Office of the City Clerk - Record #: O2015-758

This record contains private information, which has been redacted from public viewing.

Record #:

O2015-758

Type:

Ordinance

Status:

Passed

Intro date:

1/21/2015

Current Controlling Legislative Body:

Committee on Finance

Final action:

3/18/2015

Title:

Multi-Family Program Funds loan to Hilliard Homes l Limited Partnership for replacement of deteriorated windows in Hilliard l Buildings at 2111 and 2031 S Clark St

Sponsors:

Emanuel, Rahm

Topic:

AGREEMENTS - Loan & Security, - FINANCE FUNDS - Multi-Family Program Funds

Attachments:

1. O2015-758.pdf

Date	Journal Page Number	Action By	Action	Result	Action Details	Meeting Details	Captions
3/18/2015	103055	City Council	Passed	Pass	Action details	Meeting details	Not available
3/16/2015		Committee on Finance	Recommended to Pass	Pass	Action details	Meeting details	Not available
1/21/2015	101234	City Council	Referred		Action details	Meeting details	Not available

OFFICE OF THE MAYOR

CITY OF CHICAGO

RAHM EMANUEL

MAYOR

January 21, 2015

TO THE HONORABLE, THE CITY COUNCIL OF THE CITY OF CHICAGO

Ladies and Gentlemen:

At the request of the Commissioner of Planning and Development, I transmit herewith ordinances authorizing the execution of Multi-Family Loan agreements.

Your favorable consideration of these ordinances will be appreciated.

Mayor

Very truly yours,

O R D I N A N C E

WHEREAS, the City of Chicago (the "City"), a home rule unit of government under Section 6(a), Article VII of the 1970 Constitution of the State of Illinois, has heretofore found and does hereby find that there exists within the City a serious shortage of decent, safe and sanitary rental housing available to persons of low and moderate income; and

WHEREAS, the City has determined that the continuance of a shortage of affordable rental housing is harmful to the health, prosperity, economic stability and general welfare of the City; and

WHEREAS, the City has certain funds available from a variety of funding sources ("Multi-Family Program Funds") to make loans and grants for the development of multi-family residential housing to increase the number of families served with decent, safe, sanitary and affordable housing and to expand the long-term supply of affordable housing, and such Multi-Family Program Funds are administered by the City's Department of Planning and Development ("DPD"); and

WHEREAS, as of October 1, 2002, the City issued $10,775,000 of Multi-Family Housing Revenue Bonds, Series 2002 (Hilliard Homes - Phase 1 Development), and made a loan (the "Loan") of Multi-Family Program Funds in the original principal amount of $1,425,779 to Hilliard Homes I Limited Partnership, an Illinois limited partnership (the "Borrower"), of which HHI Development Corporation, an Illinois corporation (of which Peter Holsten is the sole member) is the sole managing general partner, which Loan was secured by a Junior Mortgage, Security Agreement and Financing Statement (the "Junior Mortgage") for the purpose of financing a portion of the costs of rehabilitating (the "2002-04 Rehab") two historically significant buildings which contain a total of 327 affordable dwelling units (the "Hilliard I Buildings"); and

WHEREAS, the 2002-04 Rehab utilized financing from Midland Loan Services, Inc. in the original principal amount of $4,388,000, which is secured by a Leasehold Deed of Trust (the "Senior Mortgage"); and

WHEREAS, the 2002-04 Rehab further utilized financing from Bank of America, N.A. in the original principal amount of $10,800,000, which is secured by a Leasehold Deed of Trust (the "Second Mortgage"); and

WHEREAS, the 2002-2004 Rehab further utilized financing from the Chicago Housing Authority in the original principal amount of $24,650,000, which is secured by a Senior Mortgage, Security Agreement and Financing Statement (the "Third Mortgage"); and

WHEREAS, the 2002-2004 Rehab further utilized financing from the Illinois Housing Development Authority in the original principal amount of $750,000, which is secured by a Fourth Mortgage and Assignment of Rents and Leases (the "Fourth Mortgage"), and

WHEREAS, the 2002-2004 Rehab further utilized financing from Harris Bank Frankfort in the original principal amount of $500,000, which is secured by a Subordinate Leasehold Mortgage, Assignment of Lease and Rents, Security Agreement and Financing Statement (the "Subordinate Sixth Mortgage"): and

S:\SHARED\Finance\Hilliard I and II - new subordinate loans\Hilliard I ordinance 2 docx

WHEREAS, the 2002-04 Rehab included preserving all the windows on the lower floors of the Hilliard I Buildings (the "Windows") pursuant to an agreement with the Illinois State Historic Preservation Office (the "IL SHPO"), and

WHEREAS, the Windows have deteriorated since the 2002-04 Rehab; and

WHEREAS, the IL SHPO has approved the replacement of the Windows with replicas designed to imitate the look of the originals (the "Window Replacement"); and

WHEREAS, the Borrower has requested financing from the City for the cost of the Window Replacement; and

WHEREAS, DPD has preliminarily reviewed and approved the making of a subordinate loan to Borrower in an amount not to exceed $252,608 (the "Loan") to be funded from Multi-Family Program Funds pursuant to the terms and conditions set forth in Exhibit A attached hereto and made a part hereof; now, therefore,

BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CHICAGO:

SECTION 1. The above recitals are expressly incorporated in and made a part of this ordinance as though fully set forth herein.

SECTION 2. The Commissioner of DPD (the "Commissioner") and a designee of the Commissioner (collectively, the "Authorized Officer") are each hereby authorized, subject to approval by the Corporation Counsel, to enter into and execute such agreements and instruments, and perform any and all acts as shall be necessary or advisable in connection with the implementation ofthe Loan. The Authorized Officer is hereby authorized, subject to the approval of the Corporation Counsel, to negotiate any and all terms and provisions in connection with the Loan which do not substantially modify the terms described in Exhibit A hereto. Upon the execution and receipt of proper documentation, the Authorized Officer is hereby authorized to disburse the proceeds of the Loan to the Borrower.

SECTION 3. To the extent that any ordinance, resolution, rule, order or provision ofthe Municipal Code of Chicago, or part thereof, is in conflict with the provisions of this ordinance, the provisions of this ordinance shall control. If any section, paragraph, clause or provision of this ordinance shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this ordinance. Section 2-45-110 of the Municipal Code of Chicago shall not apply to the Project or the Property (as defined on Exhibit A hereto).

SECTION 4. This ordinance shall be effective as of the date of its passage and approval.

S:\SHARED\Finance\Hilliard I and II - new subordinate loans\Hilliard I ordinance 2 docx

EXHIBIT A

BORROWER

Hilliard Homes I Limited Partnership, an Illinois limited partnership (the "Borrower"), of which HHI Development Corporation, an Illinois corporation (of which Peter Holsten is the sole member) is the sole managing general partner, and of which Alliant Tax Credit XXII, G.P , Inc. a Florida corporation, is the sole administrative general partner, and of which certain other entities are limited partners

PROJECT:

Replacement of certain historically significant windows in the Hilliard Buildings located at 2111 and 2031 S. Clark Street, Chicago (the "Property")

LOAN.

Source:

Amount

Term:

Interest:

Security."

Multi-Family Program Funds Not to exceed $252,608 Not to exceed 42 years Zero percent per annum Non-recourse loan;

Mortgage on the Property subordinate to (i) the liens of the Senior, Second, Third and Fourth Mortgages, (ii) the lien of the Junior Mortgage, and (iii) the lien of the Subordinate Sixth Mortgage

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I -- GENERAL INFORMATION

A. Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

Hilliard Homes I Limited Partnership

Check ONE ofthe following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[H the Applicant

[ ] a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the

Applicant in which the Disclosing Party holds an interest:

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

B. Business address of the Disclosing Party: 1020 West Montrose

Chicago, Illinois 60613

C. Telephone: 312-274-9137 Fax:³¹²""³³⁷"⁴⁵⁹² Email: josephdunne@holstenchicago.com

Name of contact person: Joseph Dunne
Federal Employer Identification No. (if you have one):._ '_
Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicago for replacement of existing windows.

Which City agency or department is requesting this EDS? Department of Planning and Development

If the Mailer is a contract being handled by the City's Department of Procurement Services, please complele the following:

Specification ii __ and Contract ii

Vit. 01-01-12

Page 1 of 13

SECTION II -

- DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

[ ] Limited liability company [ ] Limited liability partnership [J Joint venture [ | Not-for-profit corporation (Is the not-for-profit corporation also a 501(c)(3))?

1. Indicate the nature ofthe Disclosing Party:

[ J Person [

[ ] Publicly registered business corporation [

[ ] Privately held business corporation [

[ j Sole proprietorship [

[ ] Yes [ J No

[ ] Other (please specify)

| ] General partnership (1

[XJ Limited partnership

[ ] Trust |

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable:

Illinois

3. For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State of Illinois as a foreign entity?

[JYes

[JNo

[XJ N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal tilleholcler(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability-partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or enlily that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submil an EDS on ils own behalf.

Name Title

HH1 Development Corporation Managing General Partner

2 Please provide the following information concerning each person or entity having a direct or indirect beneficial interest (including ownership) in excess of 7 5% ofthe Disclosing Party. Examples of such an interest include shares in a corporation, partnership interest in a partnership or joint venture.

I'a-ie 2 nf 13

interest of a member or manager in a limited liability company, or interest of a beneficiary of a trust, estate or other similar entity. If none, slate "None." NOTE: Pursuant to Section 2-154-030 ofthe Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

Alliant- Tax Credit Fund XXTT, T.r.rl. 9.9__9_8_%

21600 Oxnard Street, Suite 1200 Woodland Hills, CA 91367-4949

SECTION III - BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Parly had a "business relationship," as defined in Chapter 2-156 ofthe Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes [Xj No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

SECTION IV -- DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature ofthe relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who arc paid solely through the Disclosing Party's regular payroll.

"Lobbyist" means any person or entity who undertakes to influence any legislative or administrative action on behalf of any person or entity other than: (1) a not-for-profit entity, on an unpaid basis, or (2) himself. "Lobbyist" also means any person or entity any part of whose duties as an employee of another includes undertaking to influence any legislative or administrative action.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Parly must either ask lhe City whether disclosure is required or make the disclosure.

Name (indicate whether Business Relationship to Disclosing Party Fees (indicate whether

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

Applegate & Thorne-Thorns en Attorney $20,000

626 West Jackson Blvd., Chicago

"Developers" Mortgage Corporation M"oTt~gag e~Ban king $T57oTjTJ"

2^4r-4Jo^feh-^-Sa-l-ie--S^-e^---S«ite---3-3-3'3

Chicaqo, Illinois 60601

(Add sheets il'necessary)

[ ] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V - CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Under Municipal Code Section 2-92-415, substantial owners of business entities that contract with the City must remain in compliance with their child support obligations throughout the contract's term.

Has any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[JYes [ ] No [X] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes ( J No

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article I ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the Cily. NOTE: If Article I applies lo lhe Applicant, the permanent compliance timeframe in Article 1 supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Page 4 of 13

The Disclosing Party and, if the Disclosing Party is a legal entity, all of those persons or entities identified in Section II.B.l. of this EDS:

are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any of the offenses set forth in clause B.2.b. of this Section V;
have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.
The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or enlily that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Parly, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business wilh federal or stale or local government, including the City, using substantially the same management, ovvnership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official of the Disclosing Party, any Contractor or any A ffiliated Entity or any other official, agent or employee ofthe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Neither the Disclosing Party, nor any Contractor, nor any Affiliated Entity of either the Disclosing Party or any Contractor nor any Agents have, during the five years before the date this EDS is signed, or, with respect to a Contractor, an Affiliated Entity, or an Affiliated Entity of a Contractor during the five years before the date of such Contractor's or Affiliated Entity's contract or engagement in connection with the Matter:

bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee of the City, the State oflllinois, or any agency ofthe federal government or of any state or local government in the United Slates of America, in that officer's or employee's official capacity;
agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control ofthe U.S. Department ofthe Treasury or the Bureau of Industry and Security ofthe U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any ofthe above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

N/A _

Page 6 of I 3

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all current employees of the Disclosing Party who were, at any time during the 12-month period preceding the execution date of this EDS, an employee, or elected or appointed official, ofthe City of Chicago (if none, indicate with "N/A" or "none").

None.

9. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the 12-month period preceding the execution date of this EDS, to an employee, or elected or appointed official, ofthe City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything made generally available to City employees or to the general public, or (ii) food or drink provided in the course of official City business and having a retail value of less than $20 per recipient (if none, indicate with "N/A" or "none"). As to any gift listed below, please also list the name ofthe City recipient. None.

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is [X] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Parly pledges:

"We are not and will not become a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. We further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. We understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss ofthe privilege of doing business with the City."

If the Disclosing Parly is unable to make this pledge because it or any of its affiliates (as defined in Section 2-32-455(b) ofthe Municipal Code) is a predatory lender within the meaning of Chapter 2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

N/A

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 ofthe Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-110 of the Municipal Code: Does any official or employee ofthe City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes |X] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit ofthe City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

\ ] Yes [ ] No

If you checked "Yes" to Item D.l., provide the names and business addresses ofthe City officials or employees having such interest and idenlify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2 the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page cS of 13

comply with these disclosure requirements may make any contract entered into with the City in connection with the Matter voidable by the City.

X 1. The Disclosing Party verifies that the Disclosing Party has searched any and all records of

the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage to or injury or death of their slaves), and the Disclosing Party has found no such records.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

Disclosing Party has found records of investments or profits from slavery or slaveholder insurance policies. The Disclosing Party verifies that the following constitutes full disclosure of all such records, including the names of any and all slaves or slaveholders described in those records:

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

NOTE: If the Matter is federally funded, complete this Section VI. If the Matter is not federally funded, proceed to Section VII. For purposes of this Section VI, tax credits allocated by the City and proceeds of debt obligations of the City are not federal funding.

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect to the Matter: (Add sheets if necessary): None .

(If no explanation appears or begins on the lines above, or if the letters "NA" or if the word "None" appear, it will be conclusively presumed that the Disclosing Party means that NO persons or entities registered under the Lobbying Disclosure Act of 1995 have made lobbying contacts on behalf of the Disclosing Party with respect to the Matter.)

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity lo influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member of Congress, an officer or employee of Congress, or an employee of a member ofCongrcss, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Pace 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy ofthe statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Parly is the Applicant, the Disclosing Party musl obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration of the Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

If the Matter is federally funded, federal regulations require the Applicant and all proposed subcontractors to submit the following information with their bids or in writing at the outset of negotiations.

Is the Disclosing Party the Applicant?

[X] Yes [ ] No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes [Xj No

Have you filed with the Joint Reporting Committee, the Director of the Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[ ] Yes [X] No

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

| ] Yes [X] No

If you checked "No" to question 1. or 2. above, please provide an explanation: The Applicant: is a limited partnership and has no employees.

Page 10 of 13

SECTION VII -- ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection wilh the Malter, whether procurement, City assistance, or olher City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Parly understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.citvofchicago.orq/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available lo the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement (his EDS up to the time (he City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kepi current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 ofthe Municipal Code.

The Disclosing Parly represents and warrants that:

Page 1 1 of 13

F.1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or olher charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.2 If the Disclosing Party is the Applicant, the Disclosing Party and its Affiliated Entities will not use, nor permit their subcontractors to use, any facility listed by the U.S. E.P.A. on the federal Excluded Parties List System ("EPLS") maintained by the U. S. General Services Administration.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.1. and F.2. above and will not, without the prior written consent ofthe City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F. 1., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Under penalty of perjury, the person signing below: (1) warrants that he/she is authorized to execute this EDS and Appendix A (if applicable) on behalf of the Disclosing Party, and (2) warrants that all certifications and statements contained in this EDS and Appendix A (if applicable) are true, accurate and complete as of the date furnished to the City.

Hilliard Homes I Limited Partnership (Print or^ype ruime of Diydosii^Pam

»y: 1.

vr~

(Sign here)

Peter Holsten

(Print or type name ofperson signing)

Member, HH1 Development Corporation

J4anagiiag--Geiieral-._P-ar_trier

(Print or type title ofperson signing)

(slate).

Signe^and SAVorn to before me on (date)

at C_ c^ss^^^ County,

Notary Public.

Commission expires: ^_J_j^~ ^ j J ^

Pa tie 12 of 13

% "OI-'FICIALSEAL

^ NIKISHIANNA CLAY

^ Notary Public. State of Illinois «

^ ^.a.m.^.onE^res 08^6/15 |

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

This Appendix is to be completed only by (a) the Applicant, and (b) any legal entity which has a direct ovvnership interest in the Applicant exceeding 7.5 percent. It is not to be completed by any legal entity which has only an indirect ownership interest in the Applicant.

Under Municipal Code Section 2-154-015, the Disclosing Party must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as ofthe date this EDS is signed, the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any of the following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (1) all executive officers of the Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members ofthe Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes [X] No

If yes, please identify below (1) the name and title of such person, (2) the name ofthe legal entity to which such person is connected; (3) the name and title ofthe elected cily official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

Page 13 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I - GENERAL INFORMATION

A. Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

HH1 Development Corporation

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

[X] a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

B. Business address of the Disclosing Party: 1020 west Montrose Avenue

Chicago, Illinois 60613

Telephone: 312-274-9137 Fax: 312-337-4592 Email: josephdunne@holstenchicago.com
Name of contact person: Joseph Dunne

..... . ... (

Federal Employer Identification No. (if you have one): J
Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicago for replacement of existing windows.

G. Which Cily agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complele the following:

Specification // _ and Contract //

Vt'r. 01-01-12

Page 1 of 13

SECTION II -- DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

[ ] Limited liability company [ ] Limited liability partnership [ j Joint venture [ ) Not-for-profit corporation (Is the not-for-profit corporation also a 501(c)(3))?

1. Indicate the nature ofthe Disclosing Party:

[ | Person [

[ ] Publicly registered business corporation [

[X] Privately held business corporation [

[ ] Sole proprietorship [

[ ] Yes |" J No

[ ] Olher (please specify)

[ ] General partnership (1

[ ] Limited partnership

[ ] Trust [

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable:

Illinois

3. For legal entities not organized in the State of Illinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[] Yes

[]No

[XJ N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors ofthe entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any olher person or entity that controls the day-lo-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title Peter Holsten President

2. Please provide the following information concerning each person or entity having a direct or indirect beneficial interest (including ownership) in excess of 7.5% ofthe Disclosing Party. Examples of such an interest include shares in a corporation, partnership interest in a partnership or joint venture,

Pa tic 2 of 13

interest of a member or manager in a limited liability company, or interest of a beneficiary of a trust, estate or other similar entity. If none, state "None/' NOTE: Pursuant to Section 2-154-030 ofthe M unicipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended io achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

_Pet_er_Jlo.ls_t.erj li!2Jl_j^.t_J_oriiLr.aae._Ay_; 1__0_.%. ___

Chicago, Illinois 6 0613

SECTION III -- BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 ofthe Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes [Xi No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

SECTION IV -- DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature ofthe relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

Name (indicate whether Business Relationship to Disclosing Party Fees (indicate whether

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

(Add sheets if necessary)

[ ] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V - CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes [X] No [ ] No person directly or indirectly owns 10% or more ofthe

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ j Yes [ ] No

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article I ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Parly submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

The Disclosing Party and, if the Disclosing Party is a legal entity, all of those persons or entities lentified in Section 11.B. 1. of this EDS:

are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any of the offenses set forth in clause B.2.b. of this Section V;
have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.
The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but nol limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or entily that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, wilh the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ovvnership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee ofthe Disclosing Parly, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official of Ihe Disclosing Parly, any Contractor or any Affiliated Entily (collectively "Agents").

bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee ofthe City, the State of Illinois, or any agency of the federal government or of any state or local government in the United Slates of America, in that officer's or employee's official capacity;
agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or ofthe United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department ofthe Treasury or the Bureau of Industry and Security ofthe U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Parly is unable to certify to any ofthe above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

n/_a

Page 6 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all current employees ofthe Disclosing Parly who were, at any time during the 12-month period preceding the execution date of this EDS, an employee, or elected or appointed official, ofthe City of Chicago (if none, indicate with "N/A" or "none").

None .

9. To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the 12-month period preceding the execution date of this EDS, to an employee, or elected or appointed official, of the City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything made generally available to City employees or to the general public, or (ii) food or drink provided in the course of official City business and having a retail value of less than $20 per recipient (if none, indicate with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient. None.

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is [X] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

"We are nol and will not become a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. We further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. We understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss ofthe privilege of doing business with the City."

If the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in Scclion 2-32-455(b) ofthe Municipal Code) is a predatory lender within the meaning of Chapter 2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

N/A

Page 7 of 13

Irthe letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-1 56 of the Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-1 10 ofthe Municipal Code: Does any official or employee ofthe City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[]Yes [XJNo

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you cheeked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit ofthe City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes [ ] No

Tf you checked "Yes" to Item D.I., provide the names and business addresses ofthe City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2 the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Pane 8 of 13

comply with these disclosure requirements may make any contract entered into with the City in connection with the Matter voidable by the City.

_X 1. The Disclosing Party verifies that the Disclosing Party has searched any and all records of

the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage lo or injury or death of their slaves), and the Disclosing Party has found no such records.

_____ 2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI -- CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect to the Matter: (Add sheets if necessary): None .

2. The Disclosing Party has not spent and will not expend any federally appropriated funds lo pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity lo influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member ofCongrcss, an officer or employee ofCongrcss, or an employee of a member of Congress, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, ioan. or cooperative agreement.

Pa_>c9of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy ofthe statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) it is not an organization described in scclion 501(c)(4) ofthe Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986 but has nol engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration ofthe Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes [X] No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Vcs [ J No

Have you filed with the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[ ] Yes [ ] No

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[JYes [JNo

If you checked "No" to question 1. or 2. above, please provide an explanation:

SECTION VII -- ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

'Flic Disclosing Parly understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of"any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchica^o.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all of the information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Parly waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.
The information provided in this EDS must be kept current. In the event of changes, the Disclosing Party must supplement this EDS up to the time the City takes action on the Malter. If the Matter is a contract being handled by the City's Department of Procurement Services, the Disclosing Party must update this EDS as the contract requires. MOTE: With respect to Matters subject to Article I of Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified offenses), the information provided herein regarding eligibility must be kept current for a longer period, as required by Chapter 1-23 and Section 2-1 54-020 of lhe Municipal Code.

The Disclosing Party represents and warrants that:

Page 1 1 of 13

F. 1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.2 If the Disclosing Party is the Applicant, the Disclosing Parly and its Affiliated Entities will not use, nor permit their subcontractors to use, any facility listed by the U.S. E.P.A. on the federal Excluded Parties List System ("EPLS") maintained by the U. S. General Services Administration.

F.3 If the Disclosing Parly is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.1. and F.2. above and will not, without the prior written consent ofthe City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F. 1., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Under penalty of perjury, the person signing below: (1) warrants that he/she is authorized to execute this EDS and Appendix A (if applicable) on behalf ofthe Disclosing Party, and (2) warrants that all certifications and statements contained in this EDS and Appendix A (if applicable) are true, accurate and complete as of the date furnished to the City.

HH1 Development Corporation

(Print or type name of Dis

(Sign

Peter Holsten

(Print or type name ofperson signing)

JPres-ident

(Print or type title ofperson signing)

ate)

Sinned and savoiii to before me on (date) Si--

_ County, (stale).

' ^ vw^^r^r^l

y " Notary Public. % "OFFICIALSEA- \

^ l \ NiKiSHIANNA CLAY «

- X/2(rJ /T t _N0!=ir-Public. State ot IW'nois $

Commission expires: * l_cr_j- I /____ . X ,_t_»n_iros03/26.i5

Pane 12 of 13

CITY OF CHICACO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

This Appendix is to be completed only by (a) the Applicant, and (b) any legal entity which has a direct ownership interest in the Applicant exceeding 7.5 percent. It is not to be completed by any legal entity which has only an indirect ownership interest in the Applicant.

"Applicable Party" means (1) all executive officers ofthe Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners ofthe Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners ofthe Disclosing Party, if tire Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes [Xj No

If yes, please identify below (1) the name and title of such person, (2) the name ofthe legal entity to which such person is connected; (3) the name and title ofthe elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I - GENERAL INFORMATION

A. Legal name ofthe Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

Alliant Tax Credit Fund XXII, Ltd.

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

[X] a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

B. Business address of the Disclosing Party: 340 Royal Poinciana Way, Suite 305

Palm Beach, FL 33480

Telephone: 818-668-6800 Fax: 818-668-2828 Email: brian.qoldberg@alliantcapital.com
Name of contact person: Brian Goldberg
Federal Employer Identification No. (if you have one): ,_ ;
Brief description of contract, transaction or olher undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicaqo for replacement of existing windows.

Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification ii _N/A and Contract // N/A_

Ver. 01-01-12

Page 1 of 13

SECTION II -- DISCLOSURE OF OWNERSHIP INTERESTS < L J

A. NATURE OF THE DISCLOSING PARTY

1. Indicate the nature of the Disclosing Party:

[ ] Person [ ] Limited liability company

[ ] Publicly registered business corporation [ ] Limited liability partnership

[ ] Privately held business corporation [ ] Joint venture

[ ] Sole proprietorship [ ] Not-for-profit corporation

[ ] General partnership (Is the not-for-profit corporation also a 501(c)(3))?

[XJ Limited partnership [ ] Yes [ ] No

[ ] Trust [ ] Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable: Florida

3. For legal entities not organized in the State of Illinois: Has the organization registered to do business in the State of lllinois as a foreign entity?

[ ] Yes [XJ No [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title

Alliant Capital, Ltd. General Partner

Page 2 of 13

interest of a member or-mahager in a limited liability company, or interest of a beneficiary, of. a trust, estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 ofthe Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

Alliant Capital, Ltd. 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 0.01% (GP)

Verizon Credit, Inc. 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 99.99% (LP)

SECTION III -- BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes [X] No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

N/A

SECTION IV - DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature ofthe relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Parly is not required to disclose employees who arc paid solely through the Disclosing Party's regular payroll.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

Page 3 of 13

N-anfe>(indicafe'-w-hether"^:'-" Business v^R^elationship-to^DisclosingrRarty ;. «Fe,es(*inJ.ip:_tevWihether""

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

N/A

(Add sheets if necessary)

[X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V -- CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more ofthe Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes [X] No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes [ ] No

FURTHER CERTIFICATIONS

1. Pursuant lo Municipal Code Chapter 1-23, Article I ("Article l")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies lo the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Pane 4 of 13

_V2:'V^he^is'cl0sinjg Party, and, if thd'"D'isclosing-:Party:is _ legal entity, all of those persons or entities;.:^ -. identified in Section II.B.l. of this EDS:

are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any of the offenses set forth in clause B.2.b. of this Section V;
have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.

3. The certifications in subparts 3, 4 and 5 concern:

- the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, wilh the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entily means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee ofthe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

- ^r '^Neith"eF^H6^,Di_c'losin^,g^;P-arty;- nor any ContfacTaf^W^ of either^he _)isclosingT?arty - -

or any Contractor nor any Agents have, during the five years before the date this EDS is signed, or, with respect to a Contractor, an Affiliated Entity, or an Affiliated Entity of a Contractor during the five years before the date of such Contractor's or Affiliated Entity's contract or engagement in connection with the Matter:

1. bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee of the City, the State of Illinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
2. agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
3. made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the Bureau of Industry and Security of the U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any of the above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

_N/A

Page 6 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all current employees ofthe Disclosing Party who were, at any time during the 12-

month period preceding the execution date of this EDS, an employee, or elected or appointed official,

ofthe City of Chicago (if none, indicate with "N/A" or "none").

N/A

9. To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the

12-month period preceding the execution date of this EDS, to an employee, or elected or appointed

official, ofthe City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything

made generally available to City employees or to the general public, or (ii) food or drink provided in the

course of official City business and having a retail value of less than $20 per recipient (if none, indicate

with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient.

N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is |X] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

"We are not and will not become a predatory lender as defined in Chapter 2-32 of the Municipal Code. We further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. We understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss of the privilege of doing business with the City."

If the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in

Section 2-32-455(b) ofthe Municipal Code) is a predatory lender within the meaning of Chapter

2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

_.N/A

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 ofthe Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-1 10 ofthe Municipal Code: Does any official or employee of the City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes |X] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit ofthe City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes |X] No

If you checked "Yes" to Item D.l., provide the names and business addresses ofthe City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any Cily official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply "with these disclosure requirements may make any contract entered into with the City in connection with the Matter voidable by the City.

X 1 - The Disclosing Party verifies that the Disclosing Party has searched any and all records of the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage to or injury or death of their slaves), and the Disclosing Party has found no such records.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with respect to the Matter: (Add sheets if necessary):

_.None

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entily listed in Paragraph A. 1. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member ofCongrcss, an officer or employee of Congress, or an employee of a member ofCongrcss, in connection wilh the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration ofthe Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes IX] No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ J Yes [ ] No

Have you filed wilh the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[]Ycs [JNo

Have you participated in any previous contracts or subcontracts subjccl to the equal opportunity clause?

[JYes [JNo

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII-- ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the time the City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the infonnation provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 of the Municipal Code.

The Disclosing Party represents and warrants that:

Page I 1 of 13

F. 1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.1. and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F.1., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Alliant Tax Credit Fund XXII, Ltd.

Brian_Go!db.ercj.

(Print or type name ofperson signing)

President

(Print or type title ofperson signing)

Signed and sworn to before me on (date)

Notary Public

falcon

Page 12 of 13

Co in m i s s io n ex p i res:

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

Under Municipal Code Section 2-154-015, the Disclosing Party must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as of the date this EDS is signed, the Disclosing Party or any "Applicable Parly" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any ofthe following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (1) all executive officers of the Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners ofthe Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes P<] No

Page 13 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I -- GENERAL INFORMATION

Legal name ofthe Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

Alliant Capital, Ltd.

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

(X] a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [ ] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

Business address of the Disclosing Party: 340 Royal Poinciana Way, Suite 305

Palm Beach, FL 33480

Telephone: 818-668-6800 Fax: 818-668-2828 Email: brian.goldberg@alliantcapital.com
Name of contact person: Brian Goldberg
Federal Employer Identification No. (if you have one):

P. Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicaqo for replacement of existing windows.

G. Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification //■ N/A and Contract # N/A

Vcr. 01-01-12

Page 1 of 13

SECTION II - DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

1. Indicate the nature of the Disclosing Party:

[ ] Person

[ ] Publicly registered business corporation [ ] Privately held business corporation [ ] Sole proprietorship [ ] General partnership (XJ Limited partnership [ ] Trust

[ ] Limited liability company

[ ] Limited liability partnership

[ ] Joint venture

[ ] Not-for-profit corporation

(Is the not-for-profit corporation also a 501(c)(3))?

[ J Yes [ ] No

[ J Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable: Florida

3. For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[ ] Yes (X| No [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entily listed below musl submit an EDS on its own behalf.

Name Title

Alliant Inc. General Partner _

Page 2 of 13

interest of a member of manager in a limited'liability company," or interest of a beneficiary of a trust, estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 ofthe Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

Alliant, Inc. 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 1% (GP)

The Alliant Company, LLC 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 99% (LP)

SECTION III -- BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes [X] No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

N/A

SECTION IV DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature ofthe relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

Page 3 of 13

'Na'nie (indicate whether " Business * ■ Relationship to' Disclosing Party ; Fees (indicate whether - *

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

N/A

(Add sheets if necessary)

[X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V -- CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more ofthe Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes |X] No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

f J Yes [ ] No

1-URTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article I ("Article I'")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article 1 is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Pane 4 of 13

'^;:-^/"-'2.""'Tⁱhe'^IDisc^,16sing Party arid, if the-Disclosing Party is a-legal entity-,^ all of-those-persons or entities-identified in Section II.B.l. of this EDS:

are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any of the offenses set forth in clause B.2.b. of this Section V;
have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.

3. The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business wilh federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee ofthe Disclosing Parly, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

Neither the^isc losing Party, nor any Contractor'; nor-any Affiliated Entityofeither-the'Disclosing Party ------- - ■--

bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee ofthe City, the State of Illinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the Bureau of Industry and Security of the U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any ofthe above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

_N/A

Page 6 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all current employees of the Disclosing Party who were, at any time during the 12-

monlh period preceding the execution date of this EDS, an employee, or elected or appointed official,

ofthe City of Chicago (ifnonc, indicate with "N/A" or "none").

N/A

9. To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the

12-month period preceding the execution date of this EDS, to an employee, or elected or appointed

official, of the City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything

made generally available to City employees or to the general public, or (ii) food or drink provided in the

course of official City business and having a retail value of less than $20 per recipient (if none, indicate

with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient.

N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is [X] is not

a "financial institution" as defined in Section 2-32-455(b) of the Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

"We are not and will not become a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. Wc further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. We understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss ofthe privilege of doing business with the City."

If the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in Section 2-32-455(b) ofthe Municipal Code) is a predatory lender within the meaning of Chapter 2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

_MA _

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 ofthe Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-1 10 of the Municipal Code: Does any official or employee ofthe City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes rX] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit of the City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes IX] No

If you checked "Yes" to Item D.l., provide the names and business addresses of the City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirementsTtiay make any contract entered into with the Gity in connection with the Matter voidable by the City.

