Chairman’s Letter to Shareowners

Dear Shareowner,

Verizon is now ten years old. In this first decade of the 21st century, we have transformed our historic franchise around the demands of a new industry and a new kind of customer. We have built our company around our belief that the better the network, the better the performance of everything that rides on it, and we have pushed ourselves to release the innovative power of our technology to customers. Our people are animated by their passion for this industry and our conviction that what we do is important to society. We’ve had to sharpen our reflexes and quicken our pace to compete at Internet speed – a challenge we face anew every day – but overall, Verizon’s first ten years have proven our financial strength, capacity for growth and ability to adapt to a rapidly changing environment.

Ivan Seidenberg

Ivan Seidenberg
Chairman and
Chief Executive Officer

The past year has put those qualities to the test. Competition has intensified and the economy has stagnated, taking their toll on our growth, profitability and stock price. Clearly, we have more work to do to align our performance with the expectations of our investors and ourselves. Despite these challenges, though, our 2009 results demonstrate our staying power and launch us into 2010 from a position of strength and confidence.

Verizon’s strong cash flows, solid balance sheet and modest revenue growth carried us through the most severe recession in recent memory. Pro forma adjusted revenues grew 1.5 percent to $107.8 billion in 2009, while U.S. Gross Domestic Product fell by 2.4 percent. Operating cash flow was $31.6 billion, up 14.5 percent, and free cash flow was 40.7 percent higher in 2009 than 2008. In September, our Board of Directors approved a 3.3 percent increase in our dividend, the third such increase in as many years. At a time when private capital investments in the U.S. are at near-historic lows, Verizon invested approximately $17 billion in infrastructure in 2009, which is critical to our maintaining the network superiority that is the essence of our brand. Thanks to these investments, we continued to add customers and grow revenues in broadband, wireless and strategic business services.

Chairman's Letter Continued …