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Consolidated Statements of Income (dollars in millions, except per share amounts) Years Ended December 31, 2006 2005 2004 Operating Revenues $ 88,144 $ 69,518 $ 65,751 Operating Expenses Cost of services and sales (exclusive of items shown below) 34,994 24,200 22,032 Selling, general & administrative expense 25,232 19,652 19,346 Depreciation and amortization expense 14,545 13,615 13,503 Sales of businesses, net – (530 ) – Total Operating Expenses 74,771 56,937 54,881 Operating Income 13,373 12,581 10,870 Equity in earnings of unconsolidated businesses 773 686 1,690 Other income and (expense), net 395 311 82 Interest expense (2,349 ) (2,129 ) (2,336 ) Minority interest (4,038 ) (3,001 ) (2,329 ) Income Before Provision for Income Taxes, Discontinued Operations and Cumulative Effect of Accounting Change 8,154 8,448 7,977 Provision for income taxes (2,674 ) (2,421 ) (2,078 ) Income Before Discontinued Operations and Cumulative Effect of Accounting Change 5,480 6,027 5,899 Income on discontinued operations, net of tax 759 1,370 1,932 Cumulative effect of accounting change, net of tax (42 ) – – Net Income $ 6,197 $ 7,397 $ 7,831 Basic Earnings Per Common Share(1) Income before discontinued operations and cumulative effect of accounting change $ 1.88 $ 2.18 $ 2.13 Income on discontinued operations, net of tax .26 .50 .70 Income on discontinued operations, net of tax (.01 ) – – Net Income $ 2.13 $ 2.67 $ 2.83 Weighted-average shares outstanding (in millions) 2,912 2,766 2,770 Diluted Earnings Per Common Share(1) Income before discontinued operations and cumulative effect of accounting change $ 1.88 $ 2.16 $ 2.11 Income on discontinued operations, net of tax .26 .49 .68 Income on discontinued operations, net of tax (.01 ) – – Net Income $ 2.12 $ 2.65 $ 2.79 Weighted-average shares outstanding (in millions) 2,938 2,817 2,831 (1) Total per share amounts may not add due to rounding. See Notes to Consolidated Financial Statements.

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* This is an interactive electronic version of Verizon’s 2006 Annual Report to Shareholders, and it is intended to be complete and accurate. The contents of this version are qualified in their entirety by reference to the printed version. A reproduction of the printed version is available in PDF format on this website.