X 1- The Disclosing Party verifies that the Disclosing Party has searched any and all records of the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage to or injury or death of their slaves), and the Disclosing Party has found no such records.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf ofthe Disclosing Party with

respect to the Matter: (Add sheets if necessary):

None

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member ofCongrcss, an officer or employee ofCongrcss, or an employee of a member ofCongrcss, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy ofthe statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Parly certifies that either: (i) it is not an organization described in section 501(c)(4) of the Internal Revenue Code of 1986; or(ii) it is an organization described in section 501(c)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration ofthe Matter and must make such certifications promptly available to the City upon request.

13. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes DO No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes" [ ] No

Have you filed with the Joint Reporting Committee, (he Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

f] Yes []No

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ ] Yes [ ] No

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII-- ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available lo the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. 'I he information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this FDS up to the time the City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 ofthe Municipal Code.

The Disclosing Party represents and warrants that:

Page 1 1 of 13

F.1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.L and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F.L, F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Alliant Capital, Ltd.

(Print or type nam^OfDjsclosingJParty)

Brian Goldberg

(Print or type name ofperson signing)

President

(Print or type title ofperson signing)

Pane 12 of 13

Signed and sworn to before me on (date)

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

Under Municipal Code Section 2-154-015, the Disclosing Party must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as of the date this EDS is signed, the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any of the following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (1) all executive officers of the Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners ofthe Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members ofthe Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Parly" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ J Yes |X] No

Page 13 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION 1 - GENERAL INFORMATION

Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

The Alliant Company, LLC

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

(X] a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

Business address of the Disclosing Party: 340 Royal Poinciana Way, Suite 305

Palm Beach, FL 33480

Telephone: 818-668-6800 Fax: 818-668-2828 Email: Shawn.Horwitz@alliantcapital.com
Name of contact person: Shawn Horwitz
Federal Employer Identification No. (if you have one): ■

Brief description of contract, transaction or other undertaking (referred to below as the "Matter") lo which this IiDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicaqo for replacement of existing windows.

Which Cily agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete lhe following:

Specification // N/A and Contract # N/A

Ver. 01-01-12

Page 1 of 13

SECTION II - DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

1. Indicate the nature of the Disclosing Party:

[ ] Person

[ ] Publicly registered business corporation [ ] Privately held business corporation [ ] Sole proprietorship [ ] General partnership [ ] Limited partnership [ ] Trust

P<] Limited liability company

[ ] Limited liability partnership

[ ] Joint venture

[ ] Not-for-profit corporation

(Is the not-for-profit corporation also a 501(c)(3))?

[]Yes []No [ ] Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable: Florida

3. For legal entities not organized in the State of Illinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[ ] Yes [X] No [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entily that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title

Alliant. Inc, Managing Member

Page 2 of 13

interest of a member or manager'iii "'a -1 imTfe'dHTabT 1 iVycompany^or interest-'of a beneficiary-of.a-trustjv.-,^v estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 of the Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

Alliant, Inc. 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 1% (Managing Member)

Palm Drive Associates, LLC 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 24.75% (Non-Managing Member)

344 Columbia Associates, Ltd. 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 24.75% (Non-Managing Member)

SAK Housing, LLC 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 49.5% (Non-Managing Member)

SECTION III - BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes |X] No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

N/A

SECTION IV - DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature of the relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

Page 3 of 13

Name (ihdicate^;\vhether ^: Business- ---RHaTiori'sliip"to^-''Dis'cto'sing Party Fee's (indicate whether,-

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

N/A

(Add sheets if necessary)

[X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V ~ CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes |X] No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[JYes [JNo

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article I ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article 1 applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Page 4 of 13

2T"The Disclosing Party arid, if the Disclosing PartyMs a legal entity, all of those pers6ns?or entities -identified in Section II.B.l. of this EDS:

are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any of the offenses set forth in clause B.2.b. of this Section V;
have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.

3. The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section I V, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee of the Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

' Neither the^:-E)isclosing"-Party, nor any Contractor;-nbr^rany\A;ffiHated Entity of cither the_;Diselosing Party -or any Contractor nor any Agents have, during the five years before the date this EDS is signed, or, with respect to a Contractor, an Affiliated Entity, or an Affiliated Entity of a Contractor during the five years before the date of such Contractor's or Affiliated Entity's contract or engagement in connection with the Matter:

1. bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee ofthe Cily, the State oflllinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
2. agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
3. made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any ofthe following lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the Bureau of Industry and Security ofthe U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any ofthe above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

_N/A

Page 6 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all current employees of the Disclosing Party who were, at any time during the 12-

month period preceding the execution date of this EDS, an employee, or elected or appointed official,

ofthe City of Chicago (if none, indicate with "N/A" or "none").

N/A

9. To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the

12-month period preceding the execution date of this EDS, to an employee, or elected or appointed

official, ofthe City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything

made generally available to City employees or to the general public, or (ii) food or drink provided in the

course of official City business and having a retail value of less than $20 per recipient (if none, indicate

with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient.

N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is |X] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

-MIA

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 of the Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-110 ofthe Municipal Code: Does any official or employee ofthe City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes |X] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit ofthe City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes |X] No

If you checked "Yes" to Item D.l., provide the names and business addresses of the City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or m an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

- comply with these disclosure requirements may make any contract enter.ed-intq- with the-Gity in connection with the Matter voidable by the City.

X 1. The Disclosing Party verifies that the Disclosing Party has searched any and all records of the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage to or injury or death of their slaves), and the Disclosing Party has found no such records.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI -- CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect to the Matter: (Add sheets if necessary):

None

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt lo influence an officer or employee of any agency, as defined by applicable federal law, a member ofCongrcss, an officer or employee of Congress, or an employee of a member ofCongrcss, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) of the Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration of the Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes M No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes [ ] No

Have you filed with the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[]Yes ~ [JNo

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ ] Yes [ J No

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII -- ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the time the City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 ofthe Municipal Code.

The Disclosing Party represents and warrants that:

Page 1 1 of 13

F. 1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F. 1. and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F. 1., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Under penalty of perjury, the person signing below: (1) warrants that he/she is authorized to execute this EDS and Appendix A (if applicable) on behalf ofthe Disclosing Party, and (2) warrants that all certifications and statements contained in this EDS and Appendix A (if applicable) are true, accurate and complete as ofthe date furnished to the City.

Shawn Horwitz

(Print or type name ofperson signing)

Chief Executive Officer

( Print or type title of person signing)

Signed and sworn to before me on (date)

Notary Public

Page 12 of 13

Commission expires:

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

"Applicable Party" means (1) all executive officers ofthe Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes [Xl No

Page 13 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I - GENERAL INFORMATION

A. Legal name ofthe Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

Alliant, Inc.

Check ONE ofthe following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

|X] a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

Business address of the Disclosing Party: 340 Royal Poinciana Way, Suite 305

Palm Beach, FL 33480

Telephone: 818-668-6800 Fax: 818-668-2828 Email: brian.qoldberq@alliantcapital.com
Name of contact person: Brian Goldberg
Federal Employer Identification No. (if you have one):^:

Brief description of contract, transaction or olher undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicaqo for replacement of existing windows.

Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete lhe following:

Specification # N/A and Contract # N/A

Ver. 01-01-12

Page 1 of 13

SECTION II - DISCLOSURE OF OVVNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

1. Indicate the nature of the Disclosing [ ] Person

[ ] Publicly registered business corporation |X] Privately held business corporation [ ] Sole proprietorship [ ] General partnership [ ] Limited partnership [ ] Trust

Party:

[ ] Limited liability company

[ ] Limited liability partnership

[ ] Joint venture

[ ] Not-for-profit corporation

(Is the not-for-profit corporation also a 501(c)(3))?

[]Yes [JNo [ J Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable:

Florida

3. For legal entities not organized in the State of Illinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

PC No

[] Yes

[ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titlcholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title

Sidney Kohl Director/Chairman of the Board

Shawn Horwitz Director/Chief Executive Office

Scott Kotick Director/Executive Vice President

Brian Goldberg President

James Jenkins Director/Vice President/Treasurer/Secretary

Please provide the following information concerning each person or entity having a direct or indirect beneficial interest (including ownership) in excess of 7.5% ofthe Disclosing Party. Examples of such an interest include shares in a corporation, partnership interest in a partnership or joint venture,

Page 2 of 13

interest of a member'or manager in a lim7teid1iab'ility"company, or interest of a beneficiary of a trust, estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 of the Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

Sidney Kohl 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 50% Shareholder

Shawn Horwitz 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 25% Shareholder

Scott Kotick 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 25% Shareholder

SECTION III -- BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes |X] No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

N/A

SECTION IV - DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

Page 3 of 13

Name (indicate whether Business Relationship to Disclosing Party Fees (indicate whether "

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

N/A

(Add sheets if necessary)

[X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V - CERTIFICATIONS

COURT-ORDERED CFIILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes |X] No [ ] No person directly or indirectly owns 10% or more ofthe

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes [ ] No

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article I ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Page 4 of 13

The Disclosing Party and, if the Disclosing Party is a legal entity, all of those persons or entities identified in Section II.B.l. of this EDS:

1. are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
2. have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
3. are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any ofthe offenses set forth in clause B.2.b. of this Section V;
4. have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
5. have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.
The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");

any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ovvnership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control ol'another person or entity;
any responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee ofthe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

Neither the Disclosing Party, nor any Contractor, nor ariy Affiliated Entity of "either the Disclosing-Party or any Contractor nor any Agents have, during the five years before the date this EDS is signed, or, with respect to a Contractor, an Affiliated Entity, or an Affiliated Entity of a Contractor during the five years before the date of such Contractor's or Affiliated Entity's contract or engagement in connection with the Matter:

1. bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee ofthe City, the State oflllinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
2. agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
3. made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or ofthe United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control ofthe U.S. Department of the Treasury or the Bureau of Industry and Security ofthe U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any of the above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

,_N/A_

Page 6 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. Jo the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all current employees ofthe Disclosing Party who were, at any time during the 12-

month period preceding the execution date of this CDS, an employee, or elected or appointed official,

ofthe City of Chicago (if none, indicate with "N/A" or "none").

N/A

9. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the

12-month period preceding the execution date of this EDS, to an employee, or elected or appointed

official, of the City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything

made generally available to City employees or to the general public, or (ii) food or drink provided in the

course of official City business and having a retail value of less than $20 per recipient (if none, indicate

with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient.

N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is |X] is not

a "financial institution" as defined in Section 2-32-455(b) of the Municipal Code.

If the Disclosing Parly IS a financial institution, then the Disclosing Party pledges:

If the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in

Section 2-32-455(b) ofthe Municipal Code) is a predatory lender within the meaning of Chapter

2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

...N/A

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-1 56 of the Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-110 ofthe Municipal Code: Does any official or employee ofthe City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes |X] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit ofthe City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes |X] No

If you checked "Yes" to Item D.l., provide the names and business addresses of the City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any Cily official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check cither 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirements may make any contract entered into with -theCity in connection with the Matter voidable by the City.

X 1 The Disclosing Party verifies that the Disclosing Party has searched any and all records of the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage to or injury or death of their slaves), and the Disclosing Party has found no such records.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect to the Matter: (Add sheets if necessary):

None

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member ofCongrcss. an officer or employee of Congress, or an employee of a member ofCongrcss, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy ofthe statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(e)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration of the Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes DO No

If "Yes," answer the three questions below:

Have you developed and do you have on File affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes [ ] No

Have you filed with the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[]Yes [JNo

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ ] Yes [ ] No

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII - ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this FDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this FDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the time the City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 ofthe Municipal Code.

The Disclosing Party represents and warrants that:

Page I 1 of 13

F.1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F. 1. and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F.L, F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Alliant, Inc.

Brian Goldberg

(Print or type name ofperson signing)

President

(Print or type title ofperson signing)

Signed and sworn to before me on (date) _

at iOStY^i^ County, (state).

fW^Q^W^ Notary Public.

Commission expires:_ 1^7 . i "...!.?',* Commission # 2042671 i

\ "~ " Notary Public - California _z

I '^^;;>?i4--|/ Los Angeles County j 3 j ^^-^ My Comm. Expires Sep 24, 2017 £

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

"Applicable Party" means (1) all executive officers ofthe Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners ofthe Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes X] No

If yes, please identify below (1) the name and title of such person, (2) the name of the legal entity to which such person is connected; (3) the name and title ofthe elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

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CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I -- GENERAL INFORMATION

Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

SAK Housing, LLC

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

[Xl a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

Business address of the Disclosing Party: 340 Royal Poinciana Way, Suite 305

Palm Beach, FL 33480

Telephone: 561-833-5795 Fax: 561-833-3684 Email: ijenkinsfaeskopb.com
Name of contact person: James Jenkins
Federal Employer Identification No. (if you have one): ■_
Brief description of contract, transaction or other undertaking (referred to below as the "Matter") lo which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicago for replacement of existing windows.

Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification // _N/A and Contract # N/A

Vcr. 01 -01-12

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SECTION II -- DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

1. Indicate the nature of the Disclosing Party:

Person P<J

Publicly registered business corporation [ ]

Privately held business corporation [ ]

Sole proprietorship [ ]

General partnership (Is

Limited partnership

Trust [ ]

Limited liability company Limited liability partnership Joint venture Not-for-profit corporation

the not-for-profit corporation also a 501(c)(3))?

[JYes [JNo Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable: Florida

3. For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[ ] Yes |XJ No [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each genera! partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Parly. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title

Robert Kohl Managing Member

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interest of a member or manager in a limited liability company, or interest of a beneficiary of a trust, estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 of the Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

Kohl New Generations Trust 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 11.25%

SAK Housing, Inc. 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 45%

Sidney A Kohl 2012 Irrevocable Family Trust 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 24%

The Lawrence Kohl 2013 Family Trust 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 15%

SECTION III - BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes pq No

If yes, please identify below the name(s) of such City elected official(s) and describe such rclationship(s):

N/A

SECTION IV - DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

"Lobbyist" means any person or entity who undertakes lo influence any legislative or administrative action on behalf of any person or entity other than: (1) a not-for-profit entity, on an unpaid basis, or (2) himself. "Lobbyist" also means any person or entity any part of whose duties as an employee of another includes undertaking to influence any legislative or administrative action.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

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Name (indicate whether Business Relationship'to Disclosing Party Fees (indicate whether

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

N/A

(Add sheets if necessary)

|X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V - CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Flas any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes |X] No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes [ ] No

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article I ("Article I")(whieh the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy io commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance wilh Article I is a continuing requirement for doing business with the City. NOTF: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

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2. " The Disclosing Party and, if the Disclosing Pa'rty'is a legal entity, all of those persons or entities identified in Section II.B.l. of this EDS:

1. are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
2. have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
3. are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any ofthe offenses set forth in clause B.2.b. of this Section V;
4. have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
5. have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.
The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee ofthe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Parly, any Contractor or any Affiliated Entity (collectively "Agents").

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Neither the Disclosing Party,' nor any Contractor', nor ariy Affiliated Entity of either the Disclosing Party or any Contractor nor any Agents have, during the five years before the date this EDS is signed, or, with respect to a Contractor, an Affiliated Entity, or an Affiliated Entity of a Contractor during the five years before the date of such Contractor's or Affiliated Entity's contract or engagement in connection with the Matter:

bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee of the City, the Slate of Illinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the Bureau of Industry and Security ofthe U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply wilh the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-1 56 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any ofthe above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

N/A

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If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all current employees ofthe Disclosing Party who were, at any time during the 12-

month period preceding the execution date of this F.DS, an employee, or elected or appointed official,

ofthe City of Chicago (if none, indicate with "N/A" or "none").

N/A

9. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the

12-month period preceding the execution date of this EDS, to an employee, or elected or appointed

official, of the City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything

made generally available to City employees or to the general public, or (ii) food or drink provided in the

course of official City business and having a retail value of less than $20 per recipient (if none, indicate

with "N/A" or "none"). As to any gift listed below, please also list the name ofthe City recipient.

N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is |X] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

"We are not and will not become a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. We further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 of the Municipal Code. We understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss ofthe privilege of doing business with the City."

If the Disclosing Party is unable to make this pledge because il or any of its affiliates (as defined in Section 2-32-455(b) ofthe Municipal Code) is a predatory lender within the meaning of Chapter 2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

__N_/A

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Tf the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 ofthe Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-1 10 of the Municipal Code: Does any official or employee of the City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes |X] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit of the City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes IX] No

If you checked "Yes" to Item D.l., provide the names and business addresses ofthe City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party furiher certifies thai no prohibited financial interest in the Matter will be acquired by any Cily official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

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comply with these disclosure requirements may make any contract entered into with the City in connection with the Matter voidable by the City.

X 1. The Disclosing Party verifies that the Disclosing Party has searched any and all records of the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage lo or injury or death of their slaves), and the Disclosing Party has found no such records.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect to the Matter: (Add sheets if necessary):

None

(If no explanation appears or begins on the iincs above, or if the letters "NA" or if the word "None" appear, it will be conclusively presumed that the Disclosing Party means that NO persons or entities registered under the Lobbying Disclosure Act of 1995 have made lobbying contacts on behalf of the Disclosing Party with respect to the Matter.)

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay-any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member ofCongrcss, an officer or employee ofCongrcss, or an employee of a member of Congress, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

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The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration of the Matter and must make such certifications promptly available lo the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes 1X1 No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes [1 No

Have you filed with the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[ ] Yes [ ] No

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ | Yes [ ] No

If you checked "No" to question I. or 2. above, please provide an explanation:

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SECTION VII ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement. City assistance, or other City action, and arc material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicaRO.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (3 12) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the lime the City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 ofthe Municipal Code.

The Disclosing Party represents and warrants that:

Page 1 1 of 13

F. 1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.1. and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F. 1., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

SAK Housing, LLC

(Print or type name of Disclosing Party)

By: <S^'7 --,y<ii _

(Sign hete) \

Robert Kohl

(Print or type name ofperson signing)

Managing Member

(Print or type title of person signing)

Signed and sworn to before me on (date) "/7o I-' c^S J^O/^/ ■ at "9-1J ni BuW'h County, f'-j_r> r ,rJ c< (state).

MOIRA MALLOY-EFi MY COMMISSION '■ EXPIRES Mar'.r.V' Bonded Thfu Notary Fulji'C ■.

,.7<V/C'

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

Under Municipal Code Section 2-154-015, the Disclosing Party must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as ofthe date this EDS is signed, the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any ofthe following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (1) all executive officers ofthe Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members ofthe Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes |X] No

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I - GENERAL INFORMATION

A. Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable: Kohl New Generations Trust

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

DC a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes 1 Limited Partnership

3. [ ] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

Business address of the Disclosing Party: 340 Royal Poinciana Way, Suite 305

Palm Beach, FL 33480

Telephone: 561-833-5795 Fax: 561-833-3684 Email: jjenkins@eskopb.com
Name of contact person: James Jenkins
Federal Employer Identification No. (if you have one):_^ _
Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicaqo for replacement of existing windows.

Which City agency or department is requesting this EDS'? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification # N/A and Contract # N/A

Vcr. 01-01-12

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SECTION II - DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

Indicate the nature of the Disclosing Party:

[ ] Person

[ ] Publicly registered business corporation [ ] Privately held business corporation [ ] Sole proprietorship f ] General partnership [ ] Limited partnership IX] Trust

[ ] Limited liability company

[ ] Limited liability partnership

[ ] Joint venture

[ ] Not-for-profit corporation

(Is the not-for-profit corporation also a 501(c)(3))?

[ ] Yes [ ] No

[ ] Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable:

Florida

3. For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State of Illinois as a foreign entity?

[ ] Yes IX] No [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability-partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title

Pentacorp. Inc Patricia Fadness. President Trustee

2. Please provide the following information concerning each person or entity having a direct or indirect beneficial interest (including ownership) in excess of 7.5% of the Disclosing Party. Examples of such an interest include shares in a corporation, partnership interest in a partnership or joint venture,

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interest of a member or manager in a limited liability company, or interest of a beneficiary of a trust, estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 ofthe Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

SK Grandchildren 340 Rcyal Poinciana Way, suite 305, Palm Beach, FL 33480 Sole Beneficiary

SECTION III - BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes IX] No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

N/A

SECTION IV - DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature ofthe relationship, and the total amount of the fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

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Name (indicate whether Business Relationship to Disclosing Party Fees (indicate whether

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

N/A

(Add sheets if necessary)

|X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V -- CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes [X] No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes [ ] No

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1 -23, Article I ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Page 4 of 13

2. The Disclosing Party and, if the Disclosing Party is a legal entity, all of those persons or entities identified in Section II.B.l. of this EDS:

are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any of the offenses set forth in clause B.2.b. of this Section V;
have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.

3. The certifications in subparts 3, 4 and 5 concern:

- the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City> using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official of the Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee of the Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official of the Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee of the City, the State oflllinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department ofthe Treasury or the Bureau of Industry and Security of the U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any ofthe above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

N/A

Page 6 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all current employees of the Disclosing Party who were, at any time during the 12-month period preceding the execution date of this EDS, an employee, or elected or appointed official, ofthe City of Chicago (if none, indicate with "N/A" or "none").

_N/A

9. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the

12-month period preceding the execution date of this EDS, to an employee, or elected or appointed

official, ofthe City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything

made generally available to City employees or to the general public, or (ii) food or drink provided in the

course of official City business and having a retail value of less than $20 per recipient (if none, indicate

with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient.

N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is PC] is not

a "financial institution" as defined in Section 2-32-455(b) of the Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Parly pledges:

"We are not and will not become a predatory lender as defined in Chapter 2-32 of the Municipal Code. We further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 of the Municipal Code. We understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss of the privilege of doing business with the City."

If the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in

Section 2-32-455(b) of the Municipal Code) is a predatory lender within the meaning of Chapter

2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

N/A

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 ofthe Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-110 of the Municipal Code: Does any official or employee ofthe City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes DO No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D. 1., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit of the City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes D<] No

If you checked "Yes" to Item D.l., provide the names and business addresses ofthe City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirements may make any contract entered into with the City in connection with the Matter voidable by the City.

X 1- The Disclosing Party verifies that the Disclosing Party has searched any and all records of the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage to or injury or death of their slaves), and the Disclosing Party has found no such records.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect to the Matter: (Add sheets if necessary):

None

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member of Congress, an officer or employee of Congress, or an employee of a member of Congress, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) of the Internal Revenue Code of 1986; or (ii) it is an organization described in section 503(c)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration of the Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes IX] No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[]Yes []No

Have you filed with the Joint Reporting Committee, the Director of the Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[]Yes []No

Have you participated in any previous contracts cr subcontracts subject to the equal opportunity clause?

[ ] Yes [ ] No

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII -- ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, Cily assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Parly understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all of the information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the time the City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 of the Municipal Code.

The Disclosing Party represents and warrants that:

Page 11 of 13

F. 1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

NOTE: If the Disclosing Party cannot certify as to any of the items in F.L, F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Kohl NewjGenerations Trust

(Print o/type name of Disclosing Party)

, (Jl n

fSiun Wr^y^racorP. "nc , Trustee i.oign n^,^)_By _Patrjcia _Fadness president

Patricia Fadness

(Print or type name of person signing)

President

(Print or type title of person signing)

Signed and sworn to before me on (date) ^-/Js.-s ,3Q~" 5 ^al 1.7 (rn i %r> i'h County, -f L_r> rit«~ (state).

a^j ^.V}'^6cj - / -Iv V'/-cf.,^ Notary Public.

Commission expires: J'/ ' ■J'ClS' .

Page 12 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

Under Municipal Code Section 2-154-015, the Disclosing Party must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as ofthe date this EDS is signed, the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any of the following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-iaw, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (1) all executive officers of the Disclosing Party listed in Section ILB.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes PX] No

If yes, please identify below (1) the name and title of such person, (2) the name of the legal entity to which such person is connected; (3) the name and title of the elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

Page 13 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I -- GENERAL INFORMATION

A. Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

SAK Housing, Inc.

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

(X| a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [ ] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

Business address of the Disclosing Party: 340 Royal Poinciana Way, Suite 305

Palm Beach, FL 33480

Telephone: 561-833-5795 Fax: 561-833-3684 Email: ijenkins@eskopb.com
Name of contact person: James Jenkins
Federal Employer Identification No. (if you have one):

Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains, (include project number and location of property, if applicable):

Subordinate financing from the City of Chicaqo for replacement of existing windows.

Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification ii N/A and Contract ii N/A

Vcr. 01-01-12

Page 1 of 13

SECTION II - DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

I. Indicate the nature of the Disclosing Party:

[ ] Person

[ ] Publicly registered business corporation

[XJ Privately held business corporation

[ ] Sole proprietorship

[ ] General partnership

[ ] Limited partnership

[ ] Trust

[ ] Limited liability company [ ] Limited liability partnership [ ] Joint venture [ ] Not-for-profit corporation

(Is the not-for-profit corporation also a 501(c)(3))?

[ ] Yes []No [ ] Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable: Florida

3. For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[ ] Yes rXJ No [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a genera! partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity (hat controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title

Sidney A. Kohl President

James C. Jenkins Vice President / Treasurer

2. Please provide the following information concerning each person or entily having a direct or indirect beneficial interest (including ownership) in excess of 7.5% ofthe Disclosing Party. Examples of such an interest include shares in a corporation, partnership interest in a partnership or joint venture,

Page 2 of 13

Name Business Address Percentage Interest in the

Disclosing Party

Jana Kohl 1992 Trust 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 33 333% Shareholder

Lisa Kohl 1992 Trust 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 33 333% Shareholder

Lori Gandleman 1992 Trust 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 33.333% Shareholder

SECTION III -- BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes |X] No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

JN/A

SECTION IV -- DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature of the relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Parly is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Parly must either ask the City whether disclosure is required or make the disclosure.

Page 3 of 13

Name (indicate whether retained or anticipated to be retained)

N/A

Business Relationship to Disclosing Party Address (subcontractor, attorney, lobbyist, etc.)

Fees (indicate whether paid or estimated.) NOTE: "hourly rate" or "t.b.d." is not an acceptable response.

(Add sheets if necessary)

fX] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V - CERTIFICATIONS

A. COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more ofthe Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes

|X] No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[]No

[ ] Yes

B. FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article I ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business wilh the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, a it em pled, or conspiracy io commit bribery, ihe.fl, fraud, forgery, perjury, dishonesty or deceit against an officer or employee of the City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Page 4 of 13

The Disclosing Party and, if the Disclosing Party is a legal entity, all of those persons or entities identified in Section II.B.l. of this EDS:

1. are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
2. have not, within a five-year period preceding the dale of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or slate antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
3. are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any of the offenses set forth in clause B.2.b. of this Section V;
4. have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
5. have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.
The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or entily that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entily following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, wilh the Contractor, is under common control of another person or entity;
any responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee ofthe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any' Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

1. bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee of the City, the State of Illinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
2. agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
3. made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control ofthe U.S. Department ofthe Treasury or the Bureau of Industry and Security ofthe U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
!f the Disclosing Party is unable to certify to any of the above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

_N/A _: ;

Page 6 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all current employees ofthe Disclosing Party who were, at any time during the 12-month period preceding the execution date of this EDS, an employee, or elected or appointed official, ofthe City of Chicago (if none, indicate with "N/A" or "none").

N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is [X] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

if the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in

Section 2-32-455(b) ofthe Municipal Code) is a predatory lender within the meaning of Chapter

2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

N/A

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 ofthe Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-1 10 ofthe Municipal Code: Docs any official or employee of the City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes |X] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D. 1., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit of the City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes |X] No

If you checked "Yes" to Item D.l., provide the names and business addresses ofthe City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies thai no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirements may make any contract entered into wilh the City in connection with the Matter voidable by the City.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf ofthe Disclosing Party with

respect to the Matter: (Add sheets if necessary):

None

(If no explanation appears or begins on the "lines above, or if the letters "NA" or if the word "None" appear, it will be conclusively presumed that the Disclosing Parly means that NO persons or entities registered under the Lobbying Disclosure Act of 1995 have made lobbying contacts on behalf of the Disclosing Party with respect to the Matter.)

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member ofCongrcss, an officer or employee ofCongrcss, or an employee of a member ofCongrcss, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) of the Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration of the Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

t ] Yes (X] No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (Sec 4! CFR Part 60-2.)

[JYes [JNo

Have you filed with the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[ j Yes [ ] No

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ J Yes [JNo

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicaKQ.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response lo a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the time the City takes action on the Matter. If lhe Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as lhe contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 ofthe Municipal Code.

The Disclosing Party represents and warrants that:

Page I 1 of 13

F.1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F. 1. and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any ofthe items in F.1., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

SAK Housing, Inc.

(Print or type name of Disclosing Party)

James C. Jenkins

(Print or type name ofperson signing)

Vice President / Treasurer

(Print or type title ofperson signing)

^^LiUA^L^^O o t a ry P u b 1 i c.

MOIRA MALLOY-BERTRAND

MY COMMISSION'' Fr 073037 EXPIRES-March 24, ?0I8

Page 12 of 13

Com n l i s s i o n expires: j?' .'-?^ Z j^^i. LSl

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

"Applicable Party" means (1) all executive officers of the Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected cily official or department head?

[ ] Yes [X] No

If yes, please idenlify below (1) the name and title of such person, (2) the name ofthe legal entity to which such person is connected; (3) the name and title ofthe elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION 1 - GENERAL INFORMATION

Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

Sidney A Kohl 2012 Irrevocable Family Trust

Check ONE ofthe following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

|X a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

Business address of the Disclosing Party: 340 Royal Poinciana Way. Suite 305

Palm Beach, FL 33480

Telephone: 561-833-5795 Fax: 561-833-3684 Email: ijenkinscaeskopb.com
Name of contact person: James Jenkins
Federal Employer Identification No. (if you have one):
Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of properly, if applicable):

Subordinate financing from the City of Chicaqo for replacement of existing windows.

Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification tt N/A and Contract ii N/A

Vcr. 01 -(I I -12

Pauc 1 of 13

SECTION II - DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

1. Indicate the nature of the Disclosing Party:

[ ] Person

[ ] Publicly registered business corporation

[ ] Privately held business corporation

[ ] Sole proprietorship

[ ] General partnership

[ ] Limited partnership

M Trust

[ ] Limited liability company [ ] Limited liability partnership [ ] Joint venture [ ] Not-for-profit corporation

(Is the not-for-profit corporation also a 501(c)(3))?

[]Yes []No [ ] Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable:

Florida

3. For legal entities not organized in the State of Illinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[ ] Yes |XJ No [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal litleholdcr(s).

If the entily is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title

Robert Kohl ... Trustee

Page 2 of 13

interest of a member or manager in a limited liability company, or interest of a beneficiary of a trust, estate or other similar entity. Ifnonc, state "None." NOTE: Pursuant to Section 2-154-030 of the Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

SK Grandchildren 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 Sole Beneficiary

SECTION III - BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes pq No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

N/A

SECTION IV -- DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Parly must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature ofthe relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who arc paid solely through the Disclosing Party's regular payroll.

If the Disclosing Parly is uncertain whether a disclosure is required under this Section, the Disclosing Parly must cither ask the City whether disclosure is required or make the disclosure.

Page 3 of 13

Name (indicate whether Business Relationship to Disclosing Party Fees (indicate whether

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

N/A

(Add sheets if necessary)

[X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V - CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes [X] No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes [ ] No

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article 1 ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Page 4 of 13

The Disclosing Party and, if the Disclosing Party is a legal entity, all of those persons or entities identified in Section II.B.l. of this EDS:

1. are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
2. have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
3. are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any ofthe offenses set forth in clause B.2.b. of this Section V;
4. have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
5. have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.
The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entily. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or stale or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official ofthe Disclosing Parly, any Contractor or any Affiliated Entity or any olher official, agent or employee ofthe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee of the City, the State oflllinois, or any agency ofthe federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control ofthe U.S. Department ofthe Treasury or the Bureau of Industry and Security ofthe U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply wilh the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) of the Municipal Code.
Jf the Disclosing Party is unable to certify to any of the above statements in this Part B (Further Certifications), the Disclosing Party musl explain below:

N/A

Page 6 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all current employees of the Disclosing Party who were, at any time during the 12-

month period preceding the execution date of this EDS, an employee, or elected or appointed official,

of the City of Chicago (if none, indicate with "N/A" or "none").

N/A

9. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the

12-month period preceding the execution date of this EDS, to an employee, or elected or appointed

official, ofthe City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything

made generally available to City employees or to the general public, or (ii) food or drink provided in the

course of official City business and having a retail value of less than $20 per recipient (if none, indicate

with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient.

N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is |X] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Parly pledges:

"We are not and will not become a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. We further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 of the Municipal Code. Wc understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss of the privilege of doing business with the Cily."

If the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in

Section 2-32-455(b) of the Municipal Code) is a predatory lender within the meaning of Chapter

2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

N/A

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 ofthe Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-110 of the Municipal Code: Does any official or employee of the City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes |X] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit of the City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes [X] No

If you checked "Yes" lo Item D.l., provide the names and business addresses ofthe City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please'check either 1. or 2. below. If lhe Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirements may make any contract entered into with the City in connection with the Malter voidable by the City.

X 1 ■ The Disclosing Party verifies that the Disclosing Party has searched any and all records of the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage lo or injury or death of their slaves), and the Disclosing Party has found no such records.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect lo the Matter: (Add sheets if necessary):

None __.

