Participant and the Company or a Related Company understand and agree to waive their right to trial by jury of any Units Award Dispute or Units Damages Dispute. This dispute resolution procedure shall not prevent either the Participant or the Company or a Related Company from commencing an action in any court of competent jurisdiction for the purpose of obtaining injunctive relief to prevent irreparable harm pending and in aid of arbitration hereunder; in such event, both the Participant and the Company or a Related Company agree that the party who commences the action may proceed without necessity of posting a bond.

dispute resolution provision, the laws of the State of New York shall apply without giving effect to the conflicts of laws provisions thereof.

(vi) To the extent an arbitrator determines that the Participant was not terminated for Cause and is entitled to the RSUs or any other benefits under the Plan pursuant to the provisions applicable to an involuntary termination without Cause, the Participant’s obligation to execute a release satisfactory to Verizon as provided under paragraph 7(b)(2) shall remain applicable in order to receive the benefit of any RSUs pursuant to this Agreement.

(a) The Participant’s Obligations in Exhibit A to this Agreement are essential to the continued goodwill and profitability of the Company and any Related Company;

(b) The Participant has broad-based skills that will serve as the basis for other employment opportunities that are not prohibited by the Participant’s Obligations in Exhibit A;

(d) Irreparable damage to the Company or any Related Company shall result in the event that the Participant’s Obligations in Exhibit A are not specifically enforced and that monetary damages will not adequately protect the Company or any Related Company from a breach of these Participant’s Obligations;

(f) The Participant’s Obligations in Exhibit A shall continue to apply after any expiration, termination, or cancellation of this Agreement;

(h) All disputes relating to the Participant’s Obligations in Exhibit A, including their interpretation and enforceability and any damages (including but not limited to damages resulting in the forfeiture of an award under this Agreement) that may result from the breach of such Participant’s Obligations, shall not be subject to the dispute resolution procedures, including arbitration, of paragraph 25 of this Agreement, but shall instead be determined in a court of competent jurisdiction.

Exhibit A – Participant’s Obligations

As part the Agreement to which this Exhibit A is attached, you, the Participant, agree to the following obligations:

1. Noncompetition —

(1) personally engage in Competitive Activities (as defined below); or

2. Interference With Business Relations — During the period of your employment with the Company or any Related Company, and for a period ending twelve (12) months following a termination of your employment for any reason with the Company or any Related Company, you shall not, without

the prior written consent of the Executive Vice President – Human Resources of Verizon (or his or her designee):

(a) recruit, induce or solicit, directly or indirectly, any employee, of the Company or Related Company for employment or for retention as a consultant or service provider to any person or entity;

(b) hire or participate (with another person or entity) in the process of recruiting, soliciting or hiring, directly or indirectly, (other than for the Company or any Related Company) any person who is then an employee of the Company or any Related Company, or provide, directly or indirectly, names or other information about any employees of the Company or Related Company to any person or entity (other than to the Company or any Related Company) under circumstances that could lead to the use of any such information for purposes of recruiting, soliciting or hiring any such employee for any person or entity;

(c) interfere, directly or indirectly, with any relationship of the Company or any Related Company with any of its employees, agents, or representatives;

3. Effect of a Material Restatement of Financial Results — Notwithstanding anything in this Agreement to the contrary, you agree that, with respect to all RSUs granted to you on or after January 1, 2007 and all short-term incentive awards made to you on or after January 1, 2007, to the extent the Company or any Related Company is required to materially restate any financial results based upon your willful misconduct or gross negligence while employed by the Company or any Related Company (and where such restatement would have resulted in a lower payment being made to you), you will be required to repay all previously paid or deferred (i) RSUs and (ii) short-term incentive awards that were provided to you during the performance periods that are the subject of the restated financial results, plus a reasonable rate of interest. For purposes of this paragraph, “willful misconduct” and “gross negligence” shall be as determined by the Committee. The Audit Committee of the Verizon Board of Directors shall determine whether a material restatement of financial results has occurred. If you do not repay the entire amount required under this paragraph, the Company may, to the extent permitted by applicable law, offset your obligation to repay against any source of income available to it, including but not limited to any money you may have in your nonqualified deferral accounts.

Exhibit 10d

VERIZON SENIOR MANAGER

SEVERANCE PLAN

Effective

February 5, 2010

Verizon Severance Program

1. Introduction

1.1

General Information

The Verizon Senior Manager Severance Plan (the “ Plan ”) is an employee benefit plan maintained by Verizon Communications Inc. (“ Verizon ”) and other Participating Companies to assist eligible senior managers who separate from service under specific circumstances. “ Participating Company ” means any of the participating employers identified on Appendix A.

This document (including the Appendices and Schedules attached hereto) is the plan document for the Plan. In the event of any conflict between this document and any other document, instrument, or communication describing the policies or procedures with respect to separation benefits for Senior Managers (as defined below), the terms of this document are controlling.

1.2

Effective Date

This Plan applies to Senior Managers who are notified of a Qualifying Separation (as defined below) on or after February 5, 2010 (the “ Effective Date ”).

