Verizon Communications (VZ)

Depreciation and Amortization Expense

Depreciation and amortization expense in 2009 increased by $1,967 million, or 13.5%, compared to 2008. This increase was mainly driven by depreciable property and equipment and finite-lived intangible assets acquired from Alltel which are not being divested, as well as growth in depreciable plant from capital spending partially offset by lower rates of depreciation. Depreciation and amortization expense in 2009 included $317 million of merger integration costs related to the Alltel acquisition.

Depreciation and Amortization Expense

Depreciation and amortization expense in 2008 increased by $188 million, or 1.3%, compared to 2007. The increase was primarily driven by growth in depreciable assets.

Depreciation and Amortization Expense

Depreciation and amortization expense in 2009 increased by $1,625 million, or 30.1%, compared to 2008 primarily driven by depreciable property and equipment and finite-lived intangible assets acquired from Alltel which are not being divested, including its customer lists, as well as growth in depreciable assets during 2009.

Depreciation and amortization expense increased by $251 million, or 4.9%, in 2008 compared to 2007, primarily caused by an increase in depreciable assets.

Depreciation and Amortization Expense

Depreciation and amortization expense in 2009 increased by $91 million, or 1.0%, compared to 2008. The increase was driven by growth in depreciable telephone plant from capital spending, partially offset by lower rates of depreciation as a result of changes in the estimated useful lives of certain asset classes.

Depreciation and amortization expense in 2008 increased by $104 million, or 1.2%, compared to 2007, mainly driven by growth in depreciable telephone plant and non-network software from additional capital spending, partially offset by lower rates of depreciation as a result of changes in the estimated useful lives of certain asset classes.

Depreciation and Amortization Expense

Depreciation and amortization expense in 2008 increased $104 million, or 1.2%, compared to 2007, mainly driven by growth in depreciable telephone plant and non-network software from additional capital spending, partially offset by lower rates of depreciation as a result of changes in the estimated useful lives of certain asset classes. Depreciation and amortization expense in 2007 decreased $382 million, or 4.1%, compared to 2006, mainly driven by lower rates of depreciation as a result of changes in the estimated useful lives of certain asset classes, partially offset by growth in depreciable telephone plant from increased capital spending.

Depreciation and Amortization Expense

Depreciation and amortization expense in the first quarter of 2009 increased $446 million, or 12.5%, compared to the similar period in 2008. This increase was mainly driven by the acquisition of Alltel’s depreciable property and equipment and finite-lived intangible assets, as well as growth in depreciable assets and non-network software through the first quarter of 2009.

Amortization expense in the first quarter of 2009 included $45 million of merger integration costs related to the Alltel acquisition.

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Depreciation and Amortization Expense

Depreciation and amortization expense in the first quarter of 2009 increased by $449 million, or 34.5%, compared to the similar period in 2008. This increase was primarily driven by the acquisition of Alltel’s depreciable property and equipment and finite-lived intangible assets, including its customer lists and trade name, as well as growth in depreciable assets through the first quarter of 2009.

Depreciation and Amortization Expense

Depreciation and amortization expense in the first quarter of 2009 increased $6 million, or 0.3%, as compared to the similar period in 2008. The increase was driven by growth in depreciable telephone plant from capital spending, offset by lower rates of depreciation.

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Depreciation and Amortization Expense

Depreciation and amortization expense in 2008 increased $188 million, or 1.3%, compared to 2007. The increase was mainly driven by growth in depreciable telephone plant and non-network software from additional capital spending.

Depreciation and Amortization Expense

Depreciation and amortization expense in 2007 decreased $168 million, or 1.2%, compared to 2006. The decrease was primarily due to lower rates of depreciation as a result of changes in the estimated useful lives of certain asset classes at Wireline and fully amortized customer lists at Domestic Wireless, partially offset by growth in depreciable telephone plant as a result of increased capital expenditures.

Depreciation and Amortization Expense

Depreciation and amortization expense in 2008 increased by $251 million, or 4.9%, compared to 2007 and increased by $241 million, or 4.9%, in 2007 compared to 2006. These increases were primarily due to an increase in depreciable assets. Partially offsetting this increase in 2007 was lower amortization expense resulting from customer lists becoming fully amortized during 2006.