2. The Disclosing Party has nol spent and will nol expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee of any agency, as defined I applicable federal law, a member ofCongrcss, an officer or employee of Congress, or an employee of member ofCongrcss, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy ofthe statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that cither: (i) it is not an organization described in section 501 (c)(4) of the Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration ofthe Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes rX] No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes L ] No

Have you filed with the Joint Reporting Committee, the Director of the Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[ ] Yes [ ] No

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ ] Yes [ ] No

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII - ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Parly waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party musl supplement this EDS up to the time the City lakes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article 1 of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility musl be kept current for a longer period,

as required by Chapter 1-23 and Section 2-J 54-020 ofthe Municipal Code.

The Disclosing Party represents and warrants that:

Pace 11 of 13

F. 1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor arc the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.1. and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any ofthe items in F.L, F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Sidney A Kohl 2012 Irrevocable Family Trust (Print or type name of Disclosing Party)

(Sign here) j

Robert Kohl

(Print or type name ofperson signing)

Trustee

(Print or type title ofperson signing)

Signed and sworn to before me on (date) S^Jj2JI_

^al i^jVn County, f /^/'. ^^.^< ^slilit')-

^Mx.^2U,Z^it/.- -t-S^^v/-Notary Public.

Commission expires: 3'"^,

.-#'■5% ^M0IRA MALLOY-BERTRAN0 MY COMMISSION i FF 07303/ ->.-:<y:\£/ EXPIRES- March 24. 20I8 '''■'fl/i.V!^'" ^Bonii'-<iTnni Notary Pubic Underwriters

Page 12 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

Under Municipal Code Section 2-154-015, the Disclosing Party must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as of the date this EDS is signed, the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any ofthe following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (1) all executive officers of the Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes IX] No

If yes, please identify below (!) the name and title of such person, (2) the name ofthe legal entity to which such person is connected; (3) the name and title of the elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

Page 13 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I -- GENERAL INFORMATION

A. Legal name ofthe Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

The Lawrence Kohl 2013 Family Trust

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

|X] a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

Business address of the Disclosing Party: 340 Royal Poinciana Way, Suite 305

Palm Beach, FL 33480

Telephone: 561-833-5795 Fax: 561-833-3684 Email: ijenkins@eskopb.com
Name of contact person: James Jenkins
Federal Employer Identification No. (if you have one):

Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicago for replacement of existing windows.

Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification // N/A and Contract # N/A

Ver. 01-01-12

Page 1 of 13

SECTION II -- DISCLOSURE OF OVVNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

1. Indicate the nature of the Disclosing Party:

[ ] Person [ ] Limited liability company

[ ] Publicly registered business corporation [ ] Limited liability partnership

[ ] Privately held business corporation [ ] Joint venture

[ ] Sole proprietorship [ ] Not-for-profit corporation

[ ] General partnership (Is the not-for-profit corporation also a 501(c)(3))?

[ ] Limited partnership [ ] Yes [ ] No

Trust [ ] Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable: Florida

3. For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[ ] Yes |XJ No [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titlcholder(s).

If the entily is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any olher person or entity that controls the day-to-day management of lhe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title

Pentacorp. Inc., Patricia Fadness. President Trustee

Page 2 of 13

Name Business Address Percentage Interest in the

Disclosing Party

Lawrence Kohl 340 Royal Poinciana Way, suite 305, Palm Beach, FL 33480 Sole Beneficiary

SECTION III - BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes pq No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

N/A

SECTION IV - DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entily whom the Disclosing Party has retained or expects to retain in connection wilh the Matter, as well as the nature ofthe relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party musi either ask the City whether disclosure is required or make the disclosinc.

Page 3 of 13

Name (indicate whether Business Relationship to Disclosing Party Fees (indicate whether "

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

N/A

(Add sheets if necessary)

|X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V - CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes p(]No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes f j No

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article I ("Article I")(\vhich the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Parly certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy lo commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Page 4 of 13

The Disclosing Party and, if the Disclosing Party is a legal entity, all of those persons or entities identified in Section II.B.l. of this EDS:

1. are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
2. have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
3. are nol presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any ofthe offenses set forth in clause B.2.b. of this Section V;
4. have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
5. have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.
The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parlies");
any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ovvnership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;

any responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entily or any other official, agent or employee of lhe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee ofthe City, the State oflllinois, or any agency ofthe federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the Bureau of Industry and Security ofthe U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity L.isl and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any ofthe above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

N/A

Page 6 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all current employees ofthe Disclosing Party who were, at any time during the 12-month period preceding the execution date of this EDS, an employee, or elected or appointed official, ofthe City of Chicago (if none, indicate with "N/A" or "none").

N/A

9. To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the 12-month period preceding the execution date of this EDS, to an employee, or elected or appointed official, of the City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything made generally available to City employees or to the general public, or (ii) food or drink provided in the course of official City business and having a retail value of less than $20 per recipient (if none, indicate with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient. N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is |X] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Parly IS a financial institution, then the Disclosing Party pledges:

_N/A

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-1 56 ofthe Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-1 10 of the Municipal Code: Does any official or employee of the City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes [X] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit ofthe City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes [X] No

If you checked "Yes" to Item D.l., provide the names and business addresses ofthe City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Parly further certifies that no prohibited financial interest in the Matter will be acquired by any Cily official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirements may make any contract entered into with the City in connection with the Matter voidable by the City.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect to the Matter: (Add sheets if necessary):

None

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member ofCongrcss, an officer or employee ofCongrcss, or an employee of a member ofCongrcss, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy ofthe statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) il is not an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986; or (ii) it is an organization described in section

501 (c)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".

If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration ofthe Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes rX] No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes [ ] No

Have you filed with the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[ J Yes f ] No

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ ] Yes i ] No

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII -- ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicaHo.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information prov ided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the time the City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject lo Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility musl be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 ofthe Municipal Code.

The Disclosing Party represents and warrants that:

Page 1 1 of 13

F.1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F. 1. and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F.L, F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

The Lawrence Kohl Family Trust

Patricia Fadness

(Print or type name ofperson signing)

President

(Print or type title ofperson signing)

Commission expires: "3-.-2*/ f

Paee 12 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

Under Municipal Code Section 2-154-015, the Disclosing Party must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as of the date this EDS is signed, the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any of the following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (1) all executive officers of the Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Parly or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes IX] No

If yes, please identify below (1) the name and title of such person, (2) the name ofthe legal entity lo which such person is connected; (3) the name and title ofthe elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

Page 13 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I - GENERAL INFORMATION

A. Legal name ofthe Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

Palm Drive Associates, LLC

Check ONE ofthe following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

04 a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

Business address of the Disclosing Party: 21600 Oxnard Street, suite 1200

Woodland Hills, CA 91367

Telephone: 818-668-6800 Fax: 818-668-2828 Email: Shawn.Horwitz@alliantaapital.com
Name of contact person: Shawn Horwitz
Federal Employer Identification No. (if you have one): .
Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. ( Include project number and location of property, if applicable):

Subordinate financing from the Citv of Chicago for replacement of existing windows.

Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification # N/A and Contract # N/A

Ver. 01-01-12

Page 1 of 13

SECTION II -- DISCLOSURE OF OVVNERSHIP INTERESTS

A. NATURE OE THE DISCLOSING PARTY

1. Indicate the nature of the Disclosing Party:

Person [X]

Publicly registered business corporation [ ]

Privately held business corporation [ ]

Sole proprietorship [ ]

General partnership (Is

Limited partnership

Trust [ ]

Limited liability company Limited liability partnership Joint venture

Not-for-profit corporation

the not-for-profit corporation also a 501(c)(3))?

[] Yes []No Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable:

Delaware

3. For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State of Illinois as a foreign entity?

[ ] Yes [X] No [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title

Shawn Horwitz Managing Member

Page 2 of 13

interest of a member or manager iri-a limited.liability'company, or interest.of a beneficiary-of a-trust,;-:

estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 ofthe Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

Shawn Horwitz 21600 Oxnard St., Suite 1200, Woodland Hills, CA 91367 50% (Managing Member)

Joanne Horwitz 21600 Oxnard St., Suite 1200, Woodland Hills, CA 91367 50% (Member)

SECTION III -- BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes |X] No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

N/A

SECTION IV -- DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature ofthe relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

"Lobbyist" means any person or entity who undertakes to influence any legislative or administrative action on behalf of any person or entily other than: (I ) a not-for-profit entity, on an unpaid basis, or (2) himself. "Lobbyist" also means any person or entity any part of whose duties as an employee of another includes undertaking to influence any legislative or administrative action.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

Page 3 of 13

Name (indicate-whether Business- ^i.-R.eiati'o'nsMp'fo^:Disclo^m"g'-P-art-y -Fees (indicate whether - ■ ■-

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

N/A

(Add sheets if necessary)

[X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V - CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more ofthe Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes |X] No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes [ ] No

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article I ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Page 4 of 13

2! - .TheTiisclosing Party_;and, if. the.Disclosing Party is arlegaEentity, .all of tho.seiipejES.pjns^or^ntiJle.s.jsr. identified in Section II.B.l. of this EDS:

are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any ofthe offenses set forth in clause B.2.b. of this Section V;
have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.

3. The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, wilh the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership: identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official oi the Disclosing Party, any Contractor or any ,A 1 filiated Entity or any other official, agent or employee ofthe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official of the Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

N^:elt1ieT^!the^:Disclos^hg-f'arty-,-nor-'any Contractor, nor any-Affiliated Entity of eithef-the Discld'sing-Party or any Contractor nor any Agents have, during the five years before the date this EDS is signed, or, with respect to a Contractor, an Affiliated Entity, or an Affiliated Entity of a Contractor during the five years before the date of such Contractor's or Affiliated Entity's contract or engagement in connection with the Matter:

1. bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee of the City, the State of Illinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
2. agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
3. made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or ofthe United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the Bureau of Industry and Security of the U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any ofthe above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

_N_/A _

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all current employees ofthe Disclosing Party who were, at any time during the 12-

month period preceding the execution date of this EDS, an employee, or elected or appointed official,

ofthe City of Chicago (if none, indicate with "N/A" or "none").

N/A

9. To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the

12-month period preceding the execution date of this EDS, to an employee, or elected or appointed

official, ofthe City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything

made generally available to City employees or to the general public, or (ii) food or drink provided in the

course of official City business and having a retail value of less than $20 per recipient (if none, indicate

with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient.

N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is |X] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

-MIA

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 ofthe Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-1 10 of the Municipal Code: Does any official or employee ofthe City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes [X] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit of the City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes IX] No

If you checked "Yes" to Item D.l., provide the names and business addresses of the City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check cither 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirements may make any contract entered intawith the City in ,-connection with the Matter voidable by the City.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect to the Matter: (Add sheets if necessary):

None

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt lo influence an officer or employee of any agency, as defined by applicable federal law, a member ofCongrcss. an officer or employee of Congress, or an employee of a member ofCongrcss, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration ofthe Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes rXl No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes [ ] No

Have you filed with the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[]Yes []No

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ ] Yes f ] No

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII - ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Malter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (3 12) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all of the information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the time the City lakes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 ofthe Municipal Code.

The Disclosing Party represents and warrants that:

Page 1 I of 13

F.1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.1. and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F. 1., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Under penalty of perjury, the person signing below: (1) warrants that he/she is authorized to execute this EDS and Appendix A (if applicable) on behalf ofthe Disclosing Party, and (2) warrants that all certifications and statements contained in this EDS and Appendix A (if applicable) are true, accurate and complete as of the date furnished to the City.

Palm Drive Associates, LLC

Shawn Horwitz

(Print or type name ofperson signing)

Managing Member

(Print or type title ofperson signing)

Signed and sworn to before me on (date) 1^1 ^L( I ^Qi*-?' _?

at LBS fiVVyCS County, CJ*T (state).

r\frV\iC\<r> Notary Public.

Commission expires: C#f>f(^0t7 j/^^' ANUSHSINANIAN "[

Commission # 2042671 I

Notary Public - California I

Page 12 of 13 «^^Z&j^ Los Angeles County -

4 """ My Comm. Expires Sep 24. 2017 I

■ »n i imii~~ium~~'

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

Under Municipal Code Section 2-154-015, the Disclosing Party must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as of the date this EDS is signed, the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any of the following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (1) all executive officers ofthe Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners ofthe Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners ofthe Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members ofthe Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Docs the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship''' with an elected city official or department head?

[ ] Yes Xj No

If yes, please identify below (1) the name and title of such person, (2) the name of the legal entity to which such person is connected; (3) the name and title ofthe elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

Page 13 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I - GENERAL INFORMATION

A. Legal name ofthe Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

344 Columbia Associates, Ltd.

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

[X! a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

Business address of the Disclosing Party: 21600 Oxnard Street, Suite 1200

Woodland Hills. CA 91367

Telephone: 818-668-6800 Fax: 818-668-2828 Email: scott.kotick@alliantoapital.com
Name of contact person: Scott Kotick

Federal Employer Identification No. (if you have one)::
Brief description of contract, transaction or other undertaking (referred to below as the "Malter") to which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the Citv of Chicago for replacement of existing windows.

Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification # N/A and Contract ii N/A

Ver. 01-01-12

Page I of 13

SECTION II - DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

1. Indicate the nature of the Disclosing Party:

[ ] Person

[ ] Publicly registered business corporation

[ ] Privately held business corporation

[ ] Sole proprietorship

[ ] General partnership

(X) Limited partnership

[] Trust

[ ] Limited liability company

[ ] Limited liability partnership

[ ] Joint venture

[] Not-for-profit corporation

(Is the not-for-profit corporation also a 501(c)(3))?

[JYes [JNo [ ] Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable:

Ohio

3. For legal entities not organized in the State of Illinois: Flas the organization registered to do business in the State oflllinois as a foreign entity?

[ ] Yes [X] No [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title

Scott Kotick Man^gingJ^ejTLber

Page 2 of 13

interest of a member or manager in a limited liability company, or interest of a^_beneficiary-of a trustr^; -estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 of the Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Party

Scott Kotick 21600 Oxnard St., Suite 1200, Woodland Hills, CA 91367 25% (Managing Member)

Myra Kotick 21600 Oxnard St., Suite 1200, Woodland Hills, CA 91367 25% (Member)

Kotick Family, LP 21600 Oxnard St., Suite 1200, Woodland Hills, CA 91367 50% (Member)

SECTION III -- BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes |X] No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

N/A

SECTION IV -- DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects lo retain in connection with the Matter, as well as lhe nature ofthe relationship, and the total amount of the fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

"Lobbyist" means any person or entity who undertakes to influence any legislative or administrative action on behalf of any person or entity other than: (I) a not-for-profit entity, on an unpaid basis, or (2) himself. "Lobbyist" also means any person or entity any part of whose duties as an employee of another includes undertaking to influence any legislative or administrative action.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

Page 3 of 13

Name (indicate whether Business' ~^v Relationship to Disclosing Party Fees (indicate-Whether

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

N/A

(Add sheets if necessary)

[X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V -- CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more ofthe Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes |X] No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[]Yes []No

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article 1 ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: if Article i applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Page 4 of 13

2. " Tlie Disclosing Party and; if the DisclosHng^::Party-is;a legal entity, all of those-persons or entities -

identified in Section II.B. 1. of this EDS:

are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) wilh committing any ofthe offenses set forth in clause B.2.b. of this Section V;
have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.

3. The certifications in subparts 3, 4 and 5 concern:

- the Disclosing Party;
any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, wilh the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official of the Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee ofthe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

Neither the'DisclosingPartyprior any Gbntrac-torf^hor any AtYiliated Entity-of=eitherthe'"-Disclosing^: Party⁵*".--or any Contractor nor any Agents have, during the five years before the date this EDS is signed, or, with respect to a Contractor, an Affiliated Entity, or an Affiliated Entity of a Contractor during the five years before the date of such Contractor's or Affiliated Entity's contract or engagement in connection with the Matter:

1. bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee ofthe City, the State oflllinois, or any agency ofthe federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
2. agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
3. made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or ofthe United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the Bureau of Industry and Security of the U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-1 56 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any ofthe above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

_N1/A

Page 6 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all current employees of the Disclosing Party who were, at any time during the 12-

month period preceding the execution date of this EDS, an employee, or elected or appointed official,

of the City of Chicago (if none, indicate with "N/A" or "none").

N/A

9. To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a

complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the

12-month period preceding the execution date of this EDS, to an employee, or elected or appointed

official, of the City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything

made generally available to City employees or to the general public, or (ii) food or drink provided in the

course of official City business and having a retail value of less than $20 per recipient (if none, indicate

with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient.

N/A

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is |X] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

If the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in Section 2-32-455(b) of the Municipal Code) is a predatory lender within the meaning of Chapter 2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

__Jn|/A

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 of the Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-1 10 ofthe Municipal Code: Does any official or employee of the City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes LX] No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit ofthe City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[]Yes |X] No

If you checked "Yes" to Item D.l., provide the names and business addresses of the City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirements may make any contract entered into with "the City in connection with the Matter voidable by the City.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI -- CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying Disclosure Act of 1995 who have made lobbying contacts on behalf ofthe Disclosing Party with respect to the Matter: (Add sheets if necessary):

_Non_e

2. The Disclosing Parly has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.I. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member of Congress, an officer or employee of Congress, or an employee of a member ofCongrcss, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) of the Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration of the Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes IX] No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes [ ] No

Have you filed with the Joint Reporting Committee, the Director of the Office of Federal Contract Compliance Programs, or the Fqual Employment Opportunity Commission all reports due under the applicable filing requirements?

[] Yes []No

Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ ] Yes [ ] No

If you checked "No" to question 1. or 2. above, please provide an explanation:

SECTION VII - ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Malter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entilies seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the Cily in connection with the public release of information contained in this EDS and also authorizes the Cily to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the time the City takes action on the Matter. If the Malter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 of lhe Municipal Code.

The Disclosing Party represents and warrants that:

Page I I of 13

F.1. The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.L and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F. 1., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

(Sign here)

.ScQttJSoiick.

(Print or type name ofperson signing)

Managing Member

(Print or type title ofperson signing)

Signed and sworn to before me on (date) at Uo<,rXrxO^ies County, CJ?X

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

"Applicable Party" means (1) all executive officers of the Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners ofthe Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members ofthe Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Parly" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes [X] No

If yes, please identify below (I) the name and title of such person, (2) the name ofthe legal entity to which such person is connected; (3) the name and title ofthe elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

Page 13 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I -- GENERAL INFORMATION

A. Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable:

Verizon Credit Inc.

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

[X] a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes i Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

B. Business address of the Disclosing Party: 221 East 37 Street, 7 Floor

New York NY 10016

Telephone: 646-495-2378 Fax: 21 2-983-0895 Email: Peter .D.Rutherford @

Verizon.Com

Name of contact person: Peter D. Rutherford

Federal Employer Identification No. (if you have one): . - - -
Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicago for replacement of existing windows.

G. Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification it and Contract // _

Vcr. (II-01-12

Page 1 of 13

SECTION II - DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

[ ] Limited liability company [ ] Limited liability partnership [] Joint venture f ] Not-for-profit corporation

(Is the not-for-profit corporation also a 501(c)(3))?

1. Indicate the nature ofthe Disclosing Party:

[ ] Person [

^] Publicly registered business corporation [

[ ] Privately held business corporation [

[ ] Sole proprietorship f

[ ] Yes [lNo [ J Other (please specify)

[ j General partnership (]

[ j Limited partnership

[ ] Trust [

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable:

Delaware

3. For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[ ] N/A

[]No

y Yes

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1. List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title See Attached

2 Please provide the following information concerning each person or entity having a direct or indirect beneficial interest (including ownership) in excess of 7.5% ofthe Disclosing Party. Examples of such an interest include shares in a corporation, partnership interest in a partnership or joint venture,

interest of a member or manager in a limited liability company, or interest of a beneficiary of a trust, estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-1 54-030 of the Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name Business Address Percentage Interest in the

Disclosing Parly

GTE Corporation 140 West Street 1 00% _

New York, NY 1 0007 _

SECTION III - BUSINESS RELATIONSHIPS WITH CIT Y ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 ofthe Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes [X] No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

SECTION IV - DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Parly musl disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature ofthe relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

"Lobbyist" means any person or entity who undertakes to influence any legislative or administrative action on behalf of any person or entity other than: (1) a not-for-profit entity, on an unpaid basis, or (2 ) himself. "Lobbyist" also means any person or entity any part of whose duties as an employee of another includes undertaking to influence any legislative or administrative action.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must cither ask the City whether disclosure is required or make the disclosure.

Page 3 of 13

Name (indicate whether Business Relationship to Disclosing Party Fees (indicate whether

retained or anticipated Address (subcontractor, attorney, paid or estimated.) NOTE:

to be retained) lobbyist, etc.) "hourly rate" or "t.b.d." is

not an acceptable response.

(Add sheets if necessary)

[X] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V -- CERTIFICATIONS

COURT-ORDERED CHILD SUPPORT COMPLIANCE

Has any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes [ ^No [ ] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

| J Yes [ ] No

FURTHER CERTIFICATIONS

1. Pursuant to Municipal Code Chapter 1-23, Article I ("Article l")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the Cily, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee ofthe City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

The Disclosing Party and, if the Disclosing Party is a legal entity, all of those persons or entities identified in Section II.B.l. of this EDS:

1. are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, stale or local unit of government;
2. have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
3. are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any ofthe offenses set forth in clause B.2.b. of this Section V;
4. have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
5. have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.
The certifications in subparts 3, 4 and 5 concern:

the Disclosing Party;

any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection wilh the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parlies");

any "Affiliated Entity" (meaning a person or entily that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business wilh federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
any responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee ofthe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page S of 13

1. bribed or attempted to bribe, or been convicted or ad judged guilty of bribery or attempting to bribe, a public officer or employee of the City, the State of Illinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
2. agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
3. made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department ofthe Treasury or the Bureau of Industry and Security ofthe U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
The Disclosing Party understands and shall comply with the applicable requirements ol"Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) ofthe Municipal Code.
If the Disclosing Party is unable to certify to any ofthe above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

TV. /.' ~ J" 1 ">

I'dUC U Ul 1 J

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all current employees of the Disclosing Party who were, at any time during the 12-month period preceding the execution date of this EDS, an employee, or elected or appointed official,

ofthe City of Chicago (if none, indicate with "N/A" or "none"). None

9. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the 12-month period preceding the execution date of this EDS, to an employee, or elected or appointed official, of the City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything made generally available to City employees or to the general public, or (ii) food or drink provided in the course of official City business and having a retail value of less than $20 per recipient (if none, indicate with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient. None

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

The Disclosing Party certifies that the Disclosing Party (check one)

[ ] is [x] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

If the Disclosing Parly IS a financial institution, then the Disclosing Party pledges:

"We arc not and will not become a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. We further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 ofthe Municipal Code. We understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss ofthe privilege of doing business wilh the City."

If the Disclosing Party is unable lo make this pledge because it or any of its affiliates (as defined in Section 2-32-455(b) ofthe Municipal Code) is a predatory lender within the meaning of Chapter 2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 ofthe Municipal Code have the same meanings when used in this Part D.

In accordance with Section 2-156-1 10 ofthe Municipal Code: Docs any official or employee ofthe City have a financial interest in his or her own name or in the name of any other person or entity in the Matter? _Upon knowledge without inquiry

[ ] Yes M No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D. I., proceed to Part E.

Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit ofthe City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[ ] Yes fc]No

If you checked "Yes" to Item D.l., provide the names and business addresses ofthe City officials or employees having such interest and identify the nature of such interest:

Name Business Address Nature of Interest

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the' Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

comply with these disclosure requirements may make any contract entered into with the City in connection with the Matter voidable by the City.

X 1 ■ The Disclosing Party verifies that the Disclosing Party has searched any and all records of the Disclosing Parly and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage to or injury or death of their slaves), and

the Disclosing Party has found no such records, verification is based on a cursory i of some records.

2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

SECTION VI -- CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

A. CERTIFICATION REGARDING LOBBYING

1. List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect to the Matter: (Add sheets if necessary): None

(if no explanation appears or begins on the lines above, or if the letters "NA" or if the word "None" appear, it will be conclusively presumed that the Disclosing Party means that NO persons or entities registered under the Lobbying Disclosure Act of 1995 have made lobbying contacts on behalf of the Disclosing Party with respect to the Matter.)

2. The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee of any agency, as defined by applicable federal law, a member ofCongrcss, an officer or employee ofCongrcss, or an employee of a member ofCongrcss, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy ofthe statements and information set forth in paragraphs A.l. and A.2. above.
The Disclosing Party certifies that cither: (i) it is not an organization described in section 501(c)(4) of the Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration of the Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

Is the Disclosing Party the Applicant?

[ ] Yes fe] No

If "Yes," answer the three questions below:

Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes [ ] No

liavc you filed with the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[ ] Yes [ ] No

liavc you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ j Yes [ ] No

If you checked "No" to question 1. or 2. above, please provide an explanation:

SECTION VII -- ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Malter, whether procurement, City assistance, or other City action, and arc material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all ofthe information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Parly waives and releases any possible rights or claims which it may have against the Cily in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E. The information provided in this EDS must be kept current. In the evcnl of changes, the Disclosing

Party must supplement this EDS up to the lime lhe City takes action on lhe Malter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses'), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 ofthe Municipal Code.

The Disclosing Party represents and warrants that:

n.w-. i i .n r i ^.

1 Ll U*- 11 \t I 1

F.1. The Disclosing Parly is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F 3 If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.1. and F.2. above and will not, without the prior written consent ofthe City, use any such contractor/subcontractor that docs not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F. 1., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Verizon Credit Inc.

(Print or type name of^TSTlTysiTi'g-E.arty.).

By.

Peter D: Rutherford

(Print or type name ofperson signing)

Senior Vice President-Transactions and Portfolio Management (Print or type title ofperson signing)

Signed and sworn to before me on (date) December 5, 201 4, ^al New York County, New York _ (state).

Commission expires:

Paee 12 of 13

MARVA LEVINE Notary Public, State of New York No. 02LE-4818478 Qualified in New York County Commission Expires February 28, 20_*S"

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED C ITY OFFICIALS AND DEPARTMENT HEADS

This Appendix is (o be completed only by (a) the Applicant, and (b) any legal entity which has a direct ownership interest in the Applicant exceeding 7.5 percent. It is not to be completed by any legal entity which has only an indirect ownership interest in the Applicant.

"Applicable Party" means (1) all executive officers ofthe Disclosing Party listed in Section Il.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Docs the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" wilh an elected city official or department head''

[ J Yes [ ] No

- Current Officers

Verizon Credit Inc. -

Name

Cordy, Scoll L.

Ellis, Matthew D.

Golabek, Michael J.

Jankun, Richard P.

Krakowski, Richard F.

Krausc, Tracy

Levine, Marva M.

Manniello, Mario

Mason, J. Daniel

Mattiola, Paul L.

Metzger, Kathleen

Meyer, Bonnie M.

Perrett, Londa C.

Prashker, Audrey E.

Repp, Paul H.

Rutherford, Peter D.

Title

Vice President - Taxes Chairman ofthe Board Environmental Health and Safety Officer

Vice President - Taxes

Senior Vice President - Chief Financial Officer and Risk Management, and Assistant Treasurer

Treasurer

Vice President - Assistant General Counsel and Secretary

Vice President - Taxes

Assistant Secretary

Vice President - Taxes

Vice President - Affiliate Vendor Finance

Assistant Secretary

Vice President and General Counsel

President and Chief Executive Officer

Senior Vice President - Transactions and Portfolio Management

- Current Directors

Verizon Credit Inc. -

Name

Ellis, Matthew D.

Repp, Paul H.

Van Saders, William P.

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION 1 -- GENERAL INFORMATION

A. Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable: Verizon Communications, Inc.

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

[ ] the Applicant

[X] a legal entity holding a direct or indirect interest in the Applicant. Stale the legal name of the Applicant in which the Disclosing Party holds an interest: Hilliard Homes I Limited Partnership

3. [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:

B. Business address of the Disclosing Party: 221 East 37 Street. 7th floor

New York, NY 10016

Telephone: 646-495-2378 Fax: 212-983-0895 Email: peter.d.rutherford@verizon.com
Name of contact person: Peter.D.Rutherford
Federal Employer Identification No. (if you have one):_; _ /

F. Brief description of contract, transaction or other undertaking (referred to below as the "Malter") to which this EDS pertains. (Include project number and location of property, if applicable):

Subordinate financing from the City of Chicago for replacement of existing windows.

G. Which City agency or department is requesting this EDS? Department of Planning and Development

Jf the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification # and Contract #

Ver. 01-01-12

Page 1 of 13

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, ».C. 20549

FORM 10-Q

OUAKrEKLYREPOK J PURMJAN1 TO SECTION 13 OR 15(d) Ol" THE SECUR ITII-S EXCHANGE ACT OT 1934 Foi the quantity pcnod Liidcd Scpiemhcr 30, 2014

□ TRANSITION RF.Pi iRT PirRSOANT TO SECTION 13. OR 15(d)

01" Till- SECURI'I IES EXCHANGE ACT OK 1934 Foi Hie irjniiiion pcnod iioni lo

Cn minis.-.] on file minibct I-K606

Verizon Communications Inc.

23-2:59884

(IRS EmplovLt Identification No 1

(L\aci name of lejjt^iiani a-, spi'cilied in us charter)

Delaware

10036 (Zip Code)

(Sl.slc it mhfi muimI

1095 AMnut ol the VmcrKJi Net* York, Ni »* Voii

(AddiciMif piiiicipal executive- offices)

Registrant't telephone number, including area cede: (112)395-1000

Inrisraic hv check mark whcihci the icgisiMiii |l) ha* filed all re pons required io be filed by Sccuon 13 or I 5(d) ofthe Sccunucs ExLhangc Act ot 19.14 during she piriniing 12 mon;h« (or lor <iuh shorter period ih.it th^ reentrant was requited lo file <uch rcpoits). and (2)hjs been subject to such filing lequtrcmenls for the pail 'JO days CD Yes □ No

Indicate by cheek mark whether the registrant has submitted electronically and polled on its corporate Web me. if any. every liiicraclive Data File required lo be submitted and posted pursuant la Rule 40$ of Regulation S-T ($232 403 of this chapter) during the preceding 12 months (or for such shorter penod thai the registrant was required to submil and post such files) 13 \cs D No

IrdiiVie h) check m.itk wheihei ihe registrant i* a large accelerated Jiler, an accelerated itlci, a uon-acceleraled filer oi a smaller reporting company See the definition* ul " laigc anclcraied filer" ' accelerated filer" and ''smaller reporting i orupany"' in Rule 12b-2 oflhc Exchange Acl

Laifc accelerated tiler EJ Accelerated Titer □

Non-accelerated filer G (Do nol cbcik if a smaller reporting company) Smaller reporting company □

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

*t September 30, 2014, 4 149.723,706 ahaiei of the registrant's common stock were outstanding, after deducting 92.650.534 ■dure-, held m treasury.

P\KT 1 - FINANCIAL INFORM ATION Item 1. I m4iici.il Statements (linaiidifrd)

Condensed Con (nil d.i lid Slatfrmnh of Income

Thiev mul iiii.r i,i.»nln .-mini Krpirmhrr ll). 2IIN i»,<! 201 i

Condi.n*cd Consolidated Statements of Comprehensive Income

Thief and itun-monlhi v»M SrjHrmhri W 201J mul .-OJ t

Comlt-ntt-iK onMilidileri K.iljnrt Sheet*

Ai Srpirm!,, , >0 20! J a,,,! L'n ,-mhci Jl 201 i

Condensed Consult da led Statcim nt*. ol Cash Rons

A;i]("n«in/i, rnJeJ Stpumhu .ii) 2il! 4 ,i,<J 20! .<

Notes to Condensed Onsolidjird Km incial St.iunirtus Item 1 Ma na Yemeni's I}isco<isi<in and Analysi* of Linanciul Condition and Kt-Milfi nf OiirT. Item 3 Ouantitatu e jnd Oualitrfttv c l)isc1(i»it i s Ahuut Mjikit Kisk Item 4 Coiitioh and I'umduni

PAKT II OTHF.k INFORMATION Item I Legal Pro*reding* Item 1A Knk I'acturs

Item 2 Unregistered Sales <M Ei|Uin Sei untu-s and I'sr of Procvcds

Jtrm6. Fshibii*

Signature

Certification!

Tibk «l Contfnu

TaWr rC«me«H

Item 1. Financial Statements

Condensed Consolidated Statements of Comprehensive Income

Vernon Communications Inc and Subsidiaries¹

UpiT aimi; Kll (f

Opi i jiniu Ktpi r

I mat f.tpt-irfiinv r.spii Opel itius liirnnie

Condensed Consolidated Statements of Income

inns Inc and Subsidiaries

I hi er Munths Kndt d Ninr Months Kndcd

Sepicniliei 3lt, September .10.