The Plan does not apply to any Senior Manager who was notified of a separation from service or underwent a Qualifying Separation prior to the Effective Date, even if the Senior Manager’s actual separation or last day worked occurs on or after the Effective Date.

1.3

Other Severance Programs

The Plan supersedes all other separation or severance pay plans or practices previously in effect for some or all of the Senior Managers. The separation benefits under this Plan are not intended to duplicate separation benefits under any other severance plan, arrangement or employment agreement maintained by any Verizon Company. In the event a Senior Manager qualifies for benefits under this Plan and under any other severance plan, arrangement or employment agreement of a Verizon Company, the Severance Payment (as defined below) under this Plan shall be reduced dollar for dollar by the amount or single-sum value of the severance benefits under any other such severance plan, arrangement or agreement. “ Verizon Company ” means, as of any applicable date, Verizon or any corporation, partnership, joint venture, or other entity in which Verizon directly or indirectly holds a ten percent (10%) or greater ownership interest.

The Participating Companies (including Verizon) reserve the right to provide additional benefits to employees outside of the Plan. Any such additional benefits will not be considered provided pursuant to the Plan, but unless expressly provided otherwise, any such additional benefits will offset and reduce the benefits provided under this Plan.

The amount of any reduction or offset under this Section 1.3 shall not change after a Change in Control except to the extent that such change does not change the time or form of payment of “deferred compensation” within the meaning of section 409A of the Internal Revenue Code of 1986 (the “ Code ”).


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2. Employees Covered by the Plan

2.1

Eligible Employees

This Plan covers each regular full-time or part-time salaried employee who is employed by a Participating Company at a Career Band of Level 4 or above, who has at least one day of service, and who is not included in an ineligible classification as described below (such an eligible employee is referred to herein as a “ Senior Manager ”). The term “ Career Band ” is defined by the applicable Verizon Compensation Plan. Accordingly, this Plan only covers Senior Managers and is intended to qualify as a “top hat” plan as that term is defined under ERISA.

2.2

Ineligible Classifications

The following ineligible classifications of employees or individuals are not covered by the Plan:

•

An employee at Career Band Level 5 and below;

•

Verizon’s Chairman and Chief Executive Officer;

•

a non-management employee or other associate;

•

a temporary, “Supplemental,” “Occasional,” or “Contingent” employee (or any other individual retained for a fixed duration);

•

an individual who is classified by the applicable Participating Company as an independent contractor (notwithstanding such individual’s classification or reclassification by any other person or authority), or who is paid through the accounts payable system rather than the payroll system of the Participating Company;

•

an individual whose compensation is paid by either a third-party temporary services company (a “temp agency”) or a third-party service provider that is not a Participating Company;

•

an individual retained by a Participating Company pursuant to a contract or agreement that specifies that the individual is not eligible to participate in the Plan;

•

a leased employee;

•

a “term” employee;

•

an employee on long-term disability (LTD) leave or an employee on short-term disability (STD) leave who is not certified to return from STD;

•

an employee on an unapproved absence from work or on an unapproved leave of absence; and

•

an employee or classification of employees listed on Appendix C (as such Appendix C is amended from time to time pursuant to Section 6.2).

An employee or individual who is included in one or more of such ineligible classifications shall not be covered by the Plan for the period in which included in such classification, notwithstanding a retroactive change in such classification by or pursuant to the order of any governmental or other authority.

3. Qualifying Separations from Service

3.1

Qualifying Separation


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A Senior Manager must undergo a Qualifying Separation to be eligible to receive the benefits described in Article 4 of this Plan. A “ Qualifying Separation ” means a termination that is characterized by the Verizon Company employing the Senior Manager, in its sole discretion as employer, as: (i) an involuntary termination of the Senior Manager’s employment by a Participating Company for business reasons, either individually or as part of a larger reduction in force, or (ii) a termination of employment by the Senior Manager due solely to the Senior Manager’s refusal to accept a Reclassification or Relocation initiated by a Participating Company. A Senior Manager who indicates a willingness to be involuntarily terminated in connection with a reduction in force or similar staffing exercise but who is not actually selected by a Participating Company to be involuntarily terminated shall not be considered to undergo a Qualifying Separation (even if the Senior Manager voluntarily terminates employment at or about the time of the reduction in force). In addition, with respect to a Named Executive Officer of Verizon, a Qualifying Separation includes any circumstance in which the independent members of the Verizon Board of Directors determine to be a Qualifying Separation under the Plan. For the avoidance of doubt, a termination on account of a disability is not a “Qualifying Separation,” and a Qualifying Separation shall not occur unless the Senior Manager’s termination of employment is treated as an involuntary separation from service for purposes of Treasury Regulation section 1.409A-1(d)(1).