Depreciation and Amortization Expense

Depreciation and amortization expense in 2008 increased $104 million, or 1.2%, compared to 2007, mainly driven by growth in depreciable telephone plant and non-network software from additional capital spending, partially offset by lower rates of depreciation as a result of changes in the estimated useful lives of certain asset classes. Depreciation and amortization expense in 2007 decreased $382 million, or 4.1%, compared to 2006, mainly driven by lower rates of depreciation as a result of changes in the estimated useful lives of certain asset classes, partially offset by growth in depreciable telephone plant from increased capital spending.

Depreciation and Amortization Expense

ALIGN="justify">Depreciation and amortization expense in 2007 decreased $168 million, or 1.2%, compared to 2006. The decrease was primarily due to lower rates of depreciation as a result of changes in the
estimated useful lives of certain asset classes at Wireline and fully amortized customer lists at Domestic Wireless, partially offset by growth in depreciable telephone plant as a result of increased capital expenditures.

Depreciation and Amortization Expense

Depreciation and amortization expense in the third quarter of 2008 increased $67 million, or 5.2%, and $141 million, or 3.7% for the nine months ended September 30, 2008, compared to the similar periods in 2007. These increases were primarily due to increased depreciation expense related to growth in depreciable assets.

Depreciation and Amortization Expense

Depreciation and amortization expense increased by $30 million, or 2.3% in the second quarter of 2008 and $74 million, or 2.9% for the six months ended June 30, 2008, compared to the similar periods in 2007. These increases were primarily due to increased depreciation expense related to growth in depreciable assets.

Depreciation and Amortization Expense

Depreciation and amortization expense increased by $44 million, or 3.5% in the first quarter of 2008 compared to the similar period in 2007. This increase consisted of an increase in depreciation expense related to growth in depreciable assets.

Depreciation and Amortization Expense

Depreciation and amortization expense increased by $241 million, or 4.9% in 2007 compared to 2006 and increased by $153 million, or 3.2% in 2006 compared to 2005. These increases were primarily due to an increase in depreciable assets. Partially offsetting this increase in 2007 was lower amortization expense resulting from customer lists becoming fully amortized during 2006.

Depreciation and Amortization Expense

SIZE="1"> 

The decrease in depreciation and amortization expense of $406 million, or 4.2%, in 2007 compared to 2006 was mainly driven
by lower rates of depreciation as a result of changes in the estimated useful lives of certain asset classes, partially offset by growth in depreciable telephone plant from increased capital spending. The increase in depreciation and amortization
expense of $789 million, or 9.0% in 2006 compared to 2005 was mainly driven by the acquisition of MCI’s depreciable property and equipment and finite-lived intangible assets, including its customer lists and capitalized non-network software,
and by growth in depreciable telephone plant and non-network software assets.

SIZE="2">Segment Income

Segment income
decreased by $119 million, or 7.3% in 2007 and by $281 million, or 14.7% in 2006, due to the after-tax impact of operating revenues and operating expenses described above, along with the impact of favorable income tax adjustments in 2005.

Non-recurring or non-operational items not included in Verizon
Wireline’s segment income totaled $714 million, $407 million and ($168) million in 2007, 2006, and 2005, respectively. Non-recurring or non-operational items in 2007 included costs associated with severance and other related charges, costs
incurred related to network, non-network software, and other activities in connection with the spin-off of local exchange assets in Maine, New Hampshire and Vermont (see “Recent Developments” section), as well as costs associated with
merger integration initiatives, principally related to the acquisition of MCI and other items. Non-recurring or non-operational items in 2006 included costs associated with severance activity, pension settlement losses, Verizon Center
relocation-related costs and merger integration costs. Merger integration costs primarily included costs related to advertising and re-branding initiatives, facility exit costs, severance costs, labor and contractor costs related to information
technology integration initiatives and employee retention expenses. Non-recurring or non-operational items in 2005 related to the gain on the sale of our Hawaii wireline operations, the net gain on the sale of a New York City office building,
changes to management retirement benefit plans, severance costs and Verizon Center relocation-related costs.

Our Domestic Wireless
segment provides wireless voice and data services, other value-added services and equipment sales across the United States. This segment primarily represents the operations of the Verizon Wireless joint venture with Vodafone. Verizon owns 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.

Depreciation and Amortization Expense

Depreciation and amortization increased by $79 million, or 6.5%, in the third quarter of 2007 and $164 million, or 4.5%, for the nine months ended September 30, 2007, compared to the similar periods in 2006. These increases were primarily due to increased depreciation expense related to an increase in depreciable assets, partially offset by lower amortization expense resulting from customer lists becoming fully amortized in the prior year.