201 I 2UI.1 2014 2»13

S.277 4,K>7

J2 925

12 42 ' r>'.» 1MU

1" 90s

5 11 5> ill :70 I. 91 .Mi7 S KiJJhS

6.S90 ₍4S)

I0 9d0 55 52S 2 1.11'.) 4.|}4 I2.4d5

iliil.sicd bu-,i:i«w

017) (l.'-.M)

S.fiSB of'i; 19 lili IS 517

(I M64) (1.034) 15 052) 12 S8tM j.VW S 5.575 i M.KM 5 15 *31

(dollar* in imllions)(unaudiied)

Net Incumi'

Other rnmpi rhcnsis r j;ain (loss), nvt n( tjirs

Unrcjli/ed :;jiii ilnss)on i aih flow l:cdi;P% IJimalwtii gJin (luss'i i>ji ni:iiki^,!.i[i:i- mcuiii:i -

U;l:iie.i rrnclii pfi n .!■>.[ pi-Miciremen: |>l.

t ttl-.ci cinr-pn-licnim. gam (lo«) a;:iibiii:ibk ;o V, Oilici ti'inpielieinn ■■ g.iin ilns^) ainibiiuhle :n in "J'uIjI Compi rlii'nui t Inoumr

CiiinpiiliiiiMn nit. unit. Jt;i:bi,l.ilili 1.^ ;i.<ik uiiiin Compn-liciiMve iiiio:i!i- Jlliibi:ulilc to Vei:/nii l olal Cuiiijii ehensis r Itidinic

Three Months Ended Nine Months Ended

September 30, September 3d,

3014 2013 11)14 201)

I ■¹)

I [US I 11171 till

S 1.794 S 5.57R J 14 1114 S IJ.hll

!l 14) 141! 11 i!M| 4

113

il ij

S 3 7.»

S I 5 VO

Il.lSil

. 7(lf, i I

.70fc J 12 K9S i 15.M1.1

Condensed Consolidated Balance Sheets

Ven^on Communications Inc and Subsidiaries

Condensed Consolidated SlalenitHl* of CjiIi Flows

Vcn/on Communication; Inc and Subsidiaries

Al September JO.

2014

inn/dispus'ilion of businesses

[dollar

iilliijns exiept per shjic amounts) (unaudited)

Aisets

t'uncnt assets

-f$n4fiaiidSr.45

13.2S3 l,2uf. 2.43 I

Cavh and cash equivalents Shon-iciin uivc-imenti Accounts receivable net of all In-, i muncs

230.452 140.520

Prepaid expenses and oth.-r

SI*

75,

24,61 7 5.73R 5.1 I?

I'Sarii property and equipment I.irsi. accumulated ikpit'i la'mn

lnicimcni* in unc on soliiJrr.cc! business

22 (».2 91

Olhef iniangihlf assets, i Other assi li

1.1.03 17.(155 8,231

.labilities and Equitv

it liabilities

'umnt liabilities IXhi maiming u nhni o Accounts pay.iblc and;

Othu Total cu

l.ong4ermdebl 107,627

Employee benefit obligations 25.770

Deferred income taw 42.289

Olher liabilities 5.750

Equity

Scfics picienod stiu k (1 10 p.ir \ iihir none issued)

Common stuck (S 10 par value, 4,242.374,240 and 2.967.610,119 shares issued in

each period, respectively) 424

Contributed capital 11,089

Reinvested earnings 6,964

Accumulated othercomprchcntive income 1.175

Common stock in treasury, at cost (.3.465)

Deferred compensation - employee .Hock ownership plans and other 390

Noncontrolling interests IJ91

Toial equity 17,968

Total liabilities and equity $ 226.293

AC December Jl.

2013

220 865 ] 31 909

3 4*2 75 747 : 4.(0 4

5.S00

4 535

3.933 16 453 6.664

27 050

X9.658 27.682 211.639 5.653

297 37,939 1.782 2.3 S 8 (3-Mlj

421 56.580

(dollars in millions! (unaudited)

Cash Flom from Operating Activities

Net Income

operating arliv ities

Adjustments in icruiiule net uu unit to nei cash pin¹Depreciation and amor i7.it ion expense Knipluvcc leliivmivit hen^'its Deterred inrorne taxes Provision tor uncollectible accounts Equity in earning] of unconsolidated hiiMiicises. net o( i Changes in cuiicnt nsseis' and liabilities rsci of cllccis he Other, net

Net cjsh pinvidcd by opera:ing activities

Cash thinsfrom Investing Activities

Capital e\j crid:lu:es (including capitalized sofcu-are)

Acquisition! of iniestmcnis and businesses net of cash acqui

Acquisitions of w nclcs, In.cnses

1'iocccds rioni dispositions ol unclcss lice nses

Proceeds from dispositions o( businesses

Other, net

Not cash used in investing activities

Caih Flows from Financing Activities

Proceeds lioni long-term honowtngs

Repayments ol long-term hoirowinps ami cnpn.il lease obligation Decrease in short-term obligations excluding current mammies Div idenu'. paid

Proceeds from sale of common stock Purchase of common slock for treasury Special distribution to noncuntjoiling interest Acquisition of noncontrolling interest Other, net

Net cash provided by lused in) financing acln ilies

Increase (decicasc) in cash and cash equivalent! Cash and cash equivalents, beginning of penod Cash and cash equivalents, end of penod

Sec Notes to Condensed Consolidated Financial Statements

Nine Months Knded September 3U, 2014 2013

(100) (I 07X) (2>9i)

12 4n5 t!.i3

it,785.1 («|fi)

(410, 2.11 1

2 I 575 112.-594) (426) tS.ftS3)

(12 f-2-) (180) (341)

49 166 (2.392)

(324) <4,420) 76

(151) (3.150)

53.617 3,093

(58.886) (3 087)

(46.310) 53,528

$ 7.218 S 56,710

Sec Notes to Condensed Consolidated Financial Statement*

Table Cant rati

Scplcmbc* 3D. 2014 Outstanding options to purchase shares that were, not included in Ihe compulation of diluted earnings per common share, because to do so would have been anti-dilutive for the penod, were not significant for lhe nine months ended September 30. 2014 and the three and nine months ended September 30, 2013 respectively

Notts lo Condensed Consolidated Financial Statements

Verizon Communications Inc. and Subsidiaries (Unaudited)

Trie accompanying l\ciianr.c t'oirums-. ac<.tn.i:1ini: pcliLli i

:ii onulrnvcd eonsohdaird financial statement' have been prepared based upon Set unties and tha! pi min icduccd di>closu:c fot irili/mn pi.i-.oiU For a moie compL-te discussion ol signilic ar.l :ijin i.'li.i mli■milium y>m slumM n-fri to i!ic (mannal ii.iti.nwms «n hided in th': Vi-iimi: mi:. I:n iVni.:.'i: .-i ri.e : ",,mp.in yi Annual Report on I-unn U)-k lor thr- year ended liecembei il. 2013 The-.e rin-!iiv ii-fleet .iiljusinnT.ii sli.v. art- necessary (or a lau presentation of :csults ol operations and financial condition hi pounds sho'.m im hiijjii^ normal n cuiiiiig accruals and uthii i:ems Tlie results for the ml mm period* aic not uiiijiivi ul i.-.iil> |i>r I hi; full \c.it We hate n clas-ificd ceriain prior yeai amounts to conform :o the i uneril Vi :u l-11.ctiv; I.i;:ii in i 2I.<]4 ,ie lias l a!Mi ies Uissitied the icsulis of ccitain businc.sscs such ls [IcvcloptnLnt -iiJi'.c .1= ~:.f jioi: e-.:r ^ir.iii r;u iniii.iiivk s lioni our U'lrelme vegniLiil to Corporue. t liiinn.itinns and other The uiip.n i i-i .anon v\j, rii.!;ciial io n:ir lOHUcrwfil coiin.iliil.ilcil NilJrict.il }lalfmcnls

kcv.nu. Kn»_Knnioii

*A'.- "fw ami enisling ■■::s:ii;i::r!. i J j ■- opium to p.nticipatc in V'cn;:on Edge, a pn.grain thai provides eligible wuclcss

I aiiurriti* lulus lo pa\ In: h-indscls uiuii r .:n cquipniLiil n;:.U:iri]ijJil plan (.'mlci tin Vcnzon liilge prot[ra!i). cusIdiih is

Iijm' ihe nghr lo up^raiio iIut h.ind'ci afii-r a nnnrmum of 30 days, subjccl lo ccnain condemns includinj; making a siated

;:oiiiiin ol ilvx T\.i)nim'. il,viu' im.ni-, ir-iiimi ni then lundici in f.nod winking condition »:irt ^ignitij; a new Liimuti v.iih

^i-n/on LVi'ii '!:>' viiisijr.ilnik: L':'lani.c iifthc equij.nicnl insldlliiicni pljn ii c'cchanpcd for tlie used harutscl I'ius r^idc-

rn r.i;hl i^ .iCi-i-nr.isil lor .is 'j ru.irailki obli;:jliml

Veii?on Hcij'i is a multiple -.-kmi nt :irr.it:;:cinrnt typically (.misistin^ ol the trade-in nght handsel and inorithly v.-ude.ss serv ice

Ai Uie mcepiior-. nl the :iii.in]!Ciiier,;, ihe nmu'.uii allocable lo the dcliveied units of accounting is limned io the amount that i* noi

i oriiu'.gi-'ii up.-n llu iL In, i\ .'I iht inoniri!\ iiinN M.r\ i_ti- (lhe nomominiy nt amounl) The full jiriniint nl the liade-in nghl s

lair i alue rno: in .-ilior.vcd \ .iluei \w\\ be rco^ni/cd as the guaiamee liability and the remaining allocable consiclciation mil be

jlUn.ji^il to tin I, linki [ hi.- 'tliii- ol :1k i:u.iuiiti c liability i'iki.t|iely results in a reduction in res emu. it ogni/e.l ioi the sale ol

:rjc li.::nisei i hi gujr.'.ui<.i !-it.ilii\ i-. iin-.v-uitd ai l.m value upon initial iccogniiioit bawd on assumptions lading ohsiivahk

prM i ig inpins ;m I mill) l: i!i. juobjinlii; .,:,d timui]! n| llu cusiunici upgrading to .1 nut- phone, the Cu.Mnmci's eMiniJlid

ii'injir.in^ m-i.i!liiur:i ■i;i!.:iK'i j! the in;,.- h.idc-m und the cjliLji.iic-J fju valtie ofthe phone ai the (nnc oflniJi-Hi and ihcicloic

is .-l.issiaiil ■AiiJ; :. Level ■ ii: :!ic fjir \.>.iuc Incrarcln When lhe custo:iii-r ir.idc.s-in then used phone, the handsel iccvncd ;s

ren-iileJ <<' mvri!i>»i\ :i:eMireil as ihe ,hflerrr.ee between the ien:ai:ii:ig eqoipmeu: iiistjllmen: plan balance at the lime "f

::.iJc -ji, din! il.<. ; u.iuiitu |i.!>uli:> H'o i-.ii.ii juice li.ih.luy i:iuy nicic.ise allei inilul n i gmtioii sr. a result o( i haugis in tads «r

:i>si;ni;i;<iuis .:ii>: ivc 'a;.^:l l,u air, uMcase ir; tin ^uarar.tei linb:)jl;, with J cmicspor.di;',;: di-iieasc lo revenue llu

1 i-ini[: Ar r aiin-iiii'Dl-

■\: each i> P ;'cr;:^.l. nc niorui.-i the ucii:; i|i:.iln> of ihe i afio-.is Ir-ssees in c-.:r po:i(olios Kcganling the leverage.i !.-JSf

jii.r.iuliu >n -.:s. i Mi iii.i! i :i ilu iej'i-:> :_L- ji jilalile ,uid where not av/iLible w.e use nilLiii.iil) c!c\ eloped iiidiuiois | iifc-indit at.iis or inteiri.ii eicilii risk gr icics fa; lor luster i( ros<: evpciience the s alue ofthe underlying collateral delinquent > trends jin: intiiiMiv ami ,'einial nonuriur lomliiinns lhe i ri'.fii iju.ilin ot our lessies pimiarily sines {jm AAA !o C\"C- hoi cieii

T-.;!i iii.:- a I---:! ■: pj-n = \:i:.!.ils '' ::lil!i = .:: oulsiaridiiij; d:li.livi mui[;Iio ]-:liti.i;I!> e.-T^i lmg ol If-suuie.l ilmk units

ii:. m '! ■:i.■::'m ■■! ijil .K-A i .:rrn,-' j.ei f nitunon il\ai-- i.-r it:.: iluee an<: i.iric n:.-Tr.:i- : nd. i! Scpieu;:i;T ">li. 2(11-l

trills i;n iudeei ill K i ■■;i:p:;'.a: .oi; ol"J.h:kJ eaiHiugs per eOliinion shall for tin lbrei a:i>l uirie inclilh^ enrlcii Scn<eoiber 30 ?l)l >

ic -.j-i »-i i i I v 1 li, r. n. < ;--_is:.unlng iirtim-.s :n puiehjsi slians lhar « on hi ha¹, e bi;r. .li.^-diluiii-i- Jo: the ihici monlli-. end. J

closing ofthe Wneless Transaction (iii) issued ■fni.'i urLstuuoit Veiizon nolo in 4:1 aggiegaic principal amount uf$*> 0

Krct-ully Adopted \crouiihng Standard*

Doling the fir-il quarter iif 2014, we adopted the accounting standard update relating to lhe presentation of an unrecognized tax hi'riL'fit when a net upeniring losi carryforward a similar rax loss or a tax credit carryforward exists The .standard update provides that a liability related 10 an unrecognized lax benefit should be ollset against same jurisdiction deferred lax assets lor a ncl operating loss earrvforward, a niwlai lax loss, ot a tax credit canylor*ard if such »clllcmcnl is icquucd or expected m the event the uncertain lax position is disallnvvi d The adoption of tint standard update did not hav e a significant impact on our condensed consolidated finanual statements

Recent Accounting Standards

In April 2014 the accounting standard update iclated to the icpomng of discontinued operations and duclosuies of disposals of 1 oinpoticiii* .;t an cntitv was issued This standaid update changes the cr.ier.j tor leponmg discontinued operations and enh.ini.os con. cigcncc of lite npoiliric ici]uiriiiculs f.u discontinued operations As a iesuh of thi.s standard update, a disposal of a I'oiiiponi nt ol an entity or a group ot components ut an entity i.s rcquncd lo he reported in discontinued operations if the disposal ti presents a strategic shift that has o: will have a major el feci on an entity operations and financial result* This standaid update is cflcctive as ol the Ur.st quanct 01 2015 however earlier adoption i> permuted

In May 2014, the arcounimg standard update related 10 the recognition ol revenue from contract-, wjih customers wi- issued This standaid update danfics the pnncijilcs foi iccogni/mg icvcnuc and develops a romiimn revenue standaid fot US gcncially ai t epted ac-ou riling principles (GAAP) and International Financial Keporiinf, Standards The standard update intends lo provide a more robust framework foi addressing levenue issues improve comparability of revenue recognition practices across entities, Industrie*, jurisdictions and capital markets, and provide more useful information to users of financial statements through irr.piuved disclosure reqiiiicriic:ils Upon adoption ot this *landaid update, we expect that the allocation and liming ul tcvenue recognition will be impacted We expect to adopt ;)n< standard update dining the first quartet ol 2017

There are lun adoption methods available for implementation of tin standard update related 10 the recognition of avenue fiom contrails with nisiomers Under one method the guidance is applied retrospectively 10 contracts for each reporting penod piesenicd. suhjeet 10 allowable practical expedients Under lhe other method the guidance is applied to contracts not completed as ofthe date of initial applu .Vimi rec ogtn zing 'he . limitative effect ofthe change tis an adjustment to the beginning balance of iclained earning* and also it-quircs additional disclosures compiling the lesults 10 the previous guidance We' aie iiirrcntly evaluating these adoption methods and the impact thai this standaid update will have on out condensed consolidated financial

:.l at fine II IS

In June 2014. the accounting standaid update related lo the accounting for share-based payment* when the terms of an award piovide that a performance target could he achieved aliei the requisite service penod was issued The standard update resolves the divene accounting it raiment lot these share-based payment* by requiring thai a performance tsrgei that street* veiling and thai could be achieved aliej the icqmsnc ten ice penod be treated as a peifonnancc condition The requisite service period ends when the employee can cease rendeung service and still be eligible 10 vest 111 lhe awatd if lhe performance target is achieved We will adopt this standard update during the first quarter of 2016 The adoption of this standard update is nol expected to have a significant impact on our condensed consolidated financial statements

2 At qiiisiiions and lh\rsiitiirev Wireless

Wireless Transaction

On September 2,2011. Verizon entered into a stock purchase agreement (the Slock Purchase Agreement) wilh Vodafone Group Pic (Vodafone) and Vodafone 4 Limited (Seller), pursuant to which Venznn agreed In acquire Vodafone's indirect 45% interest in Cellco Partnership d/b/a Verizon Wireless (the Partnership and such interest, the Vodafone Interest) for aggregate consideration of appioximatcly Si"-0 billion

On February 21, 2014. pursuant to the terms and subject to the conditions set forth tn Ihe Stock Purchase Agreement Venzon acquired (the Wireless Transaction) from Seller all ofthe issued and outstanding capital slock (lhe Ttansfentd Shares) of Vodafone Americas Finance I Inc .a subsidiary of Seller (VFI Inc). which indirectly through certain subsidiaries (together with VF1 Inc . the Purchased Entities) owned the Vodafone Interest In consideration for the Transferred Shares, upon completion ofthe Wireless Transaction, Verizon (1) paid approximately $58 8° billion in cash, (11) issued approximately 127 billion shares of Verizon's common slock, par value SO.10 per share (the Slock Consideration) which was valued at approximately $61 3 billion al the

Table of CaateDH

billion (the Verizon Notes), (iv) sold Verizon's mdiicctly owned 23 1% interest in Vodafone Omnttel N.V (Omnitel. and such interest, the Omnitel Interest), valued at S3 5 billion and fv) provided other consideration, which included the assumption of preferred stock valued at approximately 51 7 billion 'Ilie total cash paid to Vodafone and the other costs of the Wireless Transaction, including financing, legal and bank fees, were financed through the incurrence of third-party indebtedness See Note 4 fm additional inlonnation

In accordance with the accounting standard on consolidation a change tn .1 parent's ownership intereii while the patent retains a . onirolling financial rnlr icsi >r-, lis nihsiitiary is accounted for as an equity transaction and reincasurcmcnt of assets and liabilities ol pro lonsh f ontzollcd and r.insnli.lati-d subsidiaries is nol permitted \s a result vie accounted for the Wireless Tians.ieiion by .i;i!ii:.ur,i- lhe c.inyjng air.oi.rii ol the no:uontrollm;- inicresi to relied the change 111 Vernon's ownership intercsi in the far.r,eiH:.|i Any dmeic:ii e hcf-wci ihe Ian value i.-l'the consider.!; 1.1:1 paid an* the unto mil. by hInch tiic n.mcoriliolliiig iriteiesl is .iiiiisMcd ius 'acrri rccogin/cii in c-q.iuv .ittrihiitahlc to Vciizor:

exchanges, we received SO 9 billion of AWS and PCS spectrum treensea al fair value and we recorded an immalciial gain

di: I , Mi:.,r-_: .Mil-I Wii/.m and Yd.i:,.n. also . risMninialed trie sale ot ll,, Oniiiitei lulc-iest (the OmiiMel Tian.s .1 110:1! by a *uhsid;ai\ of Vendor, lo .1 jiibsiciiarv of Vodaloric in connection with the Wireless Transaction pursuant to a separate iharc pun I: i-c .tgiceirien; A- a result, during ih>- nine months ended September 30, 2014. we reeogni/ed a pre-ta.x gain nl S ] 9 billion on liie c.i;poi.il of. ihi Uionnel interest in Equity in earnings (losses'! of unconsolidated businesses on 0111 condensed consolidated

I he \ cri?i-:i Notes ueic isaicd io Vodaloric pui-uant lo Vcii/nn's cxi.iimg indent.lie Hie Verizon Notes weic issued 111 two m p.o.iiu s, rn s -nil, s; ; l;!, .Jm- l ,-br.uiy 21 2022 (tin cigiit-y.ai Wii/on Notes) and S2 5 billion due Fetiniaiy 2 [ 2025 (the eki 1 11 v-cai Vm/or. NoioJ The U11/.111 Notes tuai interest at a fin at me iaie which will be lesel quarterly, with intetesl payable qo^neriy 01 mica::. bcitir.ning Mjv 21. JDl-l The 1 lght-ycar Vcni'tin Notes bear interest at a floating rate equal to three-month ].-T,dr. Inicib.i:;k tillered Hate U.IH" >!i). pbas I 222V., and the clcv cr.-vcar Veii/nn Notes bear inteiesi at a floating rate equal to three <:::--riili l.lHc i|* (In-, I .«72'.i, I be indenture 11,.11 g.>\ erni liie \ en; or. Notes contains certain negative lovenams. including a iicy.oivc picdgi iu'.ui.i:!'. and ,1 merger or miiiiI.ii transaction cn'.eoaiil alllnnatrve lovenants and events ol delault that -ire cim on-.a 11 101 companies uiaiiiiaiiiing an n:v c siineni grade tied it rating An event of default lot cither series ofthe Vcnzori Noies m.n n ^u!l in a. reli-raiion ot rhc L imre pnr.i :|>j| jiv.nunl ot all debt sc. unties of that si.ncs (ie^inninji two years atlei lhe elosmi: . lir,. \\ in ls» T;i:ns.ilii'n \ eri/i-n 'H.ty redeeir !: 01 ar.\ poiluir, ol the oulMaridin,; \'cii/nn Noies held by Vodaloric 01 an> ol r.s al;i!:a:cs l.u .: u ile'i:i;i',i.i:i pud ol : d¹)*« .-I llu pnm ipj:! amount plus accrued and unpaid interest The Vcrr/cn Notes may only be ;r.i:i'.;.Tied 'nv Vodalone lo third p.niies m spreilied .imoiinls during Jpec:lied periods, commencing January J, 2017 Any Vcii/oi: N,,ie, licM bv lion! naii-c, «ill not be icdreriublc bv Vcii^on pii.o to then inatunly dales Vcri/on has ajjiccd to file a !!-(-:■ tiaii-iri si.,:. r:i;-;it « nl, u-spei: t tb.- \ i-ii.-:.;i '-...t.-s ai 'est ilire-.- nviiths prior h> ihi- Venzon Notes becuiiiing tr.irisfeiable

: I-C!a" l> jc: ( as. I , i;m.il.::ni pre!,:,red mi-c) 1 fix-Ki 1 c 1! Svd 1 is-.iie.: l-v oneofihc I'urc based l:'rin(ics Mulli the Class P

sh.,u -. i> ::■ tHu 1 >!:r. s ouK;r;ii:r::-. ₍ and I.'I .>s I" si;ri:i . 0(1H shrcs oatitaii.l 1 ng) aie rnjiulalorilv redcemabli in April .'i»20 at

Jl ill.'U pci <h.i!i- pii.s aiij ;cnieii .m.i unpaid div iden.:* Iiniilcnds accrue at 5 14*V,, per aririum and will be treated as micicsi cvpi-nsc ti.ith the CLiss 1J ( las* L" sh.nc-. have berri cl.issilieil as InhiliK instninients ami were i.-cordrd at fan value as i;clc:i:,:.:.,l at li.c chi-ii:,; .-iihe Wircli ss 'i i.o^.iu li«u

r .bl.iicd .h.i.tS attni'ur.,!.:.- to tin Wir.h's r:.>n^cl|.in hall be.-n <a'cula(.,l hasL.I 00 .01 ail!vsis nf 1,1ms

atiiiMit.il'e H¹ -1i::i 1 .r:-- h:'i>ecii 'In Mv b.i = n 1! rln mi esmte n! in lhe norKOi;liol!;r:i; interest H:a! i.s assumed compared 'o Ven.-.;r. s p.ik i-a-r A- ., r.M:,r \ ir-./on r< < .ir.ie.) a cl. Jnu.l 1.1? Iiabioiv ol approx 1 malely SI i 1 billion

Sp< (tr um l.ici use I 1 ansa. In-ns

:-.i;iii;: :!-.c - .u.Mitcr .'I-:-'., v _t . ruplc:. J Iimiim 1 vi liaiij-i t:us.,c!i.;ii!: vvirh T-Mi'bile CS-\ In. (I-Mobik U^A: to

i.ihjr.:-. ei.-i.rr Wumi.l W_!:, i, S. rv W.'v. _lt.-.,| Pe:s,,_n.,! Comrnoni. alr.-n Smifo [t't *s) lieeriseS I'bc e.ehan₍;.

1111 lulled a uu:ril>.-r o; sap- ih.n »e ev^rci i._:|! res-.iir 10 more cflnicril use of ilie AWS and f't.'s hands a,s j _K(n ,,| ,|_K^_t.

Dining the second quarter of 2014, we completed l ran *jct min pursuant lo tm) addition jl agieernents Willi T-Mohile USA with respect in our remaining 700 MIL A block spectrum licenses Undei one agreement, we sold ccnain of these licenses io T-Mobile USA in exchange tor cads consideration of approximately $2 4 billion, and undei lhe second agreement wr exchanged lhe remainder ol our 700 Mlb A block spectrum licenses as well as AWS and PCS ipeclruui licenses for AWS and PCS spectrum licenses As a result, vie iecciv ed SI 6 billion of AWS and PCS spc-e hum licenses il fair value and we iccordcd a pre-tax gain of npproximaiely 10 7 billion in Selling, general and administrative expense on our condensed consolidated statement ot income for the nine months ended September 30. 2014

led September M>. 21/14.

ash

Dm in;; the three and 11:11

During September 2014 wc entered into a iicetiic exchange agreement with affiliates ol AT&T hit to exchange renatn AWS and PCS sjiectnnn licenses Thi* non-cash exchange, which is subject lo appro* al bj the Federal Communications Commission (I'CC) and oihci customai) do sine, eunditions, is ex pee led to close in lhe lira quartet of 2015 1,'pim completion ofthe transaction we expect io record an immaterial gain

olher wneless licenses and markets ti>i

Cood»ill

Changes in the cany ing amount of Goodw ill aie as follows

(dollars in millions) Balance al January 1. 2014 Acquisition*fNotc 2) Dispositions iNotc 2) Reclassifications, ac'ius'merirs and othei Balance at Scptcmhcr 3ft, 2(114

Other Intaiigihlr Assets

The following table d;-pla>s the composition of (nhet intangible assets net

Wireless Wireline

.258 S 24.h34

(38| (4)

S IN 301 S fi.226 S 24.M7

At September .10. 2014

Accumulated Amortization

Wirflim-

On July I 2014, we sold a nun-simie-jtic Wiiclini business, winch provide* communications solutions lo a variety of go agencies, foi net cash pioei-i'ds of SO I bilhon and leeoided an iminaicnal gum

Other

During rehruaiy 2014. YVnzon acquired a hircincss dedicated lo the developmeni ot Internet froiocol tIP) telcviMon foi cash cunsideiaiinr-. that was not .snj"inearu

On Octcbei 7 2014. Redbox Instant by Veii/on a lenluie bclwven Vcn/on and Redbox Automated Retail LLC (Redfcoxl, a wholly -owned subsidiary o[ Outrrwall Ine . ceased pros iding seix'u.e to its i ustomers In aceordaru e with an agreement belween the parties Redbox w-ilbdic>* horn ihe venntrc on Octohei 211, 2014 and Vcn/on will wind down and dissolve the venture during thr next lew months As a result ofthe termination uf the vei:luie. wc expect lo ireoid a pie-lax loss of appioximately $0 1 billion in the fourth quanei of 2014

12 K41

665

Cross Amount

(dollars in millions)

Dthviire O to 7 years)

I he

miii/iit

Customer lists (5 lo 13 years) Non-network internal Other (2 to 25 years) Total

ir Other intangible

2014 2013

7. he estimated futuic amortization expense for Other intangible a

At December 31,2013

(2.870) S 7fi4 (8.1 K3| 4eS58

(34yj 3it»

Cross Accumulated Net Amount Ainorii nation Amount

3.b39 S 12 of.fi) S 979

I I 770 (7 317) 4.453

(i91 t'323) 3r>K

Nine Months Ended Septembet .10,

(1 1.402) S 5 73h S 16 100 S 110.300) S 5.800

1.178 1.183

Three Months Kndtd September 30,

3. Wireless Li<

rs, Goodwill and Other Intangible Assets

Wnrless Licenses

Changes in Ihe carrying amount of Wireless licenses aie as follows

'dollars, in millions)

Balance at January 1, 2014 S 75.747

Acquisitions (Note 2J 438

Dispositions (Note 2) (l."7M

(. apiiah/cd interest on wncless licenses 162

Reclassifications, adjustments and olher 934

Balance al September 30,2014 S 7SJ03

Reclassifications, adjustments and other includes the exchanges of wireless licenses in 2014 as well as SO 3 billion of Wireless licenses ihai are classified ai held foi sale and included in Prepaid expenses and olher on our condensed consolidated balance sheet at September 30,2014 (see Note 2 for additional details).

At September 30. 20)4, appioximately S2 2 hilhon of Wireless licenses svere underdevelopment for commercial service foi which ive weic capitalizing interest costs

Remainder of 2014

2015

2016

2017

2018

(dollar? in millions)

40] 1,379 1.145 959 795

>';.f,5S S VI SO[

21.57.*. 21 "w5

1 000 5 OHO

l.t.Sd l.t.50

('12.11) (I2V14)

t-12n)

(I 0C.7,

■ ■f _rprxim:.:cl_;Noies due Novemhei -014 _dm! iceoidtd an i .old f-n > hillio

Or Oelober 22. 2l"i|J wi ; tjetobi-i 20)4 We expi-i-t to r;c afnti Tcimbuisetnenl ol .erain expe Notes due 2021, S2 5 billion aggret of J 4ti% Notes due 2hi4 "lhe ne

l/.M nar/.-i.-^fV/W (in May 2", 201-1. we anr.eunce Cellco rC.iie-:.ship and Ven/on ' 201 i. (the 2016 Old Notes) lor \

10 (i billiiin ,it:gregare p:u:i iji.il

Tibk mt <7>al#aii

4. Debt

Debt Maturing Long-term within One War Debt

Total

Changes to dehi during the nine months ended September 30, 2014 are as follows

(dollar* in millions I

I'liiceed- fio.n long-ieilll In'riowmi's Ver./on Notes

Ri pas mints oj |o,_i(;-ii,:i, l"-.i.'W ing

IK.ere.is." mi -ic mi i.luMU'T.s. i

Kcljss.Li.iti.ii^ o; ionj--ie 1:11 deli: t'Hhei

[la lam i- ai September H). 2III4

l.t.03 S 107.027 > 10^l.) 230

:i.i:ii,_j; ; . :>iu.i:> ""Il! J is., is.m-d ">1 T'' t ill., _S£i, g.n, pr,neip.il amount ol 2 V/if. Note* doe 2D22 f I 25 billion ag.gici>a1e

On Maiih 10 2014. we announced the M'iie^of;ir. ^ listed in the foilowiug lahli

;::-.iu ipal autourit of 2^KVt Mi't. v due 2'j2fi ,.ud t ti S5 l.iilum aggicgate pmieipal aiiiuum of-l 7 ^toi Notes di.i 2tn4 'Ihe issuance ot these Notes usulied tr. cash pioneds ot jppio e::n.itely 55-1 billion, net of discounts and issuance costs The net proceeds were used ::: pan to finance tin Wnrlcs Transaction Ncl piocrrds not used to tinaner the Wireless Transaction were used li:r general .■.:j-0!iiie p.irp.--- Also liunn;' I'ebi-.i.uy 2111 1 we issued JO > billion .iggri.g.ilc principal anionn: of 5 ^y,.'"i Notes due 20*.J .■cvjliing in a-h [uo.i-i-ds i-l appioxiir: He;-. So ?■ hilhi.n ncl ol discounts and iss.i.uier nists Ilie ncl p meeds weir used lor [icnerai corporaic purpose-.