•

“ Reclassification ” means a reassignment to a lower Career Band and does not include a mere reduction in hours or a transfer to a different position in the same or a higher Career Band. A change in a Senior Manager’s Career Band as a result of a broad-based change to the Career Band structure, including a Career Band addition, deletion, consolidation or name change, shall not be considered a “Reclassification” for purposes of the Plan. In addition, a change in a Senior Manager’s Career Band shall not be considered a “Reclassification” for purposes of the Plan if the Senior Manager’s total Weekly Compensation (as defined below) is not reduced in connection with the change; provided, however, any Senior Manager specific change from a Career Band that is eligible for a long-term incentive under the applicable long-term incentive plan to a lower Career Band that has a lower individual target long-term incentive opportunity shall be considered a Reclassification. The return of a Senior Manager to his former Career Band following a temporary assignment in a higher band (a temporary promotion) shall not be considered a “Reclassification” for purposes of the Plan (even if the Senior Manager returns to a position that is not eligible for a long-term incentive). In the case of a reassignment to a different Verizon Company (even if not a Participating Company), or an offer of employment from a Verizon Company, which uses a different compensation structure, the Plan Administrator has the authority and discretion to define, on a case-by-case basis, what shall constitute a “Reclassification.”

•

“ Relocation ” means a change in a Senior Manager’s principal work location which would be considered a relocation for purposes of Verizon’s then applicable guidelines for relocation.

Neither the Plan nor the Plan Administrator determines whether a Senior Manager will be or has been involuntarily terminated for business reasons or for cause (including poor performance) or whether a Senior Manager has terminated due solely to the Senior Manager’s refusal to accept a Reclassification or Relocation initiated by a Verizon Company. All such determinations are made in the sole discretion of the applicable Verizon Company as the employer. The responsibility of the Plan Administrator is limited to reviewing the reasons the applicable Verizon Company provides in its business records for the Senior Manager’s termination of employment.


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3.2

Ineligible Separations

A Qualifying Separation does not include an ineligible separation from service such as:

•

A Senior Manager’s voluntary termination of employment for no reason or for any reason other than a refusal to accept a Reclassification or Relocation initiated by a Verizon Company;

•

a Senior Manager’s involuntary termination of employment that is characterized (at the time of termination or subsequently) by the applicable Participating Company as a termination for misconduct or Cause, as defined below (notwithstanding a contrary characterization or recharacterization of such termination by the Participating Company or any other person for any other purpose); and

•

any other involuntary termination of employment in which the Senior Manager does not actually suffer a period of unemployment.

For purposes of the Plan, a Senior Manager is not considered to suffer a period of unemployment if, for example, the Senior Manager transfers to, or terminates employment in order to commence, another job or position, either with the same employer, another Verizon Company (even if not a Participating Company), or an unrelated company or other entity that is entering into a transaction with Verizon or a Participating Company (for example, in a purchase of stock or assets; a spinoff, reorganization, or similar transaction; a contribution to a joint venture; or a contract to outsource a function previously performed in-house). Furthermore, a Senior Manager’s involuntary or voluntary termination of employment upon turning down an offer of any such job or position that does not involve a Relocation is considered an ineligible separation from service.

Also, a Senior Manager is not considered to suffer a period of unemployment if the employee transfers to or is employed by an outsourcing customer (or a successor outsourcing vendor or any other company or entity) in connection with the termination of all or part of an outsourcing arrangement, regardless of whether the arrangement is terminated early or in the normal course. Furthermore, a Senior Manager’s involuntary or voluntary termination of employment upon turning down an offer of such employment or such a transfer that does not involve a Relocation is considered an ineligible separation from service.

A Senior Manager who undergoes an ineligible separation will not be considered to have undergone a Qualifying Separation and is not eligible to receive any severance benefits under the Plan even if the Senior Manager is provided with an involuntary separation notice and/or signs a Legal Release (as defined below).

3.3

Acceptance of New Position After Notice of Separation and Before Termination

If a Senior Manager is notified of a Qualifying Separation, and then (either as a result of a redeployment process or otherwise) accepts an offer of employment with any Verizon Company prior to the Senior Manager’s termination date, the notice of separation and the right to receive any and all severance benefits under the Plan in connection with that notice are cancelled.


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4. Severance Benefits

4.1

Amount of Severance Payment

If a Senior Manager undergoes a Qualifying Separation and signs a Legal Release (as defined below) in accordance with Section 4.5, the Senior Manager will receive a single-sum cash separation payment (a “ Severance Payment ”) on or as soon as administratively practicable after the Senior Manager’s termination date, but in no event prior to the eighth calendar day (or such other day as is determined by the Plan Administrator) following the Senior Manager’s delivery of a timely and signed Legal Release (subject to Section 6.3). If a Senior Manager is notified of a Qualifying Separation and signs and delivers a Legal Release in accordance with Section 4.5, but then dies prior to undergoing the Qualifying Separation or accepting an offer of employment from any Verizon Company, the Severance Payment that would have been paid had the Senior Manager undergone a Qualifying Separation shall be paid to the estate of the Senior Manager if the Legal Release remains binding and enforeceable as of the date of payment.