Principal Amount 'urehasrd

rnt of j lendei offei ttlie Tendei Offei) to puit hase loi cwish any and all of the

Principal

i or. 5 50':.

h -iy

55ri 5 5(1^.

x so*i

Interest Amount Pure lose

1.500 1 300 1 250

Kale Maturity Outslandmf Puce"

■ 11 70 07 1 i4ii'i| I .'tS 35 1.053 (-2 1 I ii :i

Table of Canteal*

vsiiitb late will he reset quarterly, $0.5 billion aggregate pnncipai amount of 2.55% Notes due 20)9, SI 0 billion aggregate pnncipai amount of 3 45V. Notes due 2021, SI 25 billion aggregaic pnncipai amount of 4 15% Notes due 2024 and $1.25 billion aggregate pnncipai amount of S 05V. Notes due 20.14 During March 2014 ihe net proceeds were used to purchase notes in the Tcndei Offer described abov e

jed J0«) l.il

pmieipal a

c No!

ol Ihe

.'unrig September ■Milted in CJ-li r

c.-eds

SO ) bii!ir lemberjON nriiali-uai an

During Maich 2014, Ven/on Wireless icileemeil 11 25 billion aggregate pruuipal amount ofthe Cellco rjrlneii-hip and Vcn/on Wueless t.apual LLC K Mi*-, Note-, due 2d H a: 127 ! .-5% ol ihe runup;.! am:mm ot su. li nuies plus accmed and unpaid inieicst tsre Farlv Dchl Redemption ) Also, .luring .Xiaieh j(H J J 1 0 lull:,m ol UHOK p'.us 0 (.1-:. Ven'on Conunimicaiioris Notes and SI 5 hillion ol I yi% Ven/on Conimiuiicaiions Noies niaiurcd and w_CJe repaid

. due 2044 The i-cosu Ihe net _P,

eailv ,1

eusls

ico.inpii .1" f.x.d

■i ted to settle

■-■ate j.ini, ip.i, a

cash pri'ceeds "I appn:' louici) Sr. J2S billion, net of discounts and issuance costs and rs The sale consisted ul :he- rollnwing S I 5 billion aggregate principal amount oj ? 0tl% e pnncipai amount ol * 5i)^,-.« N'oies due 202-. and S2 5 billion aggregate principal amount jirorrffls don; the olleiing v ill he used io redeem nj in whole the following scries of outstanding notes w:n.li hivi iu-eii called loi earl} rc.i. rnpt ioi. November 201-1 \'in;.in ■: miTv Notes due 201 5. Veiizi-n 5 55^J-i Notes due 2CD'. Vcn/on ? W-i \,.iis diu 21)!!-. \\ii/.j:i Sd?_a Vniu dm. 2(i;-J Vm/on K ?5'.i No!i s dm- J(i 1 h Alitel Corporation 7 OdV. Drbcntuifs due 20D, and Cellco pjrliiuslnp an.1 Vcri7o:i Wireler.s Capnal LLC M 5U% Notes due 20IK ami (n) 5 I 0 billion aggregaic pnncipai amount of Vcnion ? 50V. Notes due 11) An\ proceeds nol used loi the redemption ol tbc>e notes will he used foi i>rncral corporate purposes

"apilal LLC

Ii llili I: il J Notes wc i nn red ;

a private ev. h.mge orlei Cl.r Mas lxchar.ge Otlei) to exchange up lo all 0 (i billion ouisiiiiidiii)'. aggreiiale piiiuipal amount ofh UlS'/m Notes due iioniinited Notes due 2024 (the New Notes'! and an amount of cash fins n| .1. hi (n loriuc. tion w ith tin Mai fixe harige <Iftc r w lin li expired .>n

:r,l with llu issuer sm US ii.ill.n-. (c_f

f Nc t">ld N.

swaps to fix our tutiiic inter

Juli I .

Mr I.itdcr <>t:.i ;oi each all ,c;us -lhe hr.Jci <>::

:■ Ma:;!: .'fl- i

a tiiiani ing condition, whi. )i was cithei salislied oi waivi d w n!i rcspeet to U jtiiI settled on Mr.ich 11, 20U In ad.'.ilion n< the punhs^' pin i- Jr.v j paid to thr dare of purchase iJurinr Mai.h 2014 i-e rrcoidcd early del-:

f):!ei (See F.uK DlIji R^le.iiplion ) legate pnr.iipal .iniourii oi !ixed and fioJ

raie notrs lesiiitini: in cash j itc.l rln- rV.llowir-.;; 50 ■irce-r:i.ini!i I lUt'ik pli:* (' 7.

Or. Puis 2) 201-1. we Jr.rioumed ihr cuuneneemcni <-! elc^n srp:::.u< specilicd m-:i.-s oi ouistariciiiif. Notes issued b> \ i iiron a.id Alltel ('i^ issued by v'en/o:-. I he lulv I'.v. h.inge t.llleis hue been .ucounieci foi :i

jinouni of.! N.'ic^ urn- i'l'-in (the ?0H; New N\.'es) .nul J5 bilh.-i

(the ?()5-t New Noies) m satiMaciioii o: lhe ex change ofki '-i.iisidrraiio o mines! o:i i|,c (.UJ Nnti-sl "ihe loMowing tables list the se;-.e.- o[ Uld Noli-amount ul each such seiies atfepie;! bv \ cn/on loi evcri.ini-i-

inv.ite offeis lo exchange uhr July Eix.hange i>(1er<) lion l,.-!lu-;,uli the Old N-tes) fi new N.-ies I., be a rriodilie.nion c-f debt On August 2 I 2014 Yen/on tl:*- 2t>:i.' r-ew Notes) S^: 1 biili m gsieg.ite principal i;:gri,'.ate p.m.ipal aino.ir.l e.| ?> 0J2¹:. Notes tint 205 1 Umlercd Old Noies (no; including acc iiirn and unpaid included in the July Uxcharigc Oder- ar.d ihe pnncipj]

1jI.1i ul Commit Tlit i.ihle below li.sts lhe senes nl Old Ninesincluded in the July Lxdiange Oilers lor the 2020 New Noies Principal Amount Principal Accepted Interest Amount For (dollars in ruilhonsj Kate Matuntv Outstanding F.xchatipe VdW.ui Communications 3 h5% 20IH S 4 750 I 2.052 2 50% 20lti 4.250 ],0o8 I 3,120 1 he i.ihle below lists lhe sdiu ot Old Notes included in the Ju\|y F.xchangc Ofcers ten the 2046 New Notes Principal Amount Pnncipai Accepted Interest Amount For idmlai* ni millions) Rale Maturit) Outstanding Exchange Vernon Communications 640% 2033 S 6,000 $ 1.645 7 75% 2030 2,000 794 7 35V. 2039 I 000 520 7 75% 2032 400 14* ■Miielfoipoi-aiioii 7 875% 2H32 700 2J8 ftKOV. 2029 300 65 I 3.421 The table below lists the series nl OIJ Notes included in lhe July Uncharge Oilers lor lhe 2054 New Noies Principal Amount Principal Accepted Interest Amount For Uiollais in millions) Kale Maturih Outstanding Fxchanj>e Ven/on Communications 0 55% 2043 S 15 000 S 4.330 6 40% 2038 1.750 6 90% 2038 1J50 J 4,330 I' /■""" A_Kir,-mr»l During February 2014, uc drew SO 6 billion pursuant to a icim loan agreement wilh a group of major financial inslituiions to finance, in part Ihe Wireless Transaction S3 3 billion ofthe loans under the term loan agreement had a maturity of three years (the 3.Year Loans) and S3 3 billion of the loans under the term lo«n agreement had a maturity of fixe years (the S-Ycar Loans). The 5-Year Louis provide for the partial amormation of pnncipai during the last two years that they are outstanding Loans under the term loan agreement bear interest at floating rates The term loan ngreemcnt contains certain negative covenants, including a negative pledge covenant, a merger or similar transaction covenant and an accounting changes covenant affirmative covenants and events of defaull thai are customary foi companies maintaining an investment grade credit rating In addition, the term loan agreemenl requires us to maintain a leverage ratio [as defined in ihe term loan agreement) not in excess of 3 50 1 00, until our credit ratings arc equal to or higher than A3 and A- at Moody's Invest on Service and Standard A Poor's Ratings Sen ices, respectively During June 2014, wt issued S3 3 billion aggregate principal amount offixed and floating rale notes resulting in cash proceeds of approximately S3.3 billion, ncl ol discounts and issuance costs The issuances consisted ofthe following SI 3 billion aggregate pnncipai amount of Floating Rate Notes due 2017 thai will be ai interest al a talc equal to three-month LIBOR plus 0 40% which	will be reset uiiarK-rly and S2 0 billion aggiegtite pniiLipal amount of 1 35V. Nmcs due 20i 7 We used the net pioi.cc.ls liom the offering of these notes to icpay the 3-Ycai Loans on June 12 2014 " " 14
Table ■rr.aaieDii During July 2014, we amended the term loan agreement, settled the outstanding S3 3 billion of 5-Year Loans and borrowed il 3 billion of new loans The new loans mature in July 2019, bear interest at a lower interest rate and require lower amortization payments in 2017 and 2018 In connection with the transaction, which primarily settled on a net bant, wc recorded approximately SO 5 billion of proceeds trom long-term bonowings and of repayments ot long-term borrowings, respectively Irvi.-or, .Vo/CJ During February 20 1 ! in i oinicrtinii wilh tbe Wirele« Tiania,.tion we issued SS 0 billion aggregate principal amoiinr nt floating ut-. r.i-i-s in vuiialor T ):: note- w, n i^no! in tw,. <i pai.iu sen. s will. S2 5 billmti due 1 ebniar. 21. 2tC2 and 52 5 billion clue l^:i!i:iia.'> 21 202> "i In \'. ri/or; Ni:K - beat iriieiesi al a ilojnng rate, whuii will be reset ciuarlirly mill inletcM payable quarterly in a:ica;t>. hi u:ninl- M.r. 21. 201 -1 we Note 2) Tin- ughl-yrar V'uuoti Noies be.u interest ai a Dualmg rate ec\|ua] to hue-month LIBOR plus 1 2:2"i and tin' e\|e-. cn-y eai \'en/o_n Notes b.-ai inieieo at a jli.ating n.tc coual to rhiee-montl, IJUOR ■V. a le-ult ot tin Wuelc^s I rans.U Hot) w\ .iwjiri.'d long-turn obligations w ith icspeci to 5 143% Class D and Class L cumulative Pic Idled SioU i-su. .1 in one oftlu Pmrhasi d Unties Both ihe Class D shaie.s \|S25 000 shaic s outstanding) and Class b Oiaies i>2i OOO shoes ■.■islanding) ait- r:i iaiortlv icdecm.ihk- in Apnl 20211 at SI 000 per .shale plus anv acetued .uiii unpaid* chv iddid- Didd. a., .;i < ]■! i¹- p.r annum and will be irtalcd a, inici.sl expense Both lhe Class \|) and Class L shares haie been classified as liability i est rumen is and were recorded at fair value as dciermined at the closing "f the Wireless Oil,,, CVf./.l /m :/■.-.» tin July -1 20! 4. ««■ aiii.rr.dcd oui St- 2 (nil inn t irdu IjciIhv n. in_Liease the availability to 0 billion and ex lend ihe niatuiity to il 201 j* A; i!ic same 'i:ne, we :enn.:i.i;ed .in j.2 !UiiMi.,_Ti tf.4-da> revolving credit agreement -Vs of Septembct 30 2014. ihe unused burrow me .-.ipaciiv ur:de: this . rcdil la. ility was appniMmali ly S7 9 billion During M.neli ''01'' wc ie. itiIi il rid debt rcileiupnoi. sosts ot SO 9 billion in connection with the early redemption ot SI 25 h.ih.oi a:!_;;ieg.iic pro., ipal amount ol Cel!: PiP.rur.hip an.) Vcn/on Wiieicss Cipii.il 1,1 .C S 50'. Notes due 201K. .mil the *, Ii-. .-1 i!i. 1.-U-. wui\|. ii-Ks r.i.r-.i.u,-. the Icitd.r >:ii i >"<) 1 billion Uk then .lulst.ui.lnii' SI 5 billion aggregate pmieipal** .imouiit of Vcn/on fi : 0% Note- due .'Oi.- SO S billion nl the then outstanding SI ■ billion aggiegate pnncipai aniouni of Venrori 5 50% Notes due 20 SO b billion of the then outstanding SI billion aggregate principal amount ol Vcn7on H 75 V. N.acs due 2H\|x <t) 7 hi;:-.-. fth-- thru liKtan.tir.;' 1 25 billi,i jg^iei'ate piucipa! a:i,oiiiil ul Vi 1171.11 5 5% Notes due 20 16. iii : \|;nor. -1 rlu- iii. 11 oi:i-.:i:.ii!ii' illT.- billion aggregate prindpal jinunt ol Wrirtm 5 50% Noies due 2017 SO (, billion ol ihe ih.u ouisijiidunj M D billmri :>rrc.'.ale pr:n. ip ti aniouni <-\| Cellco I'jitneit.lnp and Wil.ton V.i:cless Capital LLC S 5tlV Notrs euc 'Jl:':- 1_;! ; i.-ii,,,,; r,\| ihe:,* _i;i;l,i.,r.J r.e Uj 3 hillu.ii a_;'grrg-iie pnncipai amount of Alltel 1 "i':\|ioration 7 00% Debei.iu.es d ;r 2-:. 1 (■ ii;.l -0 ■ i-.n .1: ih-.- irici i-uisi;:.iir.i: M: (. biil.oii ;-.s;giegaie ptmcipa! amount «-11 i"11; Coipi'iauon c X-t% IXI.e.inues dl.i 2'!!.¹ W- .e...gi,i.-c carlv debi -idi-pi:. u c c-l -. .r- ( r lie 1 111...1-:. and levjieri-ef rist or. mn c .mdc mc d c "iisol idale d siaUment ol .:)- ornc C7r.-,i;-.:...o :■(>:■. .S - i hillK.n aj-^i. g.n. [<nn. ipal omoun; ol 1I1. ^. !di\| a:i,.,_:t lemann! ouisran.liiig l.acli gnaianlee will remain in pl.u e :'oi the life 0: ilie orb.'jiuui unl.-.s ivimiii.iic-t \|-nisu.!nt lo its iem-,.s. uicludini' the operating telephone cornpaiiy no loneei being a Wr al.,o .cu'.i.ir:ic-.- ihe debt onhj- .1.011s ol (Jll: 1"1por.1t...n thai were issued and outsi lnciing pnoi 10 July 1 2H03 As ol S(ir.;r,K-i 5 0 7 Hi J j 1 : i.ilhn r::V:.- ;;iin. 1p.1l ni:i,u1 1 ihe.se .)b^!; g.-. ion s rcr:: 11:1 out-L1.nl 1 ng	15 1 1 I i i 1
l.Uk «l Cum mil 5 Wireless Equipment Jn>(jtluienl Flans We oiler new ami existing customers llic opium in participate in Verizon Hdj/e, a pmgram thai pmvidcs eligible wireless L'uMmr.rts with the ability tn pay lor their handset ov e; a penod ol time (an equipment installment plan) and the right to upgrade their handset After a minimum ol 30 days, subject to certain conditions, including making a staled portion of the required device payments, trading 1:1 their handset in good working condition and Signing a new contract with Verizon At September 10, 201J ihe guarantee liability ielated to this piogum was appioximately SO 7 billion At the time oi <ale we impute nk adjusted mteiesl on the icceivahies associated with YVnzon L'dge We record the imputed inicicst a> a reduction io tin. icljied jeeounts receivable Inteieit income which is included within Othci income and (expense) mt on our condensed con»olidatcd stnlemcnts of income is recognized oi ei the tin anted installment teitti We assess the rnllcclabiiily of out \vnon Lrige i-.-ecivablcs based upon a ejr.cly uf factors, including the ciedil quality ofthe customer ba>r. pavmerit trends and other qualitative fit lo is The current portion of our receivables related to Verizon Edge included in Accounts receivable seas SI 4 billion at September 30. 2014 and was not material at Deeembei 31.2013 lhe long-term ponion ofthe equipment installment plan receivables included in Otliei assets was SO h billion al September 30. 2014 and was not maieiiai al December 11 201 * The credit ptofilcs of out customers with a Verizon ridge plan ate similar lo those of our customers with a traditional subsidized plan Customers with a credit profile winch carries a highei nsk arc required to make a down payment for equipment financed through Vcit/on fiJge 6 Fair Value Measurements The following tabic presents the balances ot assets and liabilities measured a: tair v aiur on a recurring basts as of September 30, 2014 (dollars in miliums) Level 1 "> Level 2 <^:> Level .1 <" lolal Shon -icim mxi simcms I-quiiy securities S 3RS S - S - S 3X8 Fixed income setuntic* - 247 - 247 Other assets Fixed income securities - 90* - on* Interest rate swaps - 44 - 44 Cioss cunency swaps 9 9 Total S 3 KR S 1,208 S - $ 1.596 Liabilities: Other liabilities Forward interest rule swap* S - S 138 S - S 13H Cross cunency swaps and oihei - 123 - 123 Total 5 - S 261 S - S 261 quoted pnees in activ e maifccts fot identical assets or liabilities ^im> observable inputs olher than quoted pnees in active markets for identical assets and liabilities ^,1! no observable pricing inputs in the iflaikct I£quiiy securities consist of investments in common stock of domestic and international corporations measured using quoted prices in active markets Fixed income securities consist pnmanly of investments in municipal bonds that do not have quoted prices in active markers For these sccuniies, wc use alternative matrix pricing resulting in these debt securities being classified as Level 2 Derivative contracts are valued using models based on teadily observable market parameters for all substantial terms of our derivative contracts and thus arc classified within Level 2 Wc use mid-market pricing for fait value measurements of our		derivative instruments Oji demaiivc inslium^riis are ic'coided on a gross bans If.
Table of Caatemi We recognize transfers between levels ofthe fair value hierarchy as of the end nf the reporting penod There were no transfers within the fait value hierarchy dunng the nine months ended September 30. 2014 Fair Value nf Show-term and long-term /V/" The fair value ol our debt is determined using various methods including quoted prices for identical lenns and maturities, which is a 1 eve! 1 measurement as ncl! as .muted piice- in: similar terms and mammies in inactive markets and future cash flows I'.-'.co'.iNif d at i uncut rales which .m 1 i -'r! nicasniernenis Il.c lair v alue n! .mi short-term .Hid long-term debt, excluding capital IcJ-C- «.:. il llucvs At September 30.2014 Al December 31.2013 Orrj in« Canying idoll.ii>. in millions! Amount Fair Value Amount 1'au Value Slinrl-am; lon,vic::n ill bl cv. iii.lini: cpiial bases S l0h,<.K5 S 1 2 1 "72 S 95 298 S 103.527 [K'i iv ativ e Insti unienfs We cole i into dem aiiv e lr.ui sac turn: i<> iimiagc our exposure lo llm millions in toreigu currency c \ change rales, intciest rates, and ect.iiy iino i.-nuiiodiij pnee^ U'_t. emphiv risk m.in.igcrncni strategics whnh may include the. use of a sanely of dcnvaiivcs irie'.udiNjj ci.rss unrrncy Mvajn. foreign e uncjiey anri piepant forwards and coilars, inieieM rate swap agreements, commodity swap ami i'orwor.: agreements and inlen st late Uks We do not hold ileriv .niv. > mi Hading purposes VV'e mea-uir all m-iiv am-e" me hiding denvani-es embedded in nther financial n:liniments al fair value and leengni/e them as eiriier j^ei- oi Ii Jul-.r,.-- . u nui i .nd. n ■; d ennsolnlaied baljuce -In i is Changes in the: fni value- of derivative uisiiu merits not qualifying as hedges oi any mcftecinc portion ol hedges ale iceogui/cd in earnings in the euiient period Changes in the fan talues or demativc uistninie nts used sffccturlv as fair value licdjies aie recognized in earnings, along wnh changes in the fan value oi the hcdgid mm CJimges in the l.u: value of [ eftecrivc portions ol eash How hedges are reported m Other compiehfiisive l\s ami -rogrii/i-d ir. e.irnu.i'.s when lhe hedged irrm is recognized in earning! We entei into domestic nretel rate s« if- ie- .i.-\|i:<vi- a urgeicd mix oi lived anil variable raie debt We principally ret eive fixed rates and p.ii vaii.-jbie i.ne- based on UriOK lesulnng it; a net uiclease or deeiease lo Interest expense These swaps are designated as (an v alue hedges and hedge a^ airist t h-niges in the tan value of mil debt portfolio We iceoid the io (crest rate swaps at fan value nr. our euiidei.-i d con so! id.n. d haLr.cc --bec'.s as j.w i; am! Imbilmes The fair value ol these contracts was not matena! at >epiembr: M> 20M and Deceuibei .^; 1 2t'l lespictivelv- As of Sejueiubei JO. 2014. ihe loial r.;itional amount cl rhe inteiesi iatc -.wans vc.-s ; 1 s hilli.-n ihe uieOestiM- ponion ol'lhrsc nil.-rcsi uie twj₍i- esjs rn<i materia; foi lhe three and muc moulds ended September Mi 20M rcpcdncK* In inil. r i.in.-i'i- o.ir e\[i.>-aie to luti.rc merc-i ran- changes duiiru; tlir found quarlei oi 2013 we entered mio fnrwjfi! inleii-si ::ne sw.q--. a tot d r.» v .ilc.c >■'." " billtoit Wc i!i-_ri;:n.i"cJ these contra:: a> eaiii !;c-w hedges !n March 201-;. »c -i rt'id tin m u tc-. st r:e -w qis .uu! r!:c pr. lav ;:ai:i n.-r material During the first ami ^ecoiiil quarters 2014 vce erilcied irilo :ix>ai.l iiHlkM _;K swaps oh lotal m-ti:ial value m.! 50 9 h;IImil and S3 1 billion respectively Dunng the (hud quattei ol 2.11 i 4. wi entdiil mio loivui.l rritciisi r.m svcjps war a t.ital mlional viue of SO K billion Wc dcsign.iii it liiese In t Vioher 201-1 m -ritle.l il Inllt.in il :orw_nrU inkres. rale swap- i< - l.iMion ,<l i.im. ._;d Hr-.n-.li* l<.i,! Valine de uiuaied debl mio tl > dollars am) I., liv »ur fuluie :uleie.-1 and principal ;:awrc-M- .r: I.¹ S di.lhr- - well rn:, i>\ llic .n.:-.ie i ol" Lie nrn .urieiicv n.iu-.ic! ulri gam-, or losses ■.■'■a:u;g iii. ml- u: qu.i:t. I -t 2UM in . o.i::= e i.on will, M,.j i.vebang.- t;-:lei w. intend into e o.ss i urn :ie y sw.p- di signaied ,o sash fl.-w iisJgc- t e... iiarire appro* imak iv 51 : billion of Hutisu I'ound Stcilin- deiiorniniind debl itllo C S dollais arid to		or losses 17 \| i j i 1 !

Venvun Wireless pie> iou-.lv entered into truss curreiiey swaps designated as cash llnw hedges in callunge approximately SI li lullirii of UiTii.ih Tound Sterling j»d tnro-dcnormriaieJ dcbi info US dolJjrrjnd lo fix run future interest and principal payments in US dollar, as well as 10 mitigate ihe clTeci nl foreign currency transaction gains or losses In June 2014. we sell ted SO K billion ol these cross cunensy swaps as' pan ot the Exchange. Otier and the gain* with icspcc'i 10 these swaps weie not maUtial

^ pomon of ihe gains and losses recognized in Olher comprehensive income (loss) was icclassificd in Other income and (expense), net to otlset the related pre tax foreign currency transaction gain or loss on the underlying debt obligations The fan value ol the outstanding swaps was 50 I billion at September 30 201J and waj not matenal at December 31. 2013 Dunng the three and nine months enehrd September 30 201-1. a pic-tax loss 0/ »fr i hn'liou and .m imrnatenaJ pre-tax loss. lespeenvely were rccognizeef rn Other comprehensive income (loss) During the three and nine months ended Scplcmhcr 10, 2013. a pre-tax gain ol $0 I billion ar.d 3:1 iirun-oeiial pie-iax loss, icspcctivcly. were recognized 111 Other comprehensive income (loss)

7 Stttek-ftased Compensation

s the granting of slot I. options, sinck appree latum rock units and other awards The maximum numbei

The Veri/on ( nmmunulinns Inc Long-Term liic-mlive Plan (the 1'lanJ pel nghts resinned stock, rcstccted stock iir.its, peiloimarn'e share--, perfnrmam of sliaies a va] labk' for awards from the Plan is I 19 ft million .shares

Rtihutrsi Slink Lnili

I he I'lan pins ides loi giants of Kestnsted Slock Units (RSUs) that generally vest at the end of the third yeai aftei the grant The RSI 'j are cl;i_Xs;1ied as equity awards beiause the KSUs will be paid in Vcn/on eomnion slock upon vesting The RSU equity a wauls are measured using the grant date fan c alue of Veil/on 10111111011 slock and are not rcmcMMircd at the end of each reporting penod D" id end cquiv .dent units arc also paid to participants at ilie time the RSU award is paid, and in the same proportion as the RSU award

l\-if.i.tmii:co Smrt Cum

T he I'lan ak jnov ides lor grants ol PciloRr.ar.ee Stock b'niK (I'SUs) that generally vest al the end ot the thud year alter the pranl As defined by tlie Plan, llic Hunan Rfsoui. cs C.iiiirnme.e ol the lluaicj ol Directors delciimncs ll.e iiuinuei of PSl.'s a participant cams based on the ettcni to which the corresponding pcrionnancc goals have been achieved over the three-year performance cycle lhe C!JU* are classified as liability aw aids because lhe PSU awards aie paid in cash upon vesting The PSU award liability is measured at 115 la it value al the end ot each is port ing penod and. theiclotc xx ill fluctuate based on the price ol Venzon common jtock as well as performance rrlarive 10 the targets Dn idcnd equivalent unit* tie also p.xid 10 participants at the time that the PSU award is determined and paid, and in the same proportion as the PSU award

Restricted Stork Units

(shares in thtju ond*)

The Inllovxing table summanzes the Rcsinctcd Stock Unit and Performance Slock Unit activity.

2J.724 7.080 (9.153J (252)

16 193 5.041 (6.165) (229)

Performance Stack Units

OuliUading. Jjiuuty I 2UI4

Granted

14JJ40

Pay mem 3

Cancelled/Forfeited Outstanding, September 30, 2014

21,399

As of September 30. 2014. unrecognised compensation expense related to lhe unvested portion of outstanding RSUs and PSUs was appioxirnately SO 5 billion and is expected to be recognized over appioximately two years

The RSUs granted in 2014 have a weighted-average giant date fair value of S47 19 per unit.

Employee BeneTils

Wc maintain uoii-coiunbuiory defined heneiil pension plans lor many of our employees hi addition we maintain poslrciircuicni health care and liie insurance plans lor our renrees and their dependents winch are both eoninbutury and non-coninbutory. and include a limn on om share ofthe com foi certain recent and future rciirect In accordance with our accounting policy for pension and olher poslrrltreiiiciil benefits, operating expenses include pension and benefit related credits and/.ir charges based on acinar 1,1] assumptions, including projected discount rales and an estimated return on plan assets TTicse estimates are updated in the fouiih quarter or upon a rcmc a sure-men 1 event to ictlcct actual return on plan assets and updated actuarial assumptions The adjustment wilt be rccefgfilled in the income ilalemenf dunng 'he fourth tiuarter or tts<m a remea.c tire men' event ptrtsuanr 10 oar accounting policy lor the recognition of actuarial gains and losses

alth care and life 1:1s

Nit Periodic Bern lit (Incnine) Cost

The following table summarizes the benefit (mcoi

Pension Health Cai

plans

Idollats in millions)

(ft?) (-11) 277

((.21 (3t>) 273

12) (2-16) 259

Three .Months Ended September 30,

Service cost

Amortization ofpnoi seivice cost (credit) Expected return «n plan assets Interest cost

111II10

Pcn-uun Health Care and Life

Net peiiodif benefit c»M

(dull.1.

245 S 2«d S

(190) (I.-2)

(Hil) (10M

Nine Months Ended September 30,

ScTvKecost

tinorti/anon ofpnoi service cost ten IJxpcetcd lelnin t.ri plan assets Inteiest cost

Keineasuieiiicni gain, net

Net periodic benefit (incomelcost

S 130 S (117) S

Pennon Remeasuremenl

Dunng the three and six months ended June 30,2013, we recorded net pre-tax pension remeasuremenl credits of approximately SO 2 billion in-accordance with our accounting policy 10 recognize actuarial gams and losses in the penod in which they occur The pension rcmeasuicmcnl cirdils relate to settlements for employees who received lump-sum distributions The cicdits were pnmanly driven by an approximately 75 basis point increase in our discount rate assumption used tn determine the current year liabilities of one of Our pension plans The change in discount rate resulted rn a gam of SO 3 billion partially offset by a loss resulting from the difference between our expected return on assets assumption ol 1 5*t at December 3 1. 2012 and our annualized jclual return on assets of 7 2V. at June 30 20)3, as well as other losses (SO t billion) Our weighled-ivriage discount rale assumption increased finm4 2% at Dcccuihci 31 2012 lo 5 0V. al June 30 20 j 3

Dining the three months ended September 30. 2013 as a result ofthe settlements noted above, wc performed a pension remeasuremenl in accordance with our accounting policy lo recognize actuanal gains and losses in the penod in which they occur This remeasuremenl was not malen 111 to our condensed consolidated statement of income for the penod

Dunng October 2014, ihe Society of Actuanes finalized new actuanat tables for applying mortality assumptions to measure qualified defined benefit plan and other post employment benefit obligations Wc are currently evaluating the impact these new tables may have on oui condensed consolidated financial statements, which may be material

Severance Payment*

Dunng the three and nine months ended September 30, 2014, wc paid severance bene fin of SO 1 billion and $0 4 billion, respectively At September 30, 2014, wc had a remaining severance liability of SO 4 billion, a portion of which includes future contractual payments to employees separated as of September 30,2014

Fablr rCantrali Employer Contributions

Dunng the three and nine months ended September 30, 2014, we coninbuicd SO 2 billion and SI I billion, respectively, to our other postretiremen! benefit plans Dunng the three and nine months ended Scplembei 30, 2014, we contnbutcd SO 7 billion and SI 5 billion, respectively to our qualified pension plans The coninbuiinns to our nonqualified pension plans were $0 I billion dunng the three and nine months ended September 30. 2014 There have heen no maicna] changes wnh rcspeci to the qualified and nonqualified pension contributions in 2014 as previously disclosed in Part II Item 7 'Management's Discussion and Ajmlysis of Financial Condition and Keseills ofOpeial ions' in our Annual Report on Fomi 10-K for the year ended December 3 I 201?

9 Equilv ami Aci uitiul jteil < llliei ( umpi i-hcnsi v 1 liiciiine

(Jtliei cumpieheiisivc loss Comprehensive income

1ssuar.ee o! 1 ouunori sii.ci. Coninbated c.ipiial Div idendi dee lared Common stock in lreasurv Purchase of noriconlrolling niteie Dis'.iibutrous and olhei llalance al Scptimbii JO. 2(114

The changes m C.ourno,-, soul. C the Uncles- Trailsae lion on I e'luu

ted rp;lal and i'uiehas; , 20I-: Set Note 2 f.-i addi

Vtu iliutablc- Nunc 11 till oiling

Total

I I had (1.183)

n,5lill S "'iSjTiT"

2,2'"-K 14 I0J

[((,74)

123) jj^l^l 2.225 !2VJh

(55.4(.0) (55 "(it) 1

11.454) (] S^l

due 10 ihe complelii

1 losing ol the Wut-lcss iiaiisae iimaiih ions,,!!.) of Vodaf_:lc l.c lorupl. tioi: ot (In Wik 1cs_S I:.

u lulled 111 our c.md>.-nsed c ll-on Wircle^ The n.-mori

( c-mri-.oii sioi). h- hu.n u-id Hon iceJucfriti: V \ :r::Jln'ii eornrrnn: sh.n ag;:ie:gaie v jl,,, o] SO » billion

r:ie iii trie : 111:it 111;.' requirements ol einjiloyc-e and >ha:im>rii 1 plan-id, du.iiii: (he ii;iKri,.):iilisei:.le(f x'eptcriihei 30. 2114. winch had jij

t Income

j ululated utlici comprehensive

by component are ax follows

Unrealized De fined benefit

foreign currency Unrealized luiion pennon and

translation loss on cash marketable poitrclircment

adjustments flaw hedges securities plans Total

117 U

113 $

215 S 2 358 (30)

(117) fl 153)

853 S (143) tvll)

Accumulated Other Coinrjrchi ( The changes in Ihi. b.ibncv nf.!

(dollar millions)

Balance at Januaiy 1.2014

(117) M.1M3)

Othci comprehensive income (loss)

1.158 S

(201) S

102 3

1 1

Amounts reclassified to net income Nei otbet eomptehensive loss Italand at September 30. 2014

10 Segn

The amounts presented above in net othei comprehensive loss aie net of (axes and noneontioUiug interests, which aie nol significant Tot ths nine months ended September 30. 2014 the amounts reclassified to net income related to foreign cunency ii.im.latiC'Ti -acijuitmenw aie included tn l-quiVj in timinp llussc-;) of unconsolidated bci tune sic s on s*ui condensed consolidated statement of income and are a result ofthe completion ofthe Omnitel Transact ion See Note 2 for additional details For the nine months ended September 30. 2014. the amounts reclassified to net income related to defined benefit pension and posirctiicinenl plans uere included in Cost of services and sales and Selling general and administrative expense on our condensed consolidated statement of income foi the nine months ended September 30, 2014. all other amounts reclassified to net income wctc included in Olhei income and U xpense) net on our condensed consolidated statement of income

r.d oigani/c by products arid sen n consistent with the chief opera!