Depending upon the Senior Manager’s Career Band Level at the time of his Qualifying Separation, the Severance Payment shall be determined in accordance with the following schedule: :


Executive Level		Senior Manager Severance Plan Benefits
Band C		104 x Senior Manager’s Weekly Compensation
Band 1		104 x Senior Manager’s Weekly Compensation
Band 2		52 x Senior Manager’s Weekly Compensation
Band 3		52 x Senior Manager’s Weekly Compensation
Band 4		Up to 52 x Senior Manager’s Weekly Compensation (2 weeks of Weekly Compensation per Year of Service capped at 52 weeks with a 39 week minimum)

“ Years of Service ” means the Senior Manager’s eligibility service through the Senior Manager’s last day worked as reflected in Verizon’s then readily available human resources records/system; provided that service prior to the Senior Manager’s most recent hire/rehire date shall not be counted in determining a Senior Manager’s Years of Service if the Senior Manager previously received a severance or separation benefit under this Plan or any other plan or program. A partial Year of Service (consisting of total eligible service in excess of the Senior Manager’s full Years of Service) is not counted for purposes of determining the Senior Manager’s Severance Payment.

The “ Weekly Compensation ” of a salaried Senior Manager shall be determined by dividing (i) the Senior Manager’s final annual base salary plus business plan target short-term cash incentives under the applicable short-term incentive program (including a sales-incentive program) by (ii) fifty-two (52). The Weekly Compensation of a part-time Senior Manager shall be multiplied by the Senior Manager’s full-time equivalent fraction.


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4.2

Benefits Under Other Programs

In addition to the Severance Payment, a Senior Manager who undergoes a Qualifying Separation and signs a Legal Release in accordance with Section 4.5 shall be eligible to receive or continue certain additional benefits as are described on Appendix B. Appendix B shall not include any descriptions of retirement or retiree welfare plans (even if such descriptions are commingled with or attached to descriptions of the benefits provided under this Plan), and Verizon’s retirement and retiree welfare plans shall not be considered amended by any provision of Appendix B. This Plan is not a retirement plan and does not include or provide retirement or retiree welfare benefits.

4.3

Scheduled Benefits

Subject to the amendment provisions in Section 6.2, the benefits and other terms of the Plan may be modified for the employees of a business unit or for other specifically identified groups of individuals in accordance with one or more Schedules to this Plan. Unless otherwise specified in such a Schedule, the terms of this Plan shall apply in determining the benefits to be provided under the Schedule.

4.4

Adjustment of Severance Payment for Rehires

If a Senior Manager who receives a Severance Payment is subsequently re-employed by a Verizon Company, the Senior Manager must repay the portion of the Severance Payment (after tax withholding) that exceeds the amount that would have been paid to the Senior Manager (after tax withholding) had such Severance Payment (i) begun to be paid on the first business day after the Senior Manager’s Qualifying Separation, (ii) been paid ratably over a number of weeks equal to the total amount of such Severance Payment divided by the Weekly Compensation used to determine such payment, and (iii) been cancelled as of the date of re-employment. By way of example, if a separated Senior Manager receives a Severance Payment equal to fifty-two (52) times the Senior Manager’s Weekly Compensation and is re-employed by a Verizon Company ten (10) weeks after the Senior Manager’s termination date, the Senior Manager must repay an amount equal to forty-two (42) times such Weekly Compensation (as adjusted for tax withholding).

4.5

Legal Release

Notwithstanding anything herein to the contrary (but subject to the deadlines specified in Section 6.3), no benefits are payable under this Plan unless a Senior Manager signs and delivers a Legal Release to the Plan Administrator or its delegate and does not subsequently revoke such Legal Release. This requirement is applicable under any circumstances where benefits are payable under the Plan, including where the Senior Manager has filed a claim or an appeal under the claim and appeal provisions of Article 5. “Legal Release” means a document prepared by Verizon as a settlor function with terms satisfactory to Verizon in its sole discretion. The Legal Release will include, among other provisions, a legally-binding waiver of claims by the Senior Manager, a deadline for delivery of the Legal Release, and affirmative and/or negative covenants (which may include, but which are not limited to, covenants regarding confidentiality, non-solicitation, and non-competition). Different forms of Legal Release may be utilized from one business unit or Participating Company to another and from one Senior Manager to another, as determined by Verizon in its sole discretion as a settlor function.

A Senior Manager’s entitlement to severance benefits under the Plan shall be determined solely by the terms of the Plan. All references to severance benefits in the Legal Release are subject to the terms of the


Verizon Senior Manager Severance Plan		Page 6		Effective February 5, 2010

Plan, which shall be controlling. The Legal Release shall not be construed to grant or increase Plan benefits. Except as provided in the last sentence of the first paragraph of Section 4.1 with respect to an otherwise eligible Senior Manager who dies prior to undergoing a Qualifying Separation, a Senior Manager who does not undergo a Qualifying Separation shall not be entitled to any benefits under the Plan, even if the Senior Manager is provided with and signs a Legal Release.

4.6

Tax Withholding and Other Reductions

All benefit payments under this Plan shall be subject to reduction for applicable federal, state, local, or other tax withholding.

The Plan Administrator is authorized to determine whether a Senior Manager who is eligible to receive a benefit under the Plan owes any amount of money (including any amount due as the result of a benefit overpayment) to any Verizon Company or to this Plan or to any other benefit plan maintained by any Verizon Company, and, if so, to determine the precise amount of the indebtedness. If the Plan Administrator determines that the Senior Manager has any such indebtedness, then the amount of the Severance Payment which the Senior Manager shall be eligible to receive shall be reduced by the amount of such obligation. The Plan Administrator shall also have the authority and discretion, in the event that any such indebtedness exceeds the amount of the Severance Payment, to cause the amount of any other cash benefit under any other program (including, without limitation, any company-paid medical benefit premium) to likewise be offset by the amount of any indebtedness which exceeds the Severance Payment.

5. Benefit Claims and Appeals

5.1

Required Information

Any person eligible to receive benefits hereunder shall furnish to the Plan Administrator any information or proof requested by the Plan Administrator and reasonably required for the proper administration of the Plan. Failure on the part of any person to comply with any such request within a reasonable period of time shall be sufficient grounds for delay in the payment of any benefits that may be due under the Plan until such information or proof is received by the Plan Administrator.

5.2

Initial Claims

If a Senior Manager or any other person with a colorable claim to benefits under the Plan believes that a benefit was not correctly determined or was improperly denied under the terms of the Plan, such claimant has a right to submit a written claim to the Plan Administrator or other claim fiduciary designated by the Plan Administrator (the “ Initial Claims Reviewer ”).

Such claim shall identify the benefits being requested and shall include a statement of the reasons why the benefits should be granted. The Initial Claims Reviewer shall grant or deny the claim. If the claim is denied in whole or in part, the Initial Claims Reviewer shall give written notice to the claimant setting forth: (a) the reasons for the denial, (b) specific reference to pertinent Plan provisions on which the denial is based, (c) a description of any additional material or information necessary to request a review of the claim and an explanation of why such material or information is necessary, and (d) an explanation of the Plan’s claim review procedures. The notice shall be furnished to the claimant within ninety (90) days after receipt of the claim; provided that such period of time may be extended for an additional ninety (90) days beginning at the end of the initial ninety (90)-day period if the Initial Claims Reviewer determines that special circumstances


Verizon Senior Manager Severance Plan		Page 7		Effective February 5, 2010

require such an extension. Written notice of any such extension shall be given to the claimant before the expiration of the initial ninety (90)-day period and shall indicate the special circumstances requiring the extension and the date by which the final decision is expected to be rendered. If notice of a claim decision is not provided to the claimant within the period described above (including any extension, if applicable), then the claim shall be deemed denied at the expiration of such period, and the claimant may appeal the denial as described below.

5.3

Appeals

A claimant whose claim for benefits has been denied, in whole or in part, may request a review of such denial by filing a written notice of appeal with the Plan Administrator.

Such appeal must be made within sixty (60) days after the date the initial claim was denied, or deemed denied. No action at law or equity may be brought to recover Plan benefits unless and until the claimant requests an administrative appeal during such sixty (60)-day period and such appeal is finally denied by the Plan Administrator. In connection with an appeal, the claimant (or the claimant’s authorized representative) may review pertinent documents and submit evidence and arguments in writing to the Plan Administrator. All information submitted by or on behalf of the claimant will be taken into account in deciding the questions presented by the appeal, even if such information was not submitted or considered in the initial claim determination. The Plan Administrator may decide the questions presented by the appeal, either with or without holding a meeting, and shall issue a written notice of decision to the claimant setting forth: (a) the specific reasons for the decision (b) specific reference to the pertinent Plan provisions on which the decision is based and (c) such other information as the Plan Administrator deems appropriate. The notice shall be issued within sixty (60) days after receipt of the request for review; except that, if special circumstances (including, but not limited to, the need to hold a hearing) should require, such period of time may be extended for an additional sixty (60) days beginning at the end of the initial sixty (60)-day period. Written notice of any such extension shall be provided to the claimant prior to the expiration of the initial sixty (60)-day period. If notice of an appeal decision is not provided to the claimant within the period described above (including any extension, if applicable), then the claim shall be deemed denied at the expiration of such period. If the Plan Administrator (or its delegate) consists of a committee that holds regularly scheduled meetings, then the appeal determination periods referenced above shall not apply, and instead any appeal shall be decided within the period required by section 503 of ERISA, taking into account any applicable extensions. Any decision of the Plan Administrator shall be final and conclusive except to the extent that the claimant subsequently proves that the decision of the Plan Administrator was an abuse of its fiduciary discretion.

5.4

Applicability of Section 4.5

If a claim under this Article 5 is approved, either initially by the Initial Claims Reviewer or on appeal by the Plan Administrator, payment of benefits hereunder is nevertheless conditioned on the claimant signing and delivering a Legal Release to the Plan Administrator as otherwise provided for and in accordance with the provisions of Section 4.5. Neither the filing of a claim nor an appeal under Article 5 entitles the claimant to a new deadline for delivering the Legal Release.


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6. Plan Administration

6.1

Plan Administrator

The “Plan Administrator” of this Plan is the Verizon Claims Review Committee (“ VCRC ”) and the one or more persons to whom that committee delegates any or all of the authority and responsibilities of the Plan Administrator. The Plan Administrator is the named fiduciary of the Plan as that term is used in ERISA.

The Plan Administrator shall adopt such rules for its operation as it may find appropriate. All resolutions or other actions taken by the Plan Administrator shall be taken (i) by vote of a majority of those present at a meeting of its members (with a majority of the members then in office constituting a quorum for the transaction of business), (ii) without a meeting by an instrument in writing signed by all the members at such time, or (iii) by unilateral action of the Chairperson of the Plan Administrator. The Plan Administrator may employ or retain persons to render advice with regard to any of its responsibilities under the Plan.

The Plan Administrator shall have the discretionary authority to administer and interpret the Plan and to decide any and all matters arising hereunder, including without limitation, the right and authority to make findings of fact; to determine eligibility for participation, benefits, and other rights under the Plan; to determine whether any election or notice requirement or other administrative procedure under the Plan has been adequately observed; to determine the proper recipient of any Plan benefits; to remedy possible ambiguities, inconsistencies, or omissions by general rule or particular decision; and otherwise to interpret the Plan in accordance with its terms. The Plan Administrator’s determination on any and all questions arising out of the interpretation or administration of the Plan shall be final, conclusive, and binding on all parties. To the extent the Plan Administrator delegates its administrative powers or duties to any other individual or entity (including the Initial Claims Reviewer), such individual or entity shall have the discretionary authority, as described in this paragraph, to exercise such powers or duties.

6.2

Plan Amendment and Termination

Except to the extent provided below after a Change in Control, the Executive Vice President of Human Resources for Verizon reserves the right at any time, and from time to time, by written direction, to terminate, modify or amend in whole or in part, any or all of the provisions of the Plan, including Appendices and Schedules to the Plan. Accordingly, no individual has a legally binding right to any benefit under the Plan for purposes of section 409A of the Code , as amended, until a Change in Control occurs. Except as expressly provided in a particular amendment to the Plan, any individual who does not complete at least one hour of active employment with a Participating Company on or after the effective date of any amendment to the Plan shall have his benefits, if any, determined only in accordance with the provisions of the Plan as in effect before the effective date of such amendment.

Notwithstanding anything to the contrary in this Plan, if a Change in Control occurs, no prospective or retroactive amendment to the Plan or the Appendices or Schedules to the Plan shall be adopted if such amendment (i) is not a Permitted Amendment (as defined below) or (ii) would have the effect of modifying or terminating Plan benefits to the detriment of any individual who is a Senior Manager (or a former Senior Manager entitled to benefits) as of the date on which the Change in Control occurs. The immediately preceding sentence shall apply during the one-year period immediately following a Change in Control, and shall also apply to any amendment after the expiration of such period that is effective retroactively to any date before the expiration of such period. “ Change in Control ” shall have the meaning set forth in The 2009 Verizon Communications Inc. Long-Term Incentive Plan. “ Permitted Amendment ” means an amendment that (1) is necessary to comply with applicable law; (2) is necessary to give effect to an action of Verizon that


Verizon Senior Manager Severance Plan		Page 9		Effective February 5, 2010

was specifically authorized or approved by the Board of Directors before the date on which the Change in Control occurred, or to which Verizon or the Plan committed itself contractually before the date on which the Change in Control occurred; or (3) has the effect of adding any provision to the Plan that will apply to a Senior Manager or former Senior Manager only at such individual’s affirmative election.

As a matter of prudent business planning, Verizon is continually reviewing and evaluating various proposals for changes in compensation and retirement programs, as well as proposals for separation programs like this Plan. Some of these proposals, if finally approved and implemented, might be more advantageous or less advantageous than this current Plan. Because of the need for confidentiality, such decisions are not discussed or evaluated below the highest level of senior management. Any managers, supervisors, and employees below such levels do not know whether Verizon will or will not adopt any future compensation and/or severance programs and are not in a position to speculate about future programs. Unless and until such changes are formally announced by Verizon and/or the Participating Companies, no one is authorized to give assurance that such changes will or will not occur. If a Senior Manager separates from service and receives benefits under this Plan, the Senior Manager acknowledges and understands by receiving such benefits that Verizon and/or the Participating Companies may adopt new or modified programs or benefits in the future that depending on individual circumstances may be more or less advantageous than the current Plan. No Senior Manager or individual should expect or assume that any such new or modified programs or benefits will be extended on a retroactive basis to anyone who separates from service and receives benefits under this Plan.

6.3

Miscellaneous

Any notice required to be provided in writing in accordance with the terms of the Plan may be provided in electronic or other format to the extent permitted by applicable law. Notices, reports and statements sent by regular mail shall be deemed duly given, made or delivered, when deposited in the mail, addressed to the person’s last know address as reflected in Verizon’s human resources records/system.

If the Plan Administrator determines that a Senior Manager or other person entitled to receive payment of benefits under the Plan is unable to manage his own affairs because of illness or accident or is a minor, the Plan Administrator may direct that any benefit payment due him, unless a claim shall have been made therefor by a duly appointed legal representative, be paid to his spouse, a child, a parent or other blood relative, or to a person with whom he resides. Any such payment shall completely discharge the Plan from all liability for such benefits.

If any person claiming benefits under the Plan makes a false statement that is material to a claim for benefits or otherwise receives benefits in excess of those to which the person is entitled under the terms of the Plan, any amount paid to such person to which he was not entitled under the provisions of the Plan may be offset against any future payments to such person (in addition to any other remedies available to the Plan).

Except as otherwise specifically permitted by the Plan (including Section 4.6) or as required by law, no benefit payable under the Plan or any interest therein shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, garnishment or charge, and any such attempted action shall be void and no such benefit or interest shall be in any manner liable for or subject to debts, contracts, liabilities, engagements or torts of the person entitled to such benefits or interest. The preceding sentence shall not prohibit the direct deposit of Plan benefits to a Senior Manager’s savings, checking, or other deposit account in a financial institution or the payment of benefits to the estate of an Senior Manager


Verizon Senior Manager Severance Plan		Page 10		Effective February 5, 2010

if the Senior Manager dies after becoming entitled to benefits under the Plan or if a benefit is payable to the Senior Manager’s estate pursuant to Section 4.1.

Neither the establishment of the Plan nor the payment of any Plan benefits nor any action of Verizon, a Participating Company, the Plan Administrator, or any delegate of any of the foregoing shall confer upon any person any legal right to be continued in the employ of Verizon or any Participating Company, and Verizon and each Participating Company expressly reserve the right to discharge without liability (except to the extent of any benefit required to be paid under this Plan) any Senior Manager whenever the interest of the Company or the Participating Company, in its sole judgment, may so require.

The titles to Articles and the headings of Sections, subsections, paragraphs, and subparagraphs in this Plan are placed herein for convenience of reference only and, as such, shall be of no force or effect in the interpretation of the Plan.

In the event any provision of the Plan is held to be in conflict with or in violation of any state or federal statute, rule, or decision, all other provisions of this Plan shall continue in full force and effect. In the event that the making of any payment or the provision of any other benefit required under the Plan is held to be in conflict with or in violation of any state or federal statute, rule, or decision or otherwise invalid or unenforceable, such conflict, violation, invalidity, or unenforceability shall not prevent any other payment or benefit from being made or provided under the Plan, and in the event that the making of any payment in full or the provision of any other benefit required under the Plan in full would be in conflict with or in violation of any state or federal statute, rule or decision or otherwise invalid or unenforceable, then such conflict, violation, invalidity or unenforceability shall not prevent such payment or benefit from being made or provided in part, to the extent that it would not be in conflict with or in violation of any state or federal statute, rule or decision or otherwise invalid or unenforceable, and the maximum payment or benefit that would not be in conflict with or in violation of any state or federal statute, rule or decision or otherwise invalid or unenforceable, shall be made or provided under the Plan.

The Plan shall be governed by ERISA, and to the extent not preempted thereby, by the laws of the State of New York (without giving effect to conflicts of laws principles thereof).

No Senior Manager, former Senior Manager, or any other person shall be entitled to or have any vested right in or claim to a benefit under the Plan, except as expressly provided herein. Benefits under this Plan are paid solely from the general assets of the Participating Company which employed the Senior Manager entitled to such benefits, and the right of any person to receive the benefits provided by the Plan shall be solely an unsecured claim against the general assets of the applicable Participating Company.

Where appropriate, references to an entity, position or committee shall include the successor to such.

The Plan is intended to constitute a “separation pay plan” and/or a plan providing only “short-term deferrals” that does not provide for a “deferral of compensation” as such terms are defined for purposes of section 409A of the Code, and the Plan shall be interpreted accordingly. Any Severance Payment payable hereunder to a Senior Manager (or to the estate of a Senior Manager in the event of the Senior Manager’s death), shall be paid not later than March 15 of the year following the year of the Senior Manager’s Qualifying Separation and any other benefits payable after such March 15 pursuant to Section 4.2 or 4.3 shall be paid or provided not later than the last day of the second year following the year of the Senior Manager’s Qualifying Separation. To the extent any provision of the Plan or any omission from the Plan would (absent this provision) cause amounts to be includable in income under Code section 409A(a)(1), the Plan shall be deemed amended to the extent necessary to comply with the requirements of Code


Verizon Senior Manager Severance Plan		Page 11		Effective February 5, 2010

section 409A; provided, however, that this provision shall not apply and shall not be construed to amend any provision of the Plan to the extent this provision or any amendment required thereby would itself cause any amounts to be includable in income under Code section 409A(a)(1).


Verizon Senior Manager Severance Plan		Page 12		Effective February 5, 2010

Appendix A: Participating Companies

Except for the entities and businesses identified below, all entities and businesses within the Verizon controlled group are Participating Companies. An entity or business which ceases to be within the Verizon controlled group shall immediately cease to be a Participating Company.

The following entities and businesses (and any subsidiaries thereof and successors thereto) are not Participating Companies (without regard to whether such entities and businesses are part of the Verizon controlled group): Verizon Wireless.


Verizon Senior Manager Severance Plan		Page 13		Effective February 5, 2010

Appendix B: Severance Benefits Under Other Programs

Pursuant to Section 4.2, a Senior Manager who undergoes a Qualifying Separation and signs a Legal Release in accordance with Section 4.5 shall be eligible to continue during the “severance period” (as defined below) to receive the following additional benefits:

•

Medical, dental, and vision benefits that the Senior Manager was receiving immediately prior to the Qualifying Separation, with no premium contribution, on substantially the same terms as a similarly situated Senior Manager who continues to be employed by a Participating Company during the severance period. For purposes of this Appendix B, the “severance period” is the period beginning on the day after the date of the Qualifying Separation and ending after the number of weeks equal to the total amount of the Senior Manager’s Severance Payment divided by the Weekly Compensation used to determine such payment. These benefits shall be provided on a pre-tax basis.

•

For Senior Managers who are not “executive officers”, as that term is defined under Section 16 of the Securities and Exchange Act of 1934 (“Section 16 Officers”) at the time of the Qualifying Separation, Verizon will pay, concurrently with the lump sum severance amount, a prorated short-term incentive award based on the number of actual full pay periods that the Senior Manager was actively at work during the year of the Qualifying Separation. Such prorated short-term incentive award shall be based on no less than the threshold award level under the Verizon Short-Term Incentive Plan. For Senior Managers who are Section 16 Officers at the time of their Qualifying Separation, any prorated short-term incentive award that becomes payable shall be based on the actual level of achievement under the Verizon Short-Term Incentive Plan and shall not be payable until such time as the Human Resources Committee of Verizon’s Board of Directors has certified that the performance criteria under the short-term incentive plan for the applicable performance year has been achieved.


Verizon Senior Manager Severance Plan		Page 14		Effective February 5, 2010

Appendix C: Excluded Employees


Verizon Senior Manager Severance Plan		Page 15		Effective February 5, 2010

Exhibit 10e

FORM OF AMENDMENT TO BAND 1 SENIOR MANAGER EMPLOYMENT

AGREEMENT ELIMINATING SECTION 280G TAX GROSS UP PROVISION

The following amendments are effective December 31, 2009:

1.	Paragraph 10 is deleted in its entirety and the paragraphs that follow are renumbered accordingly.

2.	Exhibit A is deleted in its entirety and Exhibit B is renamed as Exhibit A.

Exhibit 12

Computation of Ratio of Earnings to Fixed Charges

Verizon Communications Inc. and Subsidiaries


(dollars in millions)	Three Months Ended March 31, 2010
Earnings:
Income before provision for income taxes	$ 3,849
Equity in earnings of unconsolidated businesses	(133	)
Dividends from unconsolidated businesses	13
Interest expense ⁽¹⁾	680
Portion of rent expense representing interest	218
Amortization of capitalized interest	34

Earnings, as adjusted	$ 4,661


Fixed Charges:
Interest expense ⁽¹⁾	$ 680
Portion of rent expense representing interest	218
Capitalized interest	226

Fixed Charges	$ 1,124


Ratio of earnings to fixed charges	4.15

⁽¹⁾ We classify interest expense recognized on uncertain tax positions as income tax expense and therefore such interest expense is not included in the Ratio of Earnings to Fixed Charges.

EXHIBIT 31.1

I, Ivan G. Seidenberg, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Verizon Communications Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: April 28, 2010				/s/ Ivan G. Seidenberg
				Ivan G. Seidenberg
				Chairman and Chief Executive Officer

EXHIBIT 31.2

I, John F. Killian, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Verizon Communications Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: April 28, 2010				/s/ John F. Killian
				John F. Killian
				Executive Vice President and Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

I, Ivan G. Seidenberg, Chairman and Chief Executive Officer of Verizon Communications Inc. (the “Company”), certify that:

(1)	the report of the Company on Form 10-Q for the quarterly period ending March 31, 2010 (the “Report”) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (the “Exchange Act”); and

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods referred to in the Report.


Date: April 28, 2010				/s/ Ivan G. Seidenberg
				Ivan G. Seidenberg
				Chairman and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Verizon Communications Inc. and will be retained by Verizon Communications Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

I, John F. Killian, Executive Vice President and Chief Financial Officer of Verizon Communications Inc. (the “Company”), certify that:

(1)	the report of the Company on Form 10-Q for the quarterly period ending March 31, 2010 (the “Report”) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (the “Exchange Act”); and

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods referred to in the Report.


Date: April 28, 2010				/s/ John F. Killian
				John F. Killian
				Executive Vice President and Chief Financial Officer