; strategic business unii.s [■mem operating iniom

it Information

Kcpnit*hlc Segments

vVf have two u portable segments wlm Ii we upetate and n We impure and evaluate our reportable sefimems base ctrcriioH maker's asscssmcr.i ol se.gmcnl perfoimancc

.ulis

On July 1.2014, out Wireline segmer for these operations have been rcclass

Corporate, eliminations and othet includes unallocated corporate expenses intersegment eliminations recorded tn consolidation the results of othet businesses such as our investments in unconsolidated husmesses, pension and other employee benefit related lOsts lease financing as well as the historical results of divested opciatums and other adjustments and gams and losses that .i remit allocated in assessing segment performance due io their non-operational nature Although such transactions arc excluded from the business segment rc*ulis, they arc included in reported consolidated earnings Gains and losses that are nol individually .significant are included in all segment results as these items arc included in the chief operating decision maker's assessment of segment performance Effective January I, 2014. wc have also reclassified the results of certain businesses, such as development .stage businesses that support our strategic initiatives, fmm our Wireline segment to Corporate, eliminations and other The impact of this ^classification was not material to our condensed consolidated financial statements oi om segment results of operations

divested a non-strategic husiness (see Note 2) Accordingly, the historical Wneline icri to Corporate, eliminations and other in re fled comparable segment operating insults

Our segments and their pnncipai activities consul ofthe following Segment Description

Wireless' communications products and services include wireless voice and data services and equipment sales, which are provided to consumer, business and government customers across the United States

Wireline's voice, data and video communications product! and enhanced services include broadband video and data, corpotate networking solutions, data center and cloud services, secunly and managed network services and local and Inng distance voice services Wc provide these products and services to consumers in the United States, as well as to cam en. businesses and government customers both in the Untied States and in over 150 other countnes around the world

Ijblr nt Cur.lnili

The following lahle provides operating financial information foi

(dollats in millions)

External Operating Heve nues

Wireless

Retail scn'ice Othei service Service icveniic

I;qiiipinciil Olhci

Total Wireless

Wireline

Consumer retail Small business Mass Markets

Strategic service Coie Global Lr.teipn-c

Global Wholesale Othet

Total Wiielmc Total segments Corporate, elimination Total consnlidalcd

ins and other reported

Intersegment Revenues

Wireless

Wireline

Total segments

Corporate, eliminations and oihei Total consolidated - reported

Total Operating Revenue*

Wireless

Wireline

Total segments

Reconciling items

Total consolidated - reported

Operating laconic

Wireless

Wireline

Total seg menu

Reconciling items

Total consolidated - icportcd

Nine Months Ended Septiiiilier 10, 1014 2013

ii two reportable segments

1 hrci- .Months Ended September 30, 2014 2013

S.07S 2 &Mi

I6.7M i 52.»52 S 4U.127

7tJ 2.M3 1 950

1 1.606 I .Ji5Ji

0.735 3 ni I

11.020 1.907

92 224 1.663

1.131 455

2 044 O.207 I JS>0 4,0"7

K7 930 1.555

S 31.586 S 30,279 J 91.RK7 S Sv.485

Bd 756

880 (ESQ)

89.810 675

31 411

175

2L8.15 S 20.399 J 64 197 5 59.898

9,576 9.657 28.869 28.912

30.056 223

6,955 225

S 31,586 S 30,279 $ 93,817 S 89,485

2) 877 (U2)

7.1K0 (2901

7.033 95

21,258 619

19.984

(79)

$ 6.890 S 7 128 I 21.735 S 19,905

At December 31, 2013

I able of OiMcitts

(dollars in millions)

Asset?

Wireless Wijcline

Total segments

■nripletetheWirrless In

ihcr .= I 20 1 j Is ai> .'I 21114

I5S.443 80.135

A( September 30, 2014

211.002 43.09t)

146,429 84.573

218,578 Q2,2h5)

uipnsed ot cash and cash equivalents winch vi

Table «f Cantrnlt

they develop and adjust any accrual or disclosure as needed We do nut expect that the ultimate resolution of any pending regulatory or legal mallet in future penods, including the Ilickrville matter de sen bed below, will have a matcna] effect on our financial condition, bul H could have a matenal effect on our icsulls of operations for a given reporting penod

During 2003 undei a government-approved plan, remediation commenced at the site of a forme t Sylv.nna facility in Iheksville New York thai processed nuclear fuel rods in the 1950s ami 19M>>' Remediation beyond original expectations proved to be necessary and a reassessment o; lhe anln lpaied remediation costs i\,n eondticreiJ A reassessment ol c:nst: related lo reiutcliation cilons ai siv. cr.il otbei loitnei facilities vcas also undertake n In piemher :t>t)\ ill, Annv Corps ol' f-'nginccrs (ACFi a. repicd the Iri.ksv ilie ?:e n.io ll::- f rmnlv I.Tili/ed Sue k:-!ivdi.i] A.ii.-i; l'i. g:.in: Tr.\: :i;-,y n.'uli ni ihe A(. 1. j-eil.niiiiiig smc oi all .it ti;e remedianon eiloit |r lhe Ihct-.villc site isiih a corn-sp,:ii.iiii;> decease in ; .-*is to W tia.ii T.i the extent thai ihe Ac, f- a-.sumes responsibility fo; iciuco'al woiL al the liiel.sv die site: an ailiu-lnicni to a reserve previously esubiislied for ihe icmediaiiori may be made Adjustments to ihe rocrv-e may also he rrude based uiior: .KHi.il i on.!ilions disi overed dunng the n in. elation ai rtus cr aiM olher site requuing reinediatir.:i

Three Months Ended Nine Months Ended

September 30. September 30,

2014 2013 7014 2013

i 30.i>5(i S 93.000 5 Kti.H

Most ol llicse cases air brought hy non-pr.ieti;ing enliiies an.I ellrrmel broughi bv companies ilint have sidd piottiicts and seek iniuiieiice icliel a and a smal! number ma\ go to trial ir, the torn.r.g 12 month* if il-.e\ ire not n

_;:.igrh:\'e-

»<-ll These iases er.Msc resolved

Coiperaie. c 11 mi nation lulal eon-oliiiate;: oper.it

406

209

S 3l.x*.b * 30.279 S 93 HH7 5 H94X5

e to consolidated ii

ee Months Ended Nine Months Ended

September 30, September 30,

2014 2013 2014 2013

:uii.<n ol agrc .loth, julrcl,^,

mvesinienis \'eivoit ordniaclv pioM.fet matters such as ounership c't 11i. -.e. unties

'uulcrpartics may- make chums undei these

c* oiduiary . nurse ol business

with ihe ex

laming tn a variety ol uon:in.i

; dir.

;i j'u

¹¹ P"

provisions and Veri/on will !.eek to di lend ;.ga:nst those c latins .V.ihse:;iiei:i to llic vjle oi Vcn.-un lnlorm.,licin .Services < ariaiij i

ranici

«hrch «as issued cchtr. the dircsloiy busuiiis v-.s puichjscd in 21101 and lud a irt-vi ar turn jbetoie estcTsins| The pi,existing guarantee conli:iurs wiihout n-.odilic.'iiioii, ilcspne the sub-.eq'aem ule ul Veri/on Intorm.iiioit Seiv ices Canada and the spin-oil oi our domestic pnni and Intcir.ei vellow page iliiectoncs busmes* T he possible financial impact of ihe (jirai.iniee. which not expected to be a.lv crsc cninol be reasonably estimated as .) v.nietv u] ill. potential .>utcor:ies .o'.iikible undei tin. ^uaniu'ce tesitlt

"^r.l)3.i \ 2i,K7V I I'.'.'JM

1 Dial ji« ill mt upvi itlllt in

ii.nr: on speiliuin lirer.se

Impact i.fdic Cotpoi.ne. ei

f, .S0| I

(4Kj

20 (757) S4

(Si>J (3 033) II I.-06I

Ue jicmrallv a.conn: ct->t(imcr accouriicd |i>r

ml sen ices and j«sci iianxfers a: corient market prices No single ir revenues during ihe ihree and nine months ended icpiembcr 3<l.

I 1 I iimi'tittm rits and (

edings at the si

:ial litigation and regulatory pro

inu.e the i ■.irrei.ijv pending matters is lhe ainciii:: >■; in iMtu ul Ilie amounts ainady .iscrued caiin-.l be . inchtdirtg (1) uncertain damage :heor;e* and demands

plans i'ui business, wi:Ii Mine I\li> (h;nij plans fur Small business anil llic Nalniiiv.uk HiL-ines. D.ii.i Packages ami Plans " ' 25

Venzon CommuniL.itions luc (Vcn/on uj ihc Company! is a holding company thai acting through its subsidiaries, is one ol the world s leading prov iders of coinmiinic.itions information and entertainment products and sen lies lo consumers, husmcsses and governmental agencies Willi a picsence ni uvo 150 louiiIiicj -notind the world, wc offer vmu, data and video services and solutions on oui wire-less and wncline hetwoiks that are designed lo mctt customers" demand loi mobility, reliable network connectiv ity, security and control We have two reportable segments, Wireless and Wncline Our wireless business, operating as Verizon Vi neless, provides v oicc and data sen ices arid ecpjipmeut sales aeioss the United States using one ofthe mo<t extensive and ic-liable wireless networks Our wncline business ptos ides consumer, business and government customers with communications products and services including broadband data and udeo services network access, voice long distance and other communications products and services and also owns and operates one ol the most expansive end-to-end glohal Internet Prntocol (IP) neiw.ttks We have a highly sktiled. diverse and dedicated workforce ot approximately 17H.50I) employees as of September 10 2014

In recent years, Ven.'.nn has embarked upon a strategic transformation as adv anees in technology have changed the ways that our lii-ihoick interact in then ptisuiial and pmfissjonal lives and that bu-incste* operate- To meet the changing, needs ol" oui customer and addios the changing KVhnoh.gicjl landscape, we are focusing oui efloils aiound higher rriaigm and growing aie.i;. ot our business wireless dara wneluie daia and Strategic .services, including cloud computing services

Oui Kiaicgy requires significant capital investments primarily to acquire wireless spectrum put ihe spectrum into scrv ice provide additional capacity for growih in our wn_cj_tfse wireline networks invest in ihe fiber optic network that supports our wireless and wncline businesses, maim.on out wuflcst ;md wireline network* and develop and maintain significant advanced infonnation technology systems and data system rapahiliues We believe that steads and consistent investments in networks and platforms will drive innovative pioducts and services and fuel our growih Our wireless and wncline networks wili continue to be the hallmaik oi out tiran.i and prov ide tho fuiidainema! strength upon which we build our competitive ariv antngc

On Fc urn a iv 21 2014. we ceunpleted i he acquisition of Vodjfune Group I'll s tV.idyfone) indued A 5",'. interest m Cellco I'ailuership (l/b a \en/on Wireless ioi a,.,.|,-.:ale consideraiion of apptox imalely Slit) billion (the Wireless Ttansastion) The consideration paid was primarily compute el o! cash ot iippicxtmately S58 89 billion and V«:n7on common stock with a value of approvimaielv Sb I j billion Sc. Ai quisiiums and Divestitures lor additional information

In our Wireless business dunng the three months ended September 30 2014 compared io the similar penod in 2013 revenue growih of 7 O'-i was dnven by serx ice revenue growih of 4 h% as lhe demand for fourth-gener.ition (4G) [ ong-Tcrm Evolution (l.Tf) smart phones and lableis continues \]m) contributing to lhe inc tease in Wireless revenue was equipment revenue growih of 2£ 9% dnven by higher sales of equipment under both the traditional subsidy model and Venzon Edge At September 10, 2014, tcuil postpaid connections were 5 2V. higher than at September 30, 2013 with smanphoncs rcpicscnling 77% of our retail postpaid phone base at Scptcmbci 30. 2014 compared lo 67V. at September 30, 2013 Also during the three months ended September 30 2014. postpaid smanphnnc- activations represented 91% of phones activated compared to 85% in the similar penod in 2013

Now that wc have substantially completed the deployment ol our 40 Li'l: neiwoiL. wc arc Incusing the capital spending m our Wrreless business on adding capacity and density to oui existing 40 LTE network Our 40 LTE network is available to approximately 98% ofthe U S population m more lhan 500 markets and covering approximately 30ti million people, including those in areas served by uurLTfc in Rural Amenca partners Our 4G LTE ncl work provides higher data thioughput performance for data services at lower coil compared to those provided via third-gencraiton (3G) networks In May 2014. wc announced the deployment of Advanced Wireless Services (AWS) spectrum in our 4G LTE network. This additional bandwidth, which we refer to as XLTE. provides additional network capacity and is currently available in more than 400 markets Nearly all ofthe devices Venzon Wireless currently sells can operate on XLTE- Nearly 79% of out tola! data traffic in Scptcmbci 2014 was earned on our 4G LTE network

On February 13,2014, »r introduced our More Everything * plans which replaced our Share Everything 'plans and provide more v alue lo our cuslomcn These plans, which aie available lo both new and existing postpaid customers, feature domestic- unlimited voice minutes, unlimited domestic and international text, video and picture messaging,cloud siorage and a single data allowance that can be shared among multiple devices connected to the Verizon Wireless network As of September 30. 2014, More Everything accounts represented appioximately 57% of our retail postpaid accounts compared to Share Everything plans representing approximately 41% of oui retail postpaid accounts as of September 30. 2013 Venzon Wireless offers shared data

T»bk *f toalroli

In our Wireline business revenues declined 0 8% dunng the three months ended September 30. 2014 compared to the similar penod in 2013 pnmanly due to revenue declines in Global Enicrpnse Cote and Global Wholesale These decreases were partially offset by revenue increases in Consumer r-ctail dnven by FtOS FiOS represented approximately 76% of Consumer retail revenue dunng thr three months ended September 30. 2014 compared to approximately 71% dunng the similar penod in 2013 As the penetration of FiOS products increases, we continue io seek ways io increase revenue and further realize operating and capital efficiencies as well as maximize profitability As more applications are dev eloped for this high-speed sen ice, we expect that FiOS will become a huh for managing mull i pic home services that will eventually be pan ofthe digital grid, including not just entertainment anil . omnium, alions but _[l;,u |_mll. -ia-ir,.n tnn< > iiinnniriic.i linns sue h as heme moiulcinug. health monitor in", incigv m.uiageinc.ii arid utilities :iian.ir.einen'.

TiMmf C.nlrDU

In this section, we discuss our overall results of opcialions and highlight items uf a non-operational nature that ate not included in our segment result* Wc have two reportable segments Wireless and Wncline, which wc operate and manage as strategic business units and organize by products and scrv ices In ' Segment Results of Operations " we rev icxv the perfunnance uf our two reportable segments

On February 21. 2014, wc completed the acquisition of Voilafone's indued 4 5% interest m Venzon Wireless As a lesult, oui

results relied our ownciship of Verizon Wi:i-!,-S', tluou^h the closing o! ilie Wireless I :ans.i.:iior: and reflect our full

owneisliip ol Vcri.-on Wircle.s. Innn tl-.r el--.r.|-. oi '.be Wireless Tiansae inn-. ihiKiigii "-epien-.o.-r .'ti!.:

Cnrpoiiue eliminations .nni oihei ir iclaied costs, inierscguierit elrmiiMi iinionsoiielati (1 hutiricss, s |e:i-c tin. and losses thai are not located ma' are excluded Irom lhe busnie- se-ri: ir.elividuaiii Significant .lie nu' .-.esc seme it t e-f cci/mcni perlorr urieleisl.indir:g oui result-. .-: ><;» icsutts of certain businesses y

ale revenues decreased due lo declines in core scivices lies a-, well as the cor.lr.iclion of maiket rales due' lo e -crvne, we e.iiiiiniue to build our Wueluie segment !oi re-liable high-speed cunnee lions is growing Dunng label S."¹ 1 billion arid ii-presented d l". of total Global

and ii

oui FiOS platruim l.»u:i:ig 20I-: Vcri, with new Icjiuics n-.c I inline, lhe abilu;

lounce.f ihe ir.n HOS I V is otl. r

native

oI I iUS Oii.in:in:i T V which provides I'lOS TV customers ice and contiol live TV troui any 100:11 in their home This our hOS Oii.uitiim hi;i,,lind servur residential and small ■eds up in Mil) meiMbvies per second, which we icfet in .is

■sprrdMatrh

.e-h.il Who I oiling rev

C:obai b.iiie:p;:sc an, scr. ices an.: dau n ^bruiluni; market toi

■\l;0 in our Wireline business lot pnmanly as a tcv.ill of lowei vo coii-.pelitiou l'i corn]'en-ale to: t around data, v ideo and adi aneed Hie three months end. d Scpiiinb.-Enterprise rev cr.ae-s

Wc .in- ui\ rstn-.i- in i min s atn c le c hnuiur-y |,i _L- wire lev nei works ::. eh-speed liber and cloud sciv ices 10 position ourselves al the eer.tei ol trmvih trends ol the k:iu:e Puring 1rune mi-mli. enile.i September 30 2til4 these investnieiits included capital evpenditurt's of S l 2 6 In 11.or. acquisition, oi' wireless licenses of SO 3 billion and acquisition* of mv est merits and businesses of lit ; billion Dunng. the nine months ciidcci September "-fl .'.Oi 1 we also . orupVtc .1 spit; tmni license triiris.ie nuns and, as a result we received pioccc-ds ol 52 -l billion See> Cask flows t/sed in Irnesimg At nunc- and ' Acquisitions jml Oiv esiuures' foi adilitioilal nitomijiion

.< ihe:

ision ami oih.er euiplovee benelii .S-es. such as our nivesiri'.cnts in s and olhei adju-niii nls and gains ui.'.n.d n.'.iitie Allium el) sucli liansadioiis

is n| ,11.1 fiminei.il si.nemrrits in iietter

rece.rded :r. eon .,_: ...sw. II as ih, ing segment p. rt.

we dui

il the

.elas

:,::<■ inr.i.uives (toni our Wiicluic rial to cm eori.leiisctl cousolidaied

lud.d in iep.>ncd e.<n:-«ii-Jiled in ajl segmeiit icstil's ,_;s ti-.es. Hems an m. hi,

■■all.ni d lie-lid- ii.nli penod lo period I.'tfjctn e I

lis arid Other lhe unpad of this i ei I assi !ie al ion was nl n-sultsor operations

On July 1. 2*J 1J oui Win hue -eminent .In esi. .1 a non -irate i.n biisiucsMsce A.-qui-ition- and D.\estiruies ") A.c oi.lingly ll hisl-nial Win Inn- n suits for the:.e .perti.iris wh:di w. re not materia: n: on; . ori.kused .on-.oli.l ,ud liuaii. lal statement:, or .;i segment results o( opcialions. have oee.T re-cias^il.ed lo I '.>!|-.vaie ei irnmafons and olher li. rcl'.eel comparable- stigir.cnl operatui re-ults The icsults <d opeutioiis lelate^ to tho d:vc-sl:it:re uieTuded wnln:: Coiporate elimiriji.ons .1:1.1 mhei are as follows

(efoIJars

Ihrec Mouths K.ndcd iSim .Months Kudcd

Septeinber 3D Sepkmbtr 30,

2IHJ 2»J4 2013

rullreln.s)

)'■' 5- 25'. S J('*>

i. also inv<

efliiieni. ;r!...bl: inli.i-Hueto;. l.<i .-imp, >,,., ||,, inli

peifoimaiice excelle'nce a.-.d jl.oi;iiijbilfij eieate nit-tiiinigfiil w.nk foi mii-.'-ii r. .rul p_i;

i pnoidir.)', our euoiinunities with a lied tu pultnig our customers Inst an mil coie values H integrilv tespec

a long-ieim ictuni foi our sh.ircowiiet

Impact ol Divested Opeiatie

Cost of seuve- ami -ak-

mg gn

I Consulidale-eiI Re v'

We expe.i th, Wu.-le-essre-i:

>iisolulaud operating i .1 p.s^p.,,,! ARPA (lhe a

n rcl.-n-d io iien.lv .il:e< nr.)- oui business that \ea< tii.selosed in P.n !.,i [>, i.mbei ⁵ I 2D] - c.v,c;r lo ;| _Lxleul de-seiibed above

t,r|l.i:% in tf.ilh.tr.si

W,rele.--

Service ic-venue Iiquipmcni and oilier Total

Wireline

M.i-s Mart.eis Olobal l.i-ie.juisc (}l.:»al Wl olesalc Olher T oui

Cuiieiilidated Heveuiies

tee Months Ended

Sl'ptMllllfl *().

:ui4 :im t

Nine Miiiitbs Ended

Siptvinbei 30 Ini'rejsv'

:iM4 201 1 (Dei r. acr)

■S ^4 4J I S ^fc! .122 S 3 \)'.i'> t- H'!i

) 77r. Mt-. I :0D 14 0

>.,■/ so (is, .1 2'JV 7 2

^5 S-1 -102 ■' 'i

The increase in consolidated leveuues dunng (he three and nine months ended September 30, 2(1]4 compiled lo the simrlai pcnods in 2013 was pinrtanly due lo higher revenues al Wireless as well as higher Masi MarVets revenues dnven by FiOS services at our Wireline segment I'ariially offsetting these increases ueie lower Global limerpnsc and Global Wholesale revenues ai our Wireline segmem

Wireless its enues inere.ised S1 4 billion or 7 OV*. .mil S-i 3 billion or 7 ?%, lespcclively, dunng lhe three and nine months ended Sepiembei 30, 2014 eompareil ti< lhe similar periods in 2013 due to growih in service revenue and equipment and olher revenue The increase in s-crvjrc revenue during the I luce and nine months ended September 30 2014 compared to ihe similar periods in 2013 was pnm.uily dnven by higher ictail postpaid service revenue, which increased largely as a result of an increase in retail postpaid connections js will as ihe continued increase in pciictratroii ot 4G LTE sniarlphnncs and rablcls tluough oui More EvcrVlhing plans Equipment and ulh. i revenue increased dunng the three and nine munlhs ended September 30 2014 compared io ihe similar penods in 201/ pnmanly due to an increase in equipment sales dm cn by sales of equipment under both the Iiadit.oii.il subsidy model and Ven/on h'dge During the ihrec and rune months ended Sepiemhcr M). 2014, retail postpaid connection net additions increased compared to the similar periods in 201J primarily due to an increase in retail postpaid connection gross additions pantallv ol!sc< by an increase tn oui retail postpaid connection chum tale Retail postpaid connections per account increased as of September 30 2014 compared to September 30, 2013 pnmanly due io the increased pcncnaiion oi tablets

Wireline's revenues deeicased 0 S% and 0 IV respectively, dunng the thiec and nine months ended SepTember 30, 2014 compared to the similar p. nods in 2013 pnmanly as a result ot de. lines in Global Enterprise Core and Global Wholesale, partially oilset by highci Mss Miikei revenue* dnven b> 1 iOS servi,-,-* Dunne: the nine months ended Scptcmbci 30, 2014. the decrease in Wireline s revenues was t;so part :.■;!> oilset by increased Strategic serv lee revenues within Global Enierpnse

Mass Marlcls revenues ir.fTe.iscd S.O 1 billion or 3 2% and St) 5 hillion or 4 1 icspeelively, dunni' the three and nrnc months ended September 31). 20i-^: compared to ihe similar prrnuix in 201 3 primarily due tn the expansion of EiOS services (Voice, Internet and Video), including our IiOS Omnium oiler ing 5 as well as changes in our pncing strategics, partially offset by ihc e.onlinner! decline of local evi h.iiige rev cinics

Global Enterprise revenues deeieised SO 2 billiuii 01 4 4%. and SO ] billion 01 3 2"' respectively dunng the thiec and nmc monlhs ended Sepiembei 30 201 1 compaicd to the similar periods in 2013 pnmanly due lo lower voice services and data networking revenues rhc contraction ot niaiket rates due to competition and ■ decline in Core customer premise equipment revenues This decrease dunng ihc nine months ended Scptemhei 30 20)4 ua< partially oflset by increases in Strategic services rev enues, pnmanly due 10 increases in uur application services such a.s our e Inud and data center offenngs

Global Wholesale revenues dcr leased Jf 1 billion 01 4 KM, and SO 3 billion or 5 6%, respectively, dunng ihe three and nine months ended September 30. 2014 compaicd to the similar periods in 2013 pnmanly due to a decline in traditional voice revenues and a decline in domestic wholesale connections, partially offset by Ethernet migrations from core customers as well as continuing demand tor high-speed digital data services from fiber-to-t he-cell cu Homers upgrading their core data circuits to Ethernet facilities

| Consolidated Operating Expenses J

Three Months Ended Nine nlanihs Ended

September 30, Increase/ September 30, Increase/ (dollars in millions) 2014 2013 (Decrease) 2014 20)3 (Decrease) Cnsicf services and sales $ 12.252 S 10.960 J 12U2 11 Jt% S 35,528 S 32.925 S 2,603 79% Selling, genera) and administrative expense (,277 8,037 240 3 0 24.159 24,232 (73) (0 3) Depreciation and amortization expense 4 167 4 154 13 0 1 12,465 12,423 42 0.3 Consolidated Operating Expenses S 24 696 S 23.151 S 1.545 6 7 S 72,152 S 69.580 S 2.572 3 7

lihlr ml rnnicnis ' * ^TCost of Sen rr.-.t ,n<d Sa/ei

Cost of services and sales increased dunng the three and nine monlhs ended Sepiembei 30. 2014 compared to the similar periods 111 2013 pnmanly due 10 an increase in cost of equipment sales of SI.4 billion and S2 7 billion, respectively, at oui Wireless segment as a result of an incicasi: 111 lhe number of devices sold

SvUiitp. Geneial anJ Admim<lniiive k.xptme

Selling general and administrative expense ine leased dunng the three monlhs ended September 30, 2014 compared to the similar period in 2013 pnmanly due to gains leeoided dunng the third quaite: of 20 1 3 related to the completion of wireless license-liansaclioris Partially offsetting ihis me tease was a dee line 111 sales commission expense al our Wireless segment

Selling general and administrative expense decreased dunng the nine months ended Scplcrnhci 30, 2014 compared 10 lhe similar period in 2013 primarily due 10 larger gains recorded during 2014 rclaice! to the eomplenon of wne'ltSx license transactions, as compared to gains recorded dunng 2013 related 10 the completion ol wireless license Hans Jettons, partially oilset by n pension remeasuiement credit recoidcd dunng 2011

/Vyife-e iiHitm and Amu UzatioH Lipiisse

Depreciation and amortization expense increased during (he three and nine months ended September 30 2014 1 oiripaicd lo the sinulai periods 111 2013 primarily due to tn increase 111 ncl depreciable assers at our Wireless segment

Von opcnnwl OfJil*

Three .Munlhs Ended Nine Months Ended September 30. September 30,

(dollars in millions) 2014 2013 1014 2013 Gain on vpre truin license triniarhons % S 27* S 707 S 2 JX Pension rcmeasurenif nl - - - 237

See ' Olhei Items" for a description of non-operational items Cnnwhdjted Opruilniz hu nme ,ind EBITIH

Consolidated earnings heforc interest, laxes, depreciation and amortization expenses (Consolidated E1HTIM) and Consolidated Adjusted EBITDA, which arc presented below, aie non-GAAP measures and do nol purport 10 be alternatives to operating income as a measuie of operating performance Management believes that these measures are useful to mvcstois and other users of our financial information in evaluating operating profitability on a more variable cost basis as they exclude the depreciation and amortization expense related pnnunlv to capital expenditures and acquisitions that occurred in prior years as we'll as" in evaluating operating performance in relation lo our competitors Consolidated 1:1111 OA is calculated by adding back interest laxes. depreciation and amortization expense equity in cam 1 tigs (losses) of unconsolidated businesses and oihet income and (expense), net to net income

Consolidated Adjusted EBITDA is calculated by excluding the effect uf non-operational items and the impact of divested operations from the calculation of Consolidated EBITDA Management believes that this measure provides additional relevant and useful information to inveslors and other users of our financial data in evaluating the efliictiv eness of our operations and underlying business trends in a manner that 11 consistent with management'3 evaluation of business performance See "Other Items" for additional details regarding these non-operational items

Operating expenses include pension and benefit related credits and.'or charges based on actuarial assumptions, including projected discount rates and an estimated return 011 plan assets These estimates will be updated in the fourth quarter or upon a remeasuremenl event 10 re fled actual return on plan assets and updated actuarial assumptions The adjustment will be recognized in the income statement during the fourth quarter or upon a re measurement event pursuant lo our accounting policy for ihc recognition of actuanal gains/losses These re measure meat 1 could result in significant charges or credits to one or more of our pension plans

Dunng the second quarter of 2013 wc recorded pension remeasuremenls in accordance with our accounting policy to recognize

actuarial gains and losses in ihc penod in which they occur Dunng the third quarter of 2013, as a result of the previously recorded settlements, wc performed a pennon rernc<isuirment. which was not material

Taalr ml CoDlrati

It it management's intent (0 provide non-GAAP financial information to enhance the understanding of Venzon'1 GAAP financial information, and 11 should be considered by Ihe reader in addition to. but nm instead of ihc financial statements prepared in accordance u-nh GAAP Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as' nol lo imply that more emphasis should be placed on ihe non-GAAP measure The non-GAAP financial information presented may be determined ur calculated dillrrrnily by othtn companies

T hrer Munlhs Ended Nine Monlhs Ended SeplCTiil>ei 30, September 30

(dollars in miliums! 2014 201 ' 2014 201 3 Consiihd.ttrd Operating Income * (>>!'» J 7.L'S i .11 To 5 l^,J.'>u5 1 Add Depm-Mtioii and Jiii"iti7.iln.|i expciKe -K.7 12465 l2-i2i | Consolidated EBJ111A ^ J i 11 T V : 1 ji- J i M 200 S .i2 32S

I.Css Pension rcinc.-wrrcineni - (2"¹?) 1 .ess Impact ol 1I1 vested operations (H) (i 21 ("'Ol CwnseilidatvilAdivisUdEBn iiA i 11 (157 S 10'.I'll, S 3'-HI S 317F.7

Pie changes in the table above dunng the ihi-e and nine months ended Scpte inbe.r HI I'll IJ compaicd (0 the similar peiiods in 2013 weic a ;rsn]i of the faciors desc nhed in connection w irh operating rc v enur* an.l opera ling e.xprnses

.Ml

! 1

TiMc of I'onirnti

ll ffl Income Tan

| Other Consolidated Resulti~

hne Muuths Ended September 30, 2014 2013

Nine Monlhs Ended September 30, 2014 2013

Increase/ (Decrease)

Equity in earnings llosscsj ol" unconsolidated businesses decreased SO 1 hillinn dunng the ihree months ended September 30 2014. compared to lhe similar period in 20)3, pnmanly due in lhe sale of oui interest tn Vodafone Omnitel NV (Vodafone Omniiel) dunng the liisl quarter of 20)4. *hich was pun ol the consideration lor ihe Wireless Transaction

c monlhs ended September If), 20 J J. i the sale ot oui interest in Vodafone

I"qmry in earnings (Jos vet} r>f uncon.irtbdjlrd businesses jncvc.isci) 5 J 7 billion dim compared m Hie similar peimd in 2013. primarily due to the gain of SI 9 billion n Onuniel dunr.g the Tint quaner of 2014

0;h,-i huonu ii<!./(F.x/'f'ntl. Set

Three Months Kndcd September 30, 2014 20H

increase/ (Deciease-)

Additional information relating to O'.hci income and (expense), nci is as loi Lows

(dollars in millions Interest income Othci, net fuu;

Nine Months Ended

14 S 14 100 0';. S

September 30, Increase/

2014 2013 (Decrease)

" S Jl 75 h%

72 ! IK29)

1.014 J MO KO IV. S 15 (i%

5 052 2o4».;

32 9t.

15 6%

(dollars in millions)

Pre vision fur imcirnit- taxes Kfft'clivr income tax rate

ne taxes by income be tote Ihe provision (or im omr in the effective income lax rate as compared to the ncl u si on oi income within our income he fore the , noneonliolling interest in lhe Verizon Wiickss

The rf!ecli\ r income tax rale is calculated by dividing Ihe pio\ imoo loi met taxes As a result of the completion of the Wireless Transaction the different statutory fedeial income lax rate will no longer be significant due in the provision loi income uvea that was previously aiiiihut.ible to Yodafcnc partnership Prior lo the completion ofthe Wireless Transaction, our annual rtlectii e income tax rate was significantly lower than lhe statutory federal jnuMJie )j\ rale due io ihe inclusion oj miomc arijibuuhlc Jo VoJjJone s nimcojiiroJlmf! mieresi ui the Vcn/on Wneless partnership wiihin our income before ihc pros ision for income laxcy. which icsultcd in our effective income tax late being 16 1 and I 5 4 percentage points lower dunne the three and nine months ended Sepiembei 30 2013 respectively

The niciea,c m the piuvision foi income taxes and the cifcetivc income ta.x utc dining the three and nine months ended Septembet .it). 2014 compared to the similar penods in 201 3 is pnmanly due io men.and income laxes on the incremental income included in Ven/on's piisi-atquixition income before ihe provision loi income taxes n/snlting from ihe acquisition of Vodafotie's indirect 45"/. interest in VcnTon Wireless on fehruary 21. 2014 The limease dining the nine months ended September 30. 2014 compared io the similar penod in 2013 waj partially offsc-i by ihe utilization o( certain tax credits in the cuncnt penod

2 159 $ 1.7'JS SV3ti 553 (229) (414) I 606 J 2 02 7 rim

mihs ended Sepiembei )(). 2014 compared to the ate noies to finance the Wireless Transaction (<ec spu tiding increase in interest expense, ') Capitalized interest costs were lower ¹ 20)3 primarily due In a decrease

Net income attributable to MBCOBfrolliDg inter em

Uihei inc tunc and (expense), net decreaseil dunng the nine months ended September 3n, 2014 ciunpaied io the snnilai penod in 2013 primarily due to net early debt redemption i o;.:* ot SO 9 billion recorded during the titst quanet o| 2014 (see ¹ Other Items")

I hree Mouths Knded .September 30 2014 2013

/i;l.-l.'.« k\n_t;w

3.957 324

Nine Monlhs Ended

Increase/ September 30, Inoraie/

(Decrease) 2014 2013 (Decrease)

fdoilars ni millions)

i 5S6 78 7% (1 14) iftOU)

S 56,636 5 3%

S 107.034 S 54.524

4 9% 5 3 V.

Total tnieie'sl coMs on debt balane es S l ess capitalwcd interest costs Total S~

Average debl outstanding $ 1

litfectivr interest rate

nm - nol iricaningful

Total iiitciest costs on deh: balances in.teased during the three and n amilai penods m 201 3 primarily due lo the issuance of fixed and flo. "Acquisitions and Divestitures") resulting in an increase in average dchi and a c< partially oflscl by a lower clleclive mleresi rate (sec ' Consolidated Financial Condm dunng the three and nine mouth* ended September 30, 20)4 compared lo lhe similar penoda . in wire I ess licenses that are currently under development.

0 2014 ar.d S2 I billmn at December 31 ion (after-tax) and SO 3 billion laliei-lax) at ogm/ed lax beiieTils was pnmanly due to the- r '007 thiough 2H0O p_:ari ■ u11> offset by un in<

013 Interest and penalties September 30. 2014 and solution of issues wiih the case in unrecognized lax dated lo e ihc

Utueeop.ni7cd Tax IJenelits

Unrecognised tax benefits wet,- U tf billron at Sepiemb related to unrecognized tax henefns were So 2 hi lit rXcembei 31.2013 respectively The decrease Internal Revenue Service (IRS) involving lax

benefits related to the acquisition ot Voclatone's indirect 45V. inl,.rest in Ven/on WnJcss The uncertain tax bene tits the acquisition ol Vudilone's indirect 45"/. micioi in Ven/im Wireless concern pie acquisition lax controversies and subject ol an indemnity from Vodafone lor which a conespouding indeiiiinty asset has been established

Vcn/on and/or its suhstdiancs file income tax returns tn ihe US federal jurisdiction, and vanous state, local and foreign jurisdictions As a large taxpayer, we aie under audit hy the IRS and multiple state ar.d loreign juiisdiciions for vanous open lax years Significant lax examinations ar.d litigation arc ongoing in New York City for tax years as early as 2000 Ii is reasonably possible thai the amount ofthe liability for unacogm/cd tax benefits could change by a significant amount in the next twelve months An estimate ofthe range ofthe possible change cannot be made until ihesc lax matters arc further developed or resolved

Nine Monlhs Ended September 30. 2014 2013

Increase/ (Decrease)

Set Income Allnhulable lo ■Vnncontrof/inj' Interests

(Decrease)

Three Monlhs Ended September 30. 2014 2013

(dollars in millions!

$ 99 $ 3,346 5(3.247) (97 07% S 2.248 S 9.201 1(6,953) (75 ©r*

The decrease in Net income attributable to noncontrolling interest] dunng lhe three and nine monlhs ended September 30, 2014 compared lo the similar penods in 2013 was pnmanly due lo the completion ofthe Wireless Transaction on February 21,2014 As a resull. our results reflect our 55% ownership of Ven/on Wireless through Hie closing ofthe Wireless Transaction and reflect our full ownership of Venzon Wireless from ihe closing of ihe Wireless Transaction through September 30,2014 The noncontrolling interests that remained after the completion ofthe Wireless Transaction primarily relate to wireless partnership entities

Table afCanir an

| Wireless "

We have two reportable segments. Wireless and Wireline, which wc operale and manage a.s strategic husinesi units and organize by products and services We measure and evaluate our re-portable segments based un segment operating income The use of segment operating income is consistent wilh lhe chief operating decision maker's assessment of segment performance

Segment fuming! before interest, laxes depreciation and amortiratioii (Segment I;H1TDA1 which is presented below- is ti non-(i measure- ar.d dues not puipon io be an alternate e io opcititiug income as a measure of opcraring performance Management believes that this measure is useiul to invesiois and other user-, of om financial inlormation in evaluating operating profitability on a riore vanr.bh- cost bi*i, ,n n evrlu.ies ih.- drpnvi.iii.ii: and ,iir...ni/ai!ori opcines iclaied pinr.asily to capital expenditures

t rUM DA -civil i rnargir line- :n oidci I.- r, fled i.,igu; iscakuLiei! by Jl

Segment fliITD-\ n ealeiilatid bv adding back de pies i.ilioii and am.irti.'alioii expense to segment opeuung income

,r 1 IlirUA

"Iv exebld.- cqtliprierl i_-v ing h._i:-.,s Wirelin. i:ii!i 'J\i

al, ulale-.l hv ,;!\',l:rig Wm-Vse ^e|-un-ril f.lUIDAby Wni-I service ic ceiiue:, i.,:hci th ui total miiuCs Servue n.-veir

iielnie r.Hll D\bv total Wjrdine icverntes

Our Wireless segment is pnmanly composed of Cellco Partnership doing business ts Venzon Wireless Cellco Partnership was formed as a joint venture in April 2000 by the combination ofthe U.S wireless operations and interests ol"Venzon and Vodafone Pnoi to the completion ofthe Wireless Transaction, Ven/on owned a controlling 55'/* interest m Verizon Wneless and Vodafone owned lhe remaining 45% On Kebniary 21. 2014 the Wireless I ran taction was completed and Venzon acquired 100% ownership of Verizon Wireless Vernon Wireless provides wireless communications services across one of the most extensive wireless iictwoiks in the United Slates

s to L-oi:sur!iei. btisin c reji!e.->eni indiv idua!

ted Slat

i'i serv ice lor which :

Wc pro* ide- lhese services and eqinprneiil sal postpaid and ptepaid baiis I'osioaicl comiecno monthlv arcess charge in ieHirri for a monrhlv n.-ive-ml ancais Our prepaid seivici: enables individuals io nt-i paying loi .,11 services in advan. e

Operating Hi \ tnuis and Selecli-tl Opt i atiri" St.iiistii

(dollaivui millions except ARI'AJ Keiail inx ice"

biee iMu nllu Knded ScjUembei 30, 2«l-t 2H13

Nine Months tlndcd Septeinbti 30. 2014 2013

S 5v,>,i.)>; S 4.j

100 103

rquipiticn:

Orhei liquipinent ami olhei Total Operating Kevt-nue:

Conne-etions; 000) ■*:

Retail connections

Retail postpaid _t (nincciion

N.-1 additions in period ( t"

!<etail poslp_ril eouncc i

Cliiuri Kate

Retail coiineciior.^

Reiai! postpaid cennef.ior;

isjtail i-ostpjid API'A

Keiail postpaid accounts [ 000]¹¹

iseiatl postp.,i,| connections pri

'T.xeludnif; ae.;e)isition> and adjiis'.uirr.ts

Arrelrsc toial ojierat-.n)-:ei enues meicsed hv S: : bilh.-urn in.inth-.eiiiitd sepuniiie r iii \ - mjurcl : tin m nui equipment r<

i! >J i r.i!ij<■ i. i-1 7 2³i- itsfi'.iiveh ei-arin; .ii 2CI- |o:u-:r:iv i.eult "i g:miij. ir: -

T»Mc Cgntcnii .

Accdi'i'is and Cfinnecttuns

Retail (non-wholesale) postpaid accounts represent retail eUsiomeis under contract will) Verizon Wireless that aie directly served and nonaged by Verizon Wireless and use lis branded services Accounts include More JJvcryilimg plans and corporate accounts, as well as legacy single connection plans and family plans A tingle account may n-ceive monthly wireless services for a s aric-ly of conritttcd devices Retail connections represent our relail customer device connections Chum is the rate at which service In connections is laminated

Ketail connections under an accnunl may include smanphones basic phones tablets and olher Internet devices as well as Home Phone¹ Conned and Home f usion We expect to continue to experience retail connection growth based on network, service quality and the strength of our product offerings Retail postpaid connection net additions increased dunng the three and nine months ended September 10, ?0i-t compared to the simiiai periods in 2011 primarily due lo an increase in retail postpaid connection gross additions, partially oft set by an increase- in our retail postpaid connection churn rate Higher retail postpaid connection git'is additions were dnvcr. by gross additions of tablets as well as smanphones During ihc three and nine monlhs ended Sepiembei 30. 2014. our retail postpaid connection net additions included approximately 1.074 million and 2 H58 million tabids, respe'elisely. as conTared to 2^fi thousand and H? : thousand tablets, respectively m the simiiai periods in 201 3

Retail Postpaid Comieaifiis pei Account

Retail postpaid connections per account is calculated by dividing the total number ot retail pustpaid connections by the number ol retail postpaid aceounts as nl lhe end ol the period Retail postpaid connections per at count increased 3 7% as of September 30, 2014 compared io September JO, 20; 3, primarily due lo the increased penetration ofiahlets

5m,f Rexcm.r

Vrvice ie venue increased by SO K billion or 4 X*-. and H I billion ui 6 0". respectively dunng ihe three and nine months ended Sepir-nibn 30. 2014 compaicd to the similar periods n; 201 3 primarily driven by higher retail postpaid service revenue, which increased laigcly as a result ol an uii'it-a--e in retail postpaid con net I ions as well as ihe- continued increase lu penetration of 40 1.11-1 srnaitphones and tablets through our MoiC lis eiyilnng plans lhe penetration ol 40 I.TIi smmlphoncs was dm en by the activation of smartphorics by new eustonieis us "ell as existing customers migiating from basic phones and 3C> srnaitphones to 4G 1.11: smartphones

lhe increase in retail postpaid AKI'A which excludes reeumug equipment installment hillings related to Venzon F.dgc dunng the three and nine months ended September 30, 2014 compared to the similar penods in 201 3 was pnmanly dnven hy increases in smati phone penetration and retail postpaid connections per account As of September 30, 2014, we experienced a 3 7% increase in retail postpaid connections per account compared to Sepiembei 30. 2013, with smanphones representing 77V. of our retail postpaid phone base as of September 30. 2014 compared to 67% as of September 30, 2013 The increased penetration in retail postpaid connections per account u pnmanly due to increases in Internet data devices, which represented 13 1% of our retail postpaid connection base as of September 30, 2014 compared to 10 2% as of September 30. 2013, pnmanly due lo tablet activations Additionally, dunng the nine months ended September 30 2014 postpaid smariphonc activations represented 91V. of phones actuated compared io NS*/. in ihe similar penod in 201 3

Other service revenue increased dunng the three* and tunc months ended September 30. 2014 compared to the similar periods in 2013 due lo growth in wholesale connections

Operating Expenses

Three Months Ended Nine Monlhs Ended

September 30, Increase/ September 30, Increase/

(dollars in millions) 20U 1013 (.Decrease) 2014 2013 (Decrease)

Cost oTservices and sales $ 7.04 v"-; 5,b52 S I i'M 24 6% 1 1⁰ r>41 J 17 102~ S 2.5i<) 14 S%

Selling general and administrative expense 5.69K 5.H0I (103) (IK) 16991 16915 76 04

Depreciation and amortization expense 2 139 2 060 79 3 S 6.307 6 113 194 3 2

Total Operalms Expenses S 1-1 KSO S 13 513 S 1.367 10 I 1 42 93V S -tO 130 S 2.S09 7 0

Or/ of Sen ices and Sa lei

Cost of services and sales increased dunm; the three and nine months ended Septemher 30, 201 4 compared to ihe simila: penods tn 2013 primarily due io an increase- in cost ol equipment sales of SI - billion and S2 7 billion, respectively as a result of an increase in the number ol tissues sold The nu lease loi the nine month, c n.l. d September 20 IJ was also Jue to an increase in co«1 of lie! wo it services, partially off-ict by a decrease in cost of data scivn cs and dccrcaectl J.nj roaming

Selling General and idintmsl'allie Etpense

Selling, general and administrate e expense decreased Jiuirig the thiec months ended Sepiembei 30. 2014 compaicd io the siiml.u period in 201 3 primarily due to a decline of SO I billion in sales commission expense large I v tin v en by the adoption ot Venzon i:.ige

Selling, general and administrative expense increased dunng (he nine nmriilis ended September 30. 2014 couipjred to the simiiai pen rid in 2013 pnmanly due to higher advertising expense and gains recorded in the lii>l quarter of 201 3 related to wireless license exchange agreements, partially offset by lower salary expense and a decline of 50 2 billion in sales commission expense

J\'pni iiilmn tinJ.laiDiliziinoi: £'.t/Jt"i.n'

ticpici.tiini and amotitration expense i-.v-ic-vied tluiuicj, ihc lUtcc and time nvoii".li\ ended September 30. 2014 cmpaicd to the similar periods in 2013 pnmanly dnven by un ine rea sf in ncl depreciable assets

Eejutprfrnl and Other Re\eilue

Equipment and other revenue increased dunng the three and nine monlhs ended September 30. 2014 compared to the similar penods m 2013 primarily due io an increase in equipment sales, dnven by sales of equipment under both the traditional subsidy model jnd Venzon Edge

Table af Caul rat*

[ Wireline

Tablr *f Cuatrnir.

Segment Operating Income and EBITDA

Three Muniks Epded

Srplember 30, Increase/

2014 201.1 (Decrease)

(dollars in millions)

Segment Operation Incom

Add IV,!ii< i,-tron and

Segment 1.1W I [1 \

Nine Monlhi Ended

September 30, lorrease/

2014 2013 (Decrease)

r.KHf. S 10% E 2 1.258 % 19 7<iK S 1490 7 5%

:,0i-o vi ;> s ii tn7 (.,113 194 3 2

S 25 XHI S l.&M 1. ;

. for ihc.'

■ open

Our Wireline segment provides voice, data and video communications pioducts and enhanced sen tees including broadband video and data, corporate networking solutions data renter and cloud serv ices, sccunty and managed network services and local and long distance voice iciviccs Wc* piov ide these- products and fcrv ices to consumers in ihc United States, as well us lo earners, businesses and gov eminent customers both in the United Stales and in over 1 50 oihei countries around the uorld

Ac qui

the

Wlleli:

tcgie b

>n July 1,20)4, osioncal Uirelnie iesul iiperaiing rcsul;

seg

Segment operating inoimr margin S. unit n' E-lil 1 0 \ st rein «iri

lhe chance- in tin- l-lile .ibi'tc dor,,, 2013 w, 1. pnitiar.lv ,i reeuh ol tin lae i

33 ■v^,a 33 1% 33 0%

IV, fn 7% 50 4%

■ moiiihe ended Sepleuiber 30 I'd | J compared lo the similar periods iiiectioii vi nh op, :.uing lev enucs and operating expenses

Opt-rating Revenues and Selected Ojiei aim*; Statistics

Hit is Mioitlis Emli-d ph lllln l in,

Mollai-sin millions') 201-1 2(1(3

"Sine Munlhs Lndcd Se pi tin In r 3(1. 2014 2013

Thi ee Montln Ended Nine Months Ended

St pie ni be i 30, September 30,

2014 2013 2014 2013

"1 '■ l ?7h J 707 S 27)T

Small busine Mass Mart.eu

Global [interpnec Olob.d Wholesale

lotal Operating Revenues

CunrieciioiisCOOO) ■')

20 I i)

t!7M (H7)

1155) |JJ)

(7')j (4«j

I 2 10 o

5 ihi) lU^J

(191; (11) 71

C'36) it ;)

(27i-) p (■)

til 1 1 H

14 31 (0[)

I'olal Fsroadbanri corn 1'lOS liilernet sulueiili

fiOS Video subscribe.

Wnelnie's le-venues di-crcssctl f) K% Compared to the similar penods in 20'. S urlset bv /.lglicr Curisumer id.ul rive:

■ lhe ll.rre ami iiine iinOlobal l.llti-ipilse

,ths ended. Srpic ruber 30 201-1 ■ and U.-kil Wholr-al.- panialh ei-.de'l Sit'ternhei 'H 20|4 Hie e;th;n I.lubal I iiterpnse

Mass M,,r(,tK peren.ms pin local exch-nge ib.isn ecivice

Mass Maiiels revenue- ir.i-re.tsed Sii 1 billu'.-. Inteiiiei ami Video), including oi:r l';Ub (j.ui

Tahlr alfeiilmi,

Since (Xiob.;i ] 2013. wc grew our subscnhcr base by 05 million FiOS liiterm.1 subscribers and 04 million FiOS Video siihst'rihcrs. ii-hiJr also consistency improving nincliaiion rales vttlhin our FiOS service areas As ol Sepiembei 30 2014 v»c achieved penetration rates of-10 d% and 35 5*I'« foi 1'iOS lmemei and KiUS Video, respectively, compared lo peneiiatu-n rale; of 3" 2"/_B and 34 9% lor KiOS lnieniet and KiOS Video. respectively, as of Sepiembei 30.2013

Ihc increase in Mass Mark US revenues was parti.dly offset hy ihc decline ol local exchange revenues This decline was pnmanly due lo a 5 9V. detiine in Consume) iclail voice connections resulting priinaiily irom competition and leehnology substitution with wiicless. jrnl competing voice ovci IP, broadband and cable services Total voice connections include traditional switched ih;ccns lines _m -en'ice as well as li"S digital voice coiuieetious Theie was also a decline in Small business retail voice Connections pnmanly reflecting compi ntion and a shitr to hoth IP and high-speed circuits

Cnst of Sen ices iind Sales

Dunng the ihiee months ended September 30, 2014. Cost of seix ice-, and sales decreased compaicd to the simiiai period in 2013 pnmanly due to a decrease in employee costs and a decline in access costs, driven by declines in overall wholesale long distance volumes, which wcil- partially offset hy an increase in inrileril costs of VO I billion associated wilh eonliiiued liOS suhsenber growth and piogiammtrig license fee increases

During ihe nine months ended Sepiembei 30 2014. Cost of services and sales incieased compared to the similar period in 201 3 pnmanly due io an inciease in content costs of SO 3 billion associated with continued I'lOS suhsenber growih and programming license lie i/icie ases. pjfluWy oJlscl by a iJccIjiic in employ ei eosls and Jteeis tosls dm en by declines in on rail wholesale lung distance v olumes

■ipii.

Gtob.il Lint Global Ifnre

generation IP srivic'cs Also contributing lo the Core customer premise equipment lev roues 'I hc FiTtibr period in 2f)J.i w.U partially oflsel by an increase^ in out application scrv ices, such a* oui

government customers

Global Enterprise rcven¹months ended Scpiembc and SO hill,on oi 11 5* circuit-based services sm

ics dencased SO 2 billion oi 30. 2014 compared to the s. ,. respecuv ely, relaied lo low-, fiame relay pnvate line a

nctuork products and solwiniij. advanced communications services, and huge business customers multinational Corporations iind slate and federal

4 4Ti, ar.d SO 3 billion or 3 2%. respectively, during the three and nine miliar penods in 201 3 primarily due to a decline of SO I hilhon ot 11 e-r voice services and data networking revenues, which consist t-firadilional id legacy voice and data services Ihese core .seivices declined compared

to the similar penods in 2013 as our customer base continued to migrate to nc: deciease was the contijclion ot market rates due to competition and a decline n decrease during the nine tntmlhs ended Sc-prcuiber 30 2014 curnp.iird lo ihe increase in Strategic services icvenucs of S>0 2 billion, oi 2 (.".i pr.irianly due te cloud and dalj center nlleiiiigs

Global ltW.'i,i/>

GlohaJ Wholesale _rlovui,.s communications sciv tn local long distance and othei earners thai use

Global Wholesale icveuucs decreased $0 1 billion months ended September 30, 2014 compared 10 t'. levenuesand , C decline in domestic wholesale traditional voice revenue decline* are primarily due

cs including data, veiict and local dial iu;:c jiid broadb.itid services pnmanly r facilities in ptovide services io their customers

i or 4 8*4 and $0 3 hilhon or 5 6V,, respectively, dunng the thiec and nine the similar penods in 2013 primarily due io a decline in traditional voice : connections js ,>f September 30. 2014 compared lo Sepiembei 30, 2013 The ease in minutes of use and Ihe c fleet of technology substitution Also

contributing to the decline in voice revenues is the continuing contraction of market rates due to competition Partially offsetting ihc overall decrease in wholesale revenues were Ethernet migrations from core customers as well as continuing demand for highspeed digital data sen-ices from flbcr-io-thc-ccfl customers upgrading then core data circuits to Tuihcmci facilities As a result of the custoinet migrations, at September 30. 2014. the nurr.bci of core data encuits cxprnenced a 13 7% decline compaicd to September *0 2013

Nine Monlhs Ended

September 30,

2014 2013

Increase/ (Decrease)

Increase/ (Decrease)

Operating Expenses

Three Monlhs Ended September 30, 2014 2013

2.04H 1,978

2.094 2,074

6.22 It 6,016

6,517 6.254

(46) (2 2) PJ6J (4 6)

(2X9) (4 4) (238) (3 8)

(dollar? in millions)

S 5J25 S 5,342 S (17) (0J)% S 16.006 $ 15.925 J XI 0.5%

S 9.351 S 9,510 Sin?) (1 7) t 2rU50 S 28.696 S (446) (1 6)

Cost of services and sales Selling general and administrative expense Depreciation and amortization expense Total Operating Expenses

iistraiivc expanse w . genemi and admi ists. primarily as a rt

s conustent wiih the simiiai iistr.ittve e.xprnse decreased ;uli of lower headcount This

Selling General tin J ■\ilimnistran\e Expense

During the three months ended September 30 2014. Selling general ami admi penod in 2013 During the nine months ended September Hi. 2014, Kcllii-.j compared to the similar period in 2013 primarily due to declines in employee c decrease was partially offset by higher regulatory expenses

ionization expense decreased compared to ihc

Lh-piecimii'ii andAmoii'imion Expense

During the three and nine monlhs ended September 30, 20H, Depreciation and a sirml.ii penods in 7013 pnmanly due to a dec rease in net depreciable assets

Nine- Months Coded

September 30. Increase/

2014 2013 (Decrease)

Segment Operating Income and EBITDA

(dollar

21ft 0,254

Thre e Muuths Ended September 30. 2014 2013

n millions)

(23K) (3«)% S I (.5 2 0

S tIM) (OKI

Segment Operating Income 5 225 S

\dd Depreciation and

amortization expense I 97£

Segment EBITDA S 2.203 S

Segment operating income margin 2 3% 15** 21% 07*«

Segment EBITDA margin 2J 0% 23 0'. 23 0% 22 4*.

nm - nol meaningful

The changes in the table above dunng the three and nine months ended September 30, 2014 compared to the simiiai penods in 2013 were primarily a result ofihc (actors described in connection with operating revenues and operating expenses

Non-opeiatnmal items excluded from our Wireline segment Operating income evcre as lollows

I hrre Months Ended Nine Months Ended

September 30. September 30,

(dollars in millions! 2014 2013 2014 2013

Impact of divcslcd operations

Tahlr wl Cuitfbt,

[ Gain on Sptctrum License Transactions

Dunng the second quarter of 2014, we completed license exchange transactions with T-Mobile USA, Inc (T-Mobilc USA) lo exchange certain AWS and Pei.sonal Communication Services (.PCS) licenses The exchange included a number of swaps lhai wc expect will remit in more efficient use ol the AWS and PCS bands As a result of these exchanges, we received SO 9 billion of AWS .Hid PCS jpcTlrarri licenfcsai totr \-alue and «c rc:rrded an imiiMieii.il pa:n

the second quaf.ei ol 2IH4 \>c completed wane icin.ns piusoain n< iwo addition,-.! agnomen is with "1-Mobile USA wilh

respect to remaining 700 MJ!z A blnel. spee1:'.uu Ike us, > Uiiib I «:i, agiecmeiil we sold certain <>l llresc licenses lo T-M»bile

USA in iXiluriLji f<n eash eoiistdciatnin >! appnivunat, l> 5/4 billio.'i an.l e.ndei the second agreement we exchanged the ren-MiunUr ol ,.■); .'DO MM? A block ipe, van: li.cii-.i .is w, li as AWS and PCS pectiiiiii lietriso |,,r AWS and PCS spectr.im licenefs A- J restiii. we received *.: <■ btlli.-i, ot AW S and "-" sp.diun. lieenses .it tan value in,: wc iceorde.l a prc-iax gain ol jjiproxini.iteiy SO 7 billion m S, Mm:- «ei:ei.-.l i:;.l adioinisir ,nv c e.pmsc .-n .-nr t orielc ris. ii e n >ol idared M.ileinent t income loi the nine months ended September .Hi rol l

crises al lati \ ,,lue and eve

icd a pi,

Dunng lhe th_:r,: quar.e: .if 2(11 i. .-.i-.ei ic.e.Miic. liie : bk.ck speeltu.R liccmes to A'l A I Ine (ATA I') ui . vt Wireless ni AUs (It Mll.-j li.c-rlsc; ul eeit.nri in.nl its Mil/. Il block spr.ir.un licenses n, an mv c-srrnri,; iiriii

■quite.! :.Tulatory .'.ppiov ,i]s. Yen,:.-;] Witless s,-,id hiwei 700 MHz I) -.a:ij-e I.-i a payment i xj r; h.u,,,, _ad ,_llt nansfei b> ATA T io Venzon in the ve -icin Ciule.l Stales Ven/on voteless ;iko sold i cilairi lower 700 ru; loi a pa; m; ni : »0 2 lulli.m As a result we rcreivt-,1 SO 5 Inllmn of AWS of appiov.in.iicly SO « Inllmn 1:1 ScIIiiil* pciicral and ,i,l:nuiis!iJtive expense . Iniih, t:.i,. ar.dnin. m-.iiihs ended Sepiembt: 30 20 H

The Consuiiclaied .'ed.usieel ffitTUA noiUi-' disens^ion (See Consolidated Kesulis ol Operal

m,?asiiu- pieseiitecl in the Loiisolidaied Upe . 1 est ludes d.e gam on I lie- spectiuni license tra:

Income and nilfDA oisdcscnbe-d abote

Wlirlcss 1 i'iis.,c'ii<in Costs

'\s j rt-uJi "i lhe lhtfl-p;iny irrilet-ttef.i^se i.-ietiiie.f io firi.ni, e ihc Wne.'ts. I lansaeiidrt we¹ iiicorrc.-l ttucu-.t e'.xpense tif i-0 4 billion dunnc, ihc rime months ended Sepiembei -0 ?01- (-ee (""on^olidatcd l uianei.il Condition' 1 and SO 1 billion dunng the ntne mnnilis end, d SVpternbei 30 2013

i'llcse jn:,iu:iie i. pn ieiit enly tli, nil. it s; e spe use iric.iii: d prior 0. ilie e tn;; ol ll:;' Wireic ^s T .■ansacliini

j Irnpat I uf Dnesltd Opera (ions

On Juh i.2li:j w-;-^Id a n.in-straiec-c W,:eli:i

Die- l ousolidaied \,:|ii:-lcd KHUDA non-'.Wr d:seu^,:.;n (?-e (.'ons.did jted Hesults .,! ("ijurati. ileseiib.,1 ah-..

ii:n pr.stilled in lhe t on>.iln!aled Operating IrieOme and LllMDA ) ev.lu.ft> tile l:is[,,:it;i| tirurui.ll le-ults ul tlie divested optiations

ri Salt- »| Omnitel J met

i for the Wuekss

the sale of the (bun recorded a c.nu <,f ' iteuient ol iri.-on:c for

.1 -ri Ii bni.iiv ? I 201 1 t: in Tquih in earnings ll, i->iilh. en.!^d ^c-pu-i:ihf.- *"

, part ol lhe . or.sii i,ieunsoi;.!aled busi

[jT^arlv Debt Uedeinpiitin Co l.iur:ii;: March 2t)i4 »r ice

t.q.al a,r, i:nl r.t'V,:

i;i (onneeii.in Willi tl.e- e.irlv redemption ni SI 25 c:|.iil I l.( v- c,,"_t N_u!l, due 2(1 lit ar.d the St- 7 L>ilI.o:i .'I ilie Ibeil .iuls;:::ieluig > I .-: billion n .it the llieri outstanding 51 5 bill.on aggregate

T*Mi-*froBirmi ■ -- ■

Not. s tiitc 20!.« SO 7 billion uf the then outstanding il 25 hilhon aggregate pnncipai amount of Verizon 5 55*. Notes due 2016. {0 4 hiMion of [he ihen outstanding 10 75 hrlhon aggregate pnncipai amount of Venzon 5 50'* Notes due 2017 SO 6 hillion of the then outstanding SI 0 billion aggregate principal amount uf Cellco Par.nciship and Venzon Wireless Capital LLC 50*i Noies due 20]X, SO 2 billion of the then outstanding JO 3 billion aggregate principal amount of Alltel Corporation 7 00/* Debentures due 20 In and SO 3 billion of the then outstanding SO iS billion aggregate principal amount of GTE Corporation 6 84V. Debeiitures due 20IK

[ Pension Re measurement ^]

Dunng the thiec arid si*, inoriths ended June 30 201 3. we recorded net pre-tax pension re measurement ciedrts of approximately SO 2 btlliou. in accordance with our accounting policy to recognize actuarial gain] and losses in the period tn which they occur The pension icine.iMnement credits relate lo .settlements for employees who received li:mp-sum distributions The credits were pnmanly driven by an approximately 75 basis point increase in our discount rate assumption used to determine lhe current year liabilities of one ol our pension plans The change in discount rate resulted in a gain of SO 1 billion partially offset hy a loss icsult/ng from the difference between out expected return on assets assumption of 7 5ai December 3) 2012 and our annualized attual letuni on assets ol 7 2"i at June 30 7013 as well as other losses (SO 1 billion) 0;ii weighted-average discount rate assumption nun axed Irom 4 2V. at Itcccmbci 31 2012 io 5 0%/. June 30.2013

The Consolirfakd Adjusted EBITDA non-GAAP measure presented in the Consolidated Operating Income and LBITDA discussion (See Consolidated Results of Operations") excludes the pension remeasuremenl desenbed above

Nine Munths Ended September 30, 2014 2013

Til.tr nl Cmlrmli

S 23,157 S 28,m7 S (5.230)

(10.430) [10 023) (407|

(59 037) 15.253 ("4.200)

S f4d.310) S 53.Q17 S (9-»,!>27l

ision and moetenii/anori. repay exrenial financing, pay in opeianons and to the extent necessary fiom external estirig lequiicmenls Die cash portion ofthe puiehase ec ot thrrdparly unit htt-ilriess (see 'Acquisition-; and

(dollars in millions)

Cash Flows Prnnded By (Used In)

Operating activiiic Investing acliv itics Financing activities Increase (Decrease) In Cash and Cash Equivalents

We use the net ca*h generated firm our opeianons to fund network evpa div idends" and invest in new businesses Our sources of funds primarily fn financing antingerr.cnls. arc sufficient lo meet ongoing operating and in pnee tor lhe Wildest Transaction was primaiily funded by the iruurrn Divcslitutej") We expeel lhai our capita! spending requirements will continue to be finalised pnmanly through internally generated funds Debt or equity financing may be needed to iund adduion.il inve-;!nu tits or development at uv Hies or to maintain an appropriate capital structure to ensure our financial llcxihtlity Our cash and cash equiv alcnls arc pnmanly held domestically in diversified accounts and are un cited to maintain pimnpal and liquidity Aci.oidmgly we do not have significant exposure to fureign cuiicncy tlueluations Sec "Market Risk ' foi additional uifomialioii le-gaiding our f.uei.en cuireney risk management strategics

edit a

Oui available external fm:i;itir.g arrangements include financing anaiigenients issuances of registered debt o also issue short-term debi through an active cnnimcre commercial paper issuances

| Cash Mows Provided By Operating Ac ri vines

ailanlc mid. r credit securities anil pin a

acilities .uid othei bank hnes of credit, vendor ely-placed capital marl el securities Wc may .ni SS biilicn cretin taiditj to suppon such

Oui pnniary source of lunds inniinues to he cash generated from operations, pnmanly from oui Wireless segment Net cash piovided by operating activities during ihc nine months ended Sepiembei 30. 2014 decreased by S5 2 hilhon compared to the similar penod in 2013 primarily due to a S3 2 billion increase in income tax payment] due to the incremental income included in Ven/on's income since the closing ofthe Wireless Transaction and the impact of bonus depreciation recorded in 2013 Also contributing to the decrease was a S2 5 billion increase in interest payments jnnnanly due- ro the incremental debt needed to fund the Wireless Transaction as well as a SI 5 billion increase in pension conlnbulion.s The decline was partially offset by an increase in earnings at oui Wnclen segment

On February 21, 2014, we completed the acquisition of Vndafonc's indirect 45V. interest in Venzon Wireless which, among niher benefits discussed herein, also pm\ ides us full access to the cash flows of Ven/on Wireless 1 lav ing full access to all the ra<h flows fioni our wireless husincts giv e:s us I lie ability to continue to invest in our networks and sper tium, meet evolving customer requirements for piodueis and services and lake ads anugc of new giowih opportunities across our lines of business

Wc do not expect to make any matcnal employer conmbutions to our qualified pension plans in the fourth quarter of 2014

| Cash Flows Used In lav citing Activities

Capitol Expenditures

Capital expenditures continue to be out pnmaiy 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

■velopmnii o| IP t:-|, vim.ni lor tj-.li corisideiation that was not

Tahli- fCwDtrnti

Capnal expenditures, including capitalized software, were as follows

Nine M«nths Ended September 30, 2014 2013

(dollars m millions)

I 7 JJtlrl S 6_:720

Wired,,. 4 !'i4 4_:4(i?

(.it fc i- ■ fal'-' 620

1 12 624 5 1 I.N07

1 'Ij! as a pel. tillage ■<! iei ,-riii,- I i 4*/« 1 * 2".

flie uifiasc in capital t xpcudiiurt s dunng ihe r.mc im-utiiN ended Srp-cmhs-i 30 ZOJ-1 toinpaict! i.> the iimilar period in 2013 ■» a* -/.r.ii'.nily ,lu, 1,- irvi slnieiit- mi ic.is; ;l,, e-'l'.ic:ty ot i-iu -Hi 1 [1. lie tw,:ik pait:.:l iy o rise'. by low, r capital cX pc mil turtts al Wireline' as n i_Lsiill ot decrease d le's'-it y spending require nietiIs

In I'tbruaiv 20!': Ven/on acquired a s.gj-ii^riejm

TabtrafCBiJlTati

On March 10, 2014, we announced ihc commencement ofthe Tender Oflci to purchase for cash any and all of ihc scries of notes listed in the following table

Principal Principal

Interest Amount Purchase Amount

Kate- Maturity Outstanding Puce"! Purchased

(dollars in millions,exeepi loi Pmchasc Price'

20 IS 201 <> 201 7

; .5Mi S i I 7u 0/ I 500 I |a<>'} t

1 125 21. I |')(. ftt

1 ii;n f.2 111'22

ishipaiid Ven/on W'ue-less Capital LLC

Alltel Corporation G II-:Corpoia1ion

Vei Si.OOti pr.ntipil -,i

ed w.th k he puicha

ended caity debt

nurui- the nine months ended Sepiembei 30 .'Ul-t i and SO ! billion lelated to the di .p.isiiion ,.f a n information

iv cd pr.%1 ,-cds of 12 -S hilhon related lo spcciniui In ruse lonsaelions ici'.it business See -Xequ nations and Div estiiures ' for additional

The 1 enilci (iffer for each spues of note* was subject io a financing eondinon. w I all seiit-s Ihe lendei Oflci expued on March I? 20i4 and - trim rn Mar. h accieied arid unpaid rnleies: oti the ptuehased noies was paid lo ihe dale of pun.l icdemption t osls in t onnection wilh the Tender Oiler (see l aily D. bt yedempn.

:l; wascilher satisfied o i. 2U|J In .I'iditiiin ro sc Uiiiing Match 2014. we-

s due. 205-1 During M.uch 2i>l.t Itn ncl pn

| Cash flows Pi uv ide-d Bi (("std In i ^injuring Ai'tiv itie % |

We seek to maintain a mix >>: lived and tanabte rate debt to lom-i buiiou-ing costs wnhiu reasonable risk parameters ami to proiect agnnst earning* anil cash lluw voLiiiLis r. ¹.in|i:>it: .■'■i.:r.;:cs in rn.oi.c; i o.-.,!iu.:iis D.ir.r'.g lhe nine' monlhs ended >eple:i:ber 30. 20I-! and 20! i. net ,as!i p:ov idee by (used in] lin.uiemg aetiv iiies was So 9 0) billion and S.n 3 hillion, respectively The chance i:t casii ilow-s used in financing acnv in l's dun::g ihe nine monlhs ended Sepiembei 10. .10! 4 as compared

1., il;.- Miml.n period in 2'M.' WJ. pnrnar.lt -Inv-.n hv t! .la * r > V li!:,.ir: as part e'f the C orside rat lurl !oi the Wue!e::s liaiisaeiion Sec- Acquisiii»:is ant! I)ii r>n:i:res mr tidititnul micminiion

Dunng Maieh 2014. we issued S- 5 billion aggregate pnncipai a of .ippinximaieiy S4 5 billion, net of discounts and issuance aggregate pnneipal amount Noah rig Kate Notes due 201'' that which rate wd! be lest-t quartern. 10 5 billion aggregate jinnc pun. ipal amnuiir ■■( 1 J * "■ i Not. s .lu.- 2021 S I 25 biii-.on ag;:i, g.

I 5 05".,

i ihe

 '. lueii and floann.t rate notes le-sultinit in cash proceeds

Hie i.,si:nt es c.-usisied .1 lire foiiowing JO 5 billioi;

eresl at a rale equal io ihree-moriih LIBuH plus 0 77%

■un: of 2.*.*■". N.-lt-s doe JOl'J. S! 0 hillion agg:,-g:i:e

u-al .i::i-.:nl ol ■= N-ites d'le 2U2J -u,d SI 25 bilhoii

used to p.,

n '.'elltio Partnership ami Venzon

■ coMS lhe nei pri'cccds vie re used for

nres win,!, arc cxpnl.d n- sink- on net >'! diseouui-. and issuance costs ari,!

m ni in w'r.ole ihe lollowing senes o' 0% Ntes due 2015 Ven/on > 7>", Notts.!u< 21'IK Mite!

:fil !■

I I 1 C > Ml*.

ol iht-se'

if. cue ?u?2 tl 2> billion aggregate 1-1 75't Nol,-, due 2034 lhe rssnaricc

Par:i:;r l ebni.uy ."!t'M we ■■i:-:d ( 1 ';'■!!-.>n argicrat.' |-iu:m;:j1 jn . unr _v: ; . prim ipal amount ol ^: 2'*/e Notes tine jo2(i am; tn M billi.ir: aggn g.it. [inn. :pal . ol ;i-ese Noic* resulii'd in e.is!'- pioeeeds ot .ippr.n.ni.ucly if .; h.ilion. nei ol di'.t-ounis nd issuance eosis Ihe net proeccds wcic used in ['.ir'- t.i I'icant e the Wirelcs i r_J:-.s.i, :iori Sri pro. ecb. ni used io r.nn;e the '.\::ele;s T:ai]viieiion were used lor general s'orpoiatc purposes Mio cliirnir; ("ebiuar-v ?(!!■: vie- i-.sue.l 50 billion aggregate vnncipjl amouni ol 5 VO*'. Notes due 2llx I

icclling in eaeli pri.eee.ls oi ippic v ink I, !y 5i> s !<iJli.ni ri. I uf .li--e ik an.! ,-,i.:i,ei eCsts Ihe m ■ pro. fed-; W.r, u,ed loi

geiiii.d ,o:poi.ite ruri't.s.s

it. pnreipci.

nuiing March 201-1 Verifon Wireless redefined 51 ?5 fillioi Wnetess Capital LLC K 5»*, Notes doc 20Hi a; |;7 I35T1 .n (see i::iil> Debt Reden-.piior J Also, during Mateh 201 - Si SI 5 hillion of ! ').*■«;. Vnvo'i t oininiirucanons Noies ma;u:e.

irid >.

Hering September 201-*, we- .-s.i.d ii; ■> i>j!I■ ri .-.gg.it,-ate jm.- ipi i .■! -1

tc'sultci: tn cash pn'cceds of ippro.xunately SO V billion net of di.: ounts nd is-uauee ge'iieial e-'iptira'.e' punioses Msii. dynng S, pieinl-ci lol-l we ie tiec.i:itd S bil'.ior. aJJgie L Noies due Not tinbcr 20'. -I ami leeorded .in iiriin.iieii.d amount, ol talis deb" redemption eu:

On Oetobei 22. 2014. Wc s.ild So 5 billion aggiegate piuu ipai amouiii of t'l.'.ed iat, r; O. :nbe: 2't 2014 We expeiT lo receive cash pitjeeeits o! approximaiely in »;< in.11-in n

t. I'a

20 It

lele-.- fj

Notes duL 2t'?l J2 5 billn.ii agf.ie-j-jti principal .im.i-ji,: ,.f 1 Hi'., N,,:, s ,:i:e 2^(,2-t ^nd !

01 -:-10"/. Noter due ?;:3-l The net proceeds Ir.-ui the otieruis; v ill bf ue.-d to i:oeen

ou:n.,ndirig r.utei wlmr. ha\t bier, called ror earlv redernpt.ori ir. Novembci TOl-t V,i

5 NtHev d-.i. 2Clli. Virifori } Hit'. Xt-.K" ijln' 2U I'< \'e:i/mi: ■ ■'., NI. s .i ,i, i'l.MT.

Coipouiiini ' 'ItiVc Utbeinure: (nj S1 U billion agercgaie pnru i

T»Mr of CoMmUS

Venzon Communications

Venzon mjy continue to acquire debt securities issued by Venzon and its affiliates in ihe future through upon market puichascx. pnvaicly negotiated transactions tender oilers exchange ntiers m otheiwisc. upon such terms and at such pncc* as Venzon may from time to nmc deieimine for cash or olher consideration

Wuj Eu h.n^e Offer

On Ma; 29, 2014, we announced the commencement of a private exchange oiler (the May l-'xrhangc Oiler) In exchange up to all Cell* o Partnership and Vliizuii Win less Capital LLC's iO o billion inHsumimg ^ggicgale pnnupal amount of R K7*>V. Notes due 201 fi (ihc 20/* Old N»ies) fr>r Venzon s new sicrJing-drjiojiwuicd Notes due 2024 /lhe Neiv Noies) and an amnuni of cash This exchange offer has been accounted for as a modification of debt In connect inn w ilh the Mav lis change Offer, which expired on June 25 20] 4 we issued fO 7 billion aggregate principal of New Notes and maJe a cash pay me:it of 122 million in exchange tin 10 (i billion jjgiegatc prim ipal amount ot tendered 201 fi Oid Notes 1 he New Notes bear interest al a rate cl 4 073% per annum

:scfOld Notes included in the July Exchange Of fere fc:i the- 2054 New Notes

I nier est Kate

15 000 1,750 1.250

Principal Amount Principal Accepted Amount Fur Maturitx. Outstanding Exchange

4.330

6 55% 2043 6 40% 20'sS o °u% 203R

icy su.ips to lis our future interest and pnncipai

les ut intend into cross e

Concuiient with the issuance of the Nctv Ni pay incuts in US dollais (see Maikci R isk" )

Juh Ex, hang, Otfei\

The table he |.v.\ lists tire

it Old Not

On July 23. 2014. eve announced the commencement of eleven separate private offe-is to exchange (the July lis change Oilers) specified setns m outstanding Notes issued hy Venzon and Alltel Corporation (collectively the Old Notes) fot new Notes to be issued hy Venzon The July Exchange tillers have been accounted for as a modification of debt On AuguO 21, 2014, Venzon issued 53 3 billion ap grcvaie principal amount ol ? d25% Notes due 2020 (the 2O20 New Notes). S4 5 hill inn aggregate pnncipai amount of 4 ₀'62% Notes dee 204b (the ?ti4f. New Noiesi and S5 5 billion aggregate principal amount of 1 012% Noies due 2054 [the 20.*-4 NVvs Noic-sjin saiisf.ietiori of the exchange offei consideration on lend, ted Old Noies (not including ace tired and unpaid ir.ierest on the Old Notes) The following, tables list the senes o( Old Notes included in the July l.xchange Oilers and the principal amount of c«ch such sciie* accepts .1 b) Vcn/on for exchange

icludeil in tlie July H» change Oilers tor the 20? i

a Notes

idollar^inmilhuiisl

Veri/on Communications

201 H 20 Hi

Principal Amount Principal Accepted Amount For Maturity Outstanding Exchange

Kate

The lable bc]₀w lists Ihe s>

4,750 S 2,052 4.250 I.OoK

ufOld Notes included m ihc July Exchange Offers for the 2046 New Notes

(dollars in millions)

Venzon Communications

fl.000 2.000 1.000 400

700 300

Principal Amount Pnuctpal Accepted .Amount For Maturity Outstanding Exchange

Rate

1,645 794

A 40% 2033

7 75% 2030

7 35V. 2031

Allicl Corporation

7 75% 2032

7 K75V. 2032

6 8.0% 2029

Tein:t.,>:

During hebniary 2014. wc dicw $6 6 billion pursuant to a term lo.m agreement with a group of major financial institutions to finance, in part, ihe Wireless Transaction 5.3 3 billion ol the loans undei the term loan agiccir.cni had a matuiity ot three years (the 3-Year Loans I and 53 3 billion of the loans undei lhe leiiTi loan agiee'irie-ut had a maturity of lit e j e.us (ihe 5-Vear Loans') Tire 5-Year Loans provide fiit the partial amort U.ahoti of principal during the- last two years that they are outstanding Loans under the lenn loan agreement hear interest at floating talcs llic icnn loan agreement cnni.iiii> certain negative covenants, including a negative pledge covenant a merger or similar transaction covenant and an accounting changes covenant allinnativc covenants and events of default that are customary foi companies maintaining an investment grade credit rating In addition, the leim loan agreement requires tir- lo maintain a leverage ratio (a* defined in the lenn loan agreement.! not in excess of 3 50 I 00. until oui credit ratings arc equal to or higher than A3 and A- ar Moody's Investors Service and Standard A. Poor s K.itings Services respectively

During June 2014. we issued S3 3 billion aggr. gate pnncipai amount ot fixed and lloalui^ rate not.-* icsulii_Ti» m cash proceeds ut apptoxunaicly S3 3 billion, net of discounts and issuance costs The issuances consisted ofthe following S I 3 billion aggregate pnnupal amount ol Homing Rate Notes due 2017 that will beai iiiien st ,u a rate equ.il to three-month I.IHOK plus 0 401-» winch will be reset quarterly and S2 0 billion aggregate pnncipai amount of I 35% Noies due 201 7 We used ihc net pioceedi from ihc ufl'eiing of these notes to repay ihe 3-Year Loans on June 12. 2014

Dunng July 2014. we amended the term loan agreement, settled the outstanding S3 3 billion of 5-Year Loans and borrowed $3 3 billion of new loans The new loans mature in July 201" beai interest at a lower inleiest rale and i.tqime lowei amortization payments in 2017 and 201K In connection with the transaction, which pnmanly settled on a net basis, wc reeoided approximately SO 5 billion of pioteeds fiom long-tenn bonowings and of repayments of long-term boriovc trigs, respectively

Other C redtt Facilities

On July 31.2014, we amended our S<S 2 billion credit facility to increase the availability to Jf! 0 billion and extend the malumy to July 31. 2018 Al the same time, we tenmnated our 52 0 billion 364-day revolv ing credit agreement As of September 30 2014. ihe unused borrowing capacity under thus credit facility was approximately S7 ⁰ billion

EailvDeki /iiJcmplion

Dunng March 20)4, wt recorded ncl debt redemption costs of SO 9 billion in connection with ihe early redemption of SI 25 billion aggregate pnncipai amount of Cellco Partnership and Venzon Wireless Capital LLC 8 50% Notes due 2018, and die purchase ofthe following notes pursuant to the Tender Offer SO 7 billion ofthe then outstanding SI.5 billion aggregate pnncipai amounl of Verizon 6 10% Notes due 2018, SO 8 billion of the then outstanding SI 5 billion aggregate pnncipai amount of Venzon S 50% Notes due 2018, SO 6 billion of the then outstanding SI J billion aggregate pnncipai amount of Venzon 8 75% Notes due 2018. S0.7 billion ofthe ihen outstanding SI 25 billion aggicgate pnncipai amount of Venzon 5.55% Notes due 2016. SO 4 billion of the (hen outstanding SO 75 billion aggregate pniiapaj amount of Venzon 5 50% Noies due 2017, SO 6 billion of ihc then outstanding S1.0 billion aggregate pnncipai amounl of Cellco Partnership and Venzon Wireless Capital IXC 8 50% Notes due 2018, S0J billion of the ihen outstanding $0 3 billion aggregate pnncipai amount of Alltel Corporation 7 00% Debenture* due 2016 and SO.3 billion of lhe ihen outstanding SO 6 billion aggregaic pnncipai amount of GTE Corporation 6 84V* Debentures due 2018

Tabkr af Cant mil

TaMe mt Caaimii

Othet. net

| Decrease In Cash and Cash Equivalents

Ihe change in Free i ash How di pnmanly due to a S3 2 billion

resources During the third quarter of 201-1 Venzoi v SI p,: sh.-.rc tr.'rii S f i p, r share in the same penod

The change in Oihei. net financing activities dunng the nine months ended September 30,2014 compared to the similar penod in 2013 was pnmanly driven by a decline in tax distributions to Vodafone pursuant to the Cellco Partnership agreement As a result of lhe completion of lhe Wireless Transaction, the final tax distnhuiion was made in lhe second quarter of 2014 Partially offsetting the- decline in tax distnbutions lo Vodafone were ncl early debt redemption costs of SO 9 billion

Di vi,/emit

*\s in pnoi penods dividend payments were a s:gr:iin.in; use i Iloaitl o! Dirciiors m.rease.l our qu.:iieil\ divi.i.nd pasmer.is h\ 2<rl i Tins is ,-rgIr.l, eoti'cc.nivL ee.u that the Hoard h.,s .iy.y.:.

Corn

ed !i

; In

[■.innp ihe nine irtoritc.-- einte.l Sepi.-mner 201-1 t- e p.od S'i T bill_:r! ic. ci-h div idrpcls Huu:ig the nine montiis ended September 3'J. 2013 we p.i.o S-1 - billion in e.i-h do. idends Ihe i;« re.is.- in , .,s|_: dm,buds is pnmanly due to the issuance ] appioximalclv I 27 billion shares o! Vni/.-n .onir:in -IolV. a- p:1 ol lhe e <■!:: ids it.l ion paid lo colliplile lhe Wuele.-S

rii.ni-. ol .niploye, arid slurc-nuiicr plan¹- .-udt-d Sepiembei 3U. 2014. which had a

aggregate value of SO 4 billn.n 5/_;(₍-irj//.lriH,m.iro«

In May 20! 3 i[ie Ho.,rd of P.epreser:iativ cs el Venzoi: Wireless dec I ired ., di,in|.ui:ori io i:. .iwners whic h was paid lit lhe quailc-i of 20) ' in pir-poriion lo then p.inrieish.p irneieM.s »n the payment dale, in lhe aggregate ainouiil ol S7 0 biliior result, \'odari,ti- received a cash p.iyinei:' of S? : r hilhnri and the remainder ot ihe disrnbutuu, was reeeiv ed by Ven^oii

\1 a lesull of ihe complclion of the v\ uvle-.s I i.uisae lion on l^:c bruary 21 2014 we now bat e full ownership of Ven/on W arid will no lunger make ^'Ccul disliibli'.ieitr. to Voilatune

stors and othet users of Venzon s s ealciilal. ,i hi subtracting eapitai s Net cash provided by operating

Our Cash and cash equivalents at September 30. 2014 totaled S7.2 billion, a S46 3 billion decrease compared to Cash and cash equivalents at December 31,2013 pnmanly as a result ofthe completion ot the Wireless Transaction

Free Cash Flow

tloutlis l.rnh-.l .Sepiembei 30,

2013 Cbani^T

x.?S7 S (5.230)

IXD7 SI 7

2(H

Free cash tlow is a non-CiAAP financial measure thai management belit-vt-s is useful to n lir.aneial infonnation in evaluating >.asii available to pay debt and dividends free ca-h lh" expenditures from net cash provided bv operating activities Ihe lullowmi: table i.tonc aciiv nics io free ea*h [low-

lo ^M!l S (dt)47)

Nei c ash pun ided by opeianng ai livi;ies

Less Capital e x pen di tines (inc biding tarn ilizt'tl

Tree rash Hon

ot tlie Wuelrs, Ttti

nine mantiis ^nded September 30 2tH4 e t.:i:|.aie.! n in income tax payments a 5 billion iiicie.ise u. . intribulions arid liighei capital expenditures Subsequent lo the rouipletn 2014. wc now have hill access lo all ol lhe cash flows ce-riei.tled bv our wireless busi

nllio

peitniis eo rii oral

Co;im;"i V/.-ii \sa lesiilt of ihe Wneless f On Maieli 7 201 t

7 billion shares r.iW.

it'on HiMid ni [>un;o:s ejiproved a jlian I'liybj.;. pi.iguiii. vvhicli ,iuilio:t/t i the repuieliase ot up lo 'ii , <-n-.iiin ->:.k 1, :jiii ri or-.ri|: n.i Lit; i lli.u. llu Jus., ,-f lin-in, -s on I ebniaiy ?H, 20 I 7 Die pioglam ase sh ire:, e: Unie with ihc .iinoun: and iimii:g ot n pure h see¹- ttepeiidir:g on ln.nket eiiiidiiious mid

Ven/on (lid imi repurchase* anv s inoriil-.s endee] Sepicmbe: ~-0 20 1

;.-k lhrough lis auilnuized sh.ire buy luck progrjin dunng the nine

TiMr el CanTfou

M- i-'i - ,

Wc aie exposed to various types ol market nsk in the normal course of business unhiding ihe effects i>1 interest rate changes, foreign currency exchange rate fl uclu.iltent, changes in investment, equity and commodity prices and changes in corporate lax rates Vic employ risk management siulegics which may include Ihc use nl a variety of denvatives including cross t.unency swaps, foreign cuneney and prepaid foiwaids and collars, inteicsl rate swap agreements commodity swap and forward agreements and uiiciersr jale locks We do nol hold derivatives loi trading purposes

Ir is our general policy lo enter intu interest rare foreign cuneney and other derivative transactions only to the extent necessary to jjneve our desired object i\ es in limning our e> posuie to various maiket risks Oui objectives include maintaining a mix of fixed and vanable rate debt to lower bono wing costs within reasonable nsk parameters and to protect against earnings and cash flow volatility resulting hom changes in m.nke', conditions WV do nol hedge oui market risk exposure in a manner that would completely eliminate the eiYeet of changes in interest rates and foreign exchange rales on our earnings Wc do not expect thai our ncl income liquidity and cash flows will be materially affected by these risk management strategics

| Interest Rate Risk |

Wc arc exposed to changes in interest tales pmnarilv on 01:1 shoM-tenn debt and the portion ot long-term debt that carries floating interest rates As ol September 3(1. ?0M. approximately *5% of ihc aggregate principal amounl of our total debt portfolio consisted of fixed rate indebtedness, including the effect of inieiest rate swap agreements designated as hedges Tlie impact of a ]f)0 basis point change in interest rale-; affecting our floating tale debt would result in a change in annual interest expense, including oui interest iate swap agreements that arc designated as hedges, of appioximately SO.2 billion Die interest rales on ■teibsiaiilirdly all ofour existing long-term debi obligations are unaffected hy changes lo out eiedrt ratings

Intocf'Katr SV.i-;.,

rates and pay vanable rates based on LILtOR resulting in a net mctease oi decrease to Inteicsl expense These swaps aie designated ni |air value hedges and hedge against changes in tbe fair value of our debt port folio Wc record the interest rale swaps al fair value nr. our condensed consolidated balance sheets as assets and liabilities l he fan value of these contracts was not material al September 30 20 M and December 3 1. 2.01 3 respectively As of September 30, 20 M, Ihe total notional amount ol'lhe interest rale swaps was SI ti billion The ineffective portion of these interest rale swap- was not material for (he three and nine months ended September K). 2014, respectively

FoitHtiJ Jmnev Ratr .¥«■«/) .v

In older to manage oui exposure to future' interest rate changes, dunng ihc fourth quarter of 2013, vac entered into forward interest rale swaps wilh a total notional value of S2 0 billion Wc designated these contracts as cash flow hedges In March 2014, we settled these forward inicies' rate swaps and the pre-tax gain was nsu material Dunng the first and second quarters of 2014. we entered into forward interest rale swaps with total notional values of SO 9 billion and S3 1 billion, respectively Dunng the third quarter of 2014, we emcrcd into loiward imcrcsi rate .swaps wilh a total notional value of $0 S billion Wc designated these contracts as cash flow hedges

In October 2014, we settled SI.2i billion ot forward interest rate swaps

| Foreign Currency Translation |

The functional cuneney for our foreign operalions is primarily the local currency. The Iranslaiion of income statement and balance sheet amounts of oui foreign operations into U S dollars is recorded as cumulative translation adjustments, which arc included in Accumulated other comprehensive income in our condensed consolidated balance sheets Gains and losses on foreign currency transactions arc recorded in the condensed consolidated statements of income in Other income and (expense), nei At SepitTnbti30,2014,OLiipnTiiiTy translation exposure was to the British Pound Sterling, ihc Euro, the Australian Dollar, the Indian Rupee and the Japanese Yen.

Crn<i CvnrncvS*'ttpi

Dunng ihc first quarter of 2014, wc entered into cross cuneney swaps designated as cash flow hedges lo exchange approximalely SS 4 billion of Euro and Hnlisli Pound Steding denominated debt mio L'S dollars and lo fix oui fell ore interest and principal

payments in US dollars as well as to mitigate* the impact of foreign ciiiieiic y transaction gains or losses

Dunng the second quart" ol 2014, in connection with the May Exchange Oltei. wc entered into eross cvineivcy sw jjie designated as cash llow hedges to exchange approximately S1 2 billion of Dnlish Pound Sterling denominated debt into US dollars and to fix our future interest and pnncipai payment! in U S dollars, as well as to mitigate the impact of foreign cuneney transaction ga:ns or looses

Tafair Ctnnri

Venion Wireless previously entered into cross cuneney swaps designated as cash flow hedges to exchange approximately SI 6 billion of Bntish Pound Sterling and Euro-denominated debt mm US dollars and to fix our future interest and pnncipai payments in US dollars, as well as to mitigate the effect of foreign currency transaction gains or losses In June 2014, wc settled SO H billion oT these cross cuneney swaps as pan ol the Exchange Oiler and the gains with respect io these swaps wcte not

lilateiia)

A poiiiun nfihe gains ,,ud h.sees rei ogni/ed ui Oilier , .--uin.-hciisii c in. oiiii (lim) was icvlas-.iic.l to l)ihci income and (expeine', net to oilset the related pre-r.ix |:>icigii cunt oey lraris.iiimn ;■ j:ri tn loss on trie underiying debt ohligjiions I he !ati t alue of the outstanding swaps "a-; SO 1 billion at Sepiembei 30 ?01-i ant) w.^ not material at December 3 1 "013 During the three and nine months aided Scpli-inhsi ^s" Til 1-1 a pre -iax loss of 50 1 rnl^:ion and an inunau nal (tit-lax Less re spedn ely weic recognized in iltlici comprehensive income flosj) Dun rig lb- 'hue and ni::c months ended .September 10. 201 i, a pit-tax gain ol SO I hillion and an immaterial pre-tax loss, irsjiei lively . ve:e ret oi:i::.:ri! in ( rtl.ei . i-inpieliriisn e me nine (loss)

Win-less

Wireless 1 ransjc linn

(Jn "lcP'embei 2 2'H 3. V.-n/ii cnie-nrr. inie a sit;, i. purchase .ie reenter'. 1 (lhe M.ick Pan h.rst- Agreement J ttilh Vodalone Gioup Pk (Vntialone] and Vodafone ■! Limited [Seiit.r! piiisu.uu to ttl.ieii V.-n/or. .u-iced to .ie quire V',.,!.i|one s mdnc-! 45% interest in Celled r.irti'crsnip d/b;.i Vcn/or, Wireicts tihe Partnership and 'ueli irueiesi ihe W.ualonc IntervsiI for aggie-gale consideration nl approximately SI '0 billion

eht Fcbmaiy 21. 2014 pursuant io tlie teinis and siibicel lo the conditions set forth in the Stuck Purchase- \giccmenl Venzon ac qui red (the Wireless Transaction) tinrn Seller all of the issued and oiustandirig capital stock Mhe Transferred Shares) ol Vodafone Anieiic.isrinar.ee 1 Ir.c a subsidiary ol Seller (V|"l In, ) which iridm. riy rhinugh certain subsidiaries (together with Vl^: 1 Inc ihe Puich.'seel Amities) ovtiietl the Vodafone Inteiesl In tnr.sideiaimn lor Ihe I'raiislerred Shares, upon completion ol the Wireless Ti-.tr,-" > ion Vtn.'on ti) paid appn. t un.i'e ly S5-: V> billion in eash. [ui is-iu-d appm viinaicly 1 2" billion shares of Vein:n's eumrn^ri slock, par value" SO it) pe: share [the Sn-ck <"i.i!sidr.ili;.;i I wh.ni w.i' v.ducd ;n approximalcly Stil 3 billion al ihc cltjsmg ol tlie Vsirele-.': 1 mils,,, l,,,,, i:uj isvu,,i e, _llu._; ,_:s, , ,, .1 V. n/,-:, ,,i,.e ,.-i an aggiegaTe prim ipal amo-.m: of Sf> 0 billion (the \ en.'on rs¹k si (iv ) sold V.i;,-.jn s indiiecilt owned 2 '» ]-\ u,re:e-i in Vinv.roi'.e t):n:::iel .\ V I Omnitel and such inteicsl Ihe llmnitel IMi'k.-i) t.du.d :■.: S ¹ ^ l:;:lion and n J piovnicd .-rht: consid. ial;.,:i. wiiich itielud.d lhe assumption ofpicfeni-d stock tallied at approximai. ly * . 7 huiion The to:-: e.i.-.:i p:d to \ -datiir ml tl;, i.ihi r . -is :,i i:n Wildest Tiaiisaetiou, includii-.g firtanrin.' lei'.al and har.i. fees ucie lir.anced ll'.r'iunh ihc inci.rrti.rr ol ihird-psr",y indcbicrincss (sec Consolidaied Hnancinl Conuilfii" 1

In .ii ci'i.ianee tt ilh ihe .K.'ouriiin^ sr irt.taid or; ennsolulano.-i ^ cli^nge in a parrni s ownership nileii si ufule lhe parent teiains a cunt rolling tiuaru nil ml. rc-t in its subeittijiy is iieeounlci to: a-, .in e.juit;, Iran i ion and rt rile a* menu n; ot a-sels and liahihlies u; prev iou-Iv loritrollcd and t i.nsoli.l.iivil subsidiaries is nei; pcnmtt.d A- a u mi It »e :ie counted !o: the Win less Iian-ft. tiun by

Pritnefslup \r.y dirteic-rn e beiwecii ihe l.nr tal.ie o: the c or sid. i.-tio;i pa.,1 ai,,: trie jr:-.oiir-.l by u:;id- the iioii, onnoliir.g interest is adjusted has been iec.";:-.i.'ed -ri riiuitt .if.r.-oilMe 1 v t.

tin IVIiru.uv 2i 2(t|4. Vcn/on am! \ othif.nii- also , ,:::mi irini.i!.-.; '!i<- saie ol tl,.- i 'runnel inter.-st (rlie Itmr.nel 11 an sac ii.in) hy a su'isidi.uv <:( Wn/.ir-. lo a oibsuliary ol Vod.it.-ne ;:, , nut-. i-n -.till; llu- Wi:el,-ss 1 i.ms.ie lion juusiianr to a lepjitili: sli.ue-purchase agieemerit A - a resuli dunng ihe rune nmnlhi t rid.-.'. Sept-ini'd 30 211!- >ti rccogrii/e.l a pre-t;ix gain f S 1 *' billion f. *.he .t-.spi.vol ol lh (loiriir. 1 -.uier.-.: ,r, Lqui'v u: ll.:s-.-.| ,,l em,. ,i;.-i,l i ilale.t husi'ie-.s.-S ml our . Uinfenved , ul sc Inbred sljl, merit o! iirconu

llu- \Vrl<:o:-, Nnle* .urr I* -ue.l lo \',:daloni' pu:-ur \ ,-r:.:in . :-.e ;-i i.i-.- irictcrii art- Thr Vell/On ^'"rs vs,-re usueer in tveo

TaTtl* ( C*Dir*ll

(lhe eleven-year Venzon Notes) The Venzon Notes bear interest at a floating rate, which will be reset quarterly, with interest payable quarterly in arrears, beginning May 21. 2014 The eight-year Venzon Notes hear interest at a floating rate equal to three-month LIBOR, plus 1 222%, and the elev cn-ycar Venzon Notes bear interest al a final ing rale equal to three-month LIBOR, plus 1 372% The indenture thai governs lhe Venzon Notes contains certain negative covenants, including a neganv c pledge covenant and a tneiger or similar transaction covenant alllnnative covenants and events of default ihat aie customary for companies maintaining an investment grade eiedit latuig An event of default foi either series ol the Vcri.'uri Note? nuy res'alt in jcccleraliou ol the entire principal amount of all deb: sec'iiulns ni rh.it series Hi-j.ininng two y-i-.u- ,_:iiir tb- t Irismg nt tin- Wireles-Trjii-aeliun. Ven/on may redeem all oi any portion ol the tints' and trig Ven,:on Note- held by Vo.l.iione or any ol Us alii hales lot a ic'deinpitoti price ol I 00% ol the principal amouiii plus ae. nied and unpaid inieresi Ihc Ven.-.-n Notes may ortly be transfeired by VnJjforie tn lliinl parties m spc'eilii i^ t.mnunis dunng spccilieel pe-muli eoiiinveivt iiif J.uums i, 2111 7 Atvs Veri.'tsn Note-, beltt sis-llnrd pariie- will not he redeemable bv Venzon pnoi to then matuntv dates Vrnrmi has agreed to file a regisitaiion statement wilh ic?pc-cl to the Veii/iiii Notes at 1, ast thiec nioruhs pno: to the V'cr;/i;ii N,.tes becoming ti.uiifeiabte

0;l-i C»'if<Jei-iin»i

bic-luded in the other consideuiiion piov i.I.-d io W.dafoiir ,» rhe unfile. I assmnption ; loi-._t;-r,-,ui oi-lig.nions vtirh lesnet i to b 1 13% Class-D^iiii (.'lass T t uiriul-lin preleitecl slock (Vieferted Stocl 1 issued l^v one ol ll.e r,iithan.! I ritiin-. Hoiii ihe Lhiss Ii 1 shales ir.25.O0O vliJiciOiilst-nid.iiiij ami Cia^s 1: shares (X25 00(i r.ii.nes .jutslautlirig) Jie iii.imt.-.ioril:. redri-mabli- in April 2020 ai ! 5 1.000 per share plus any acd'aed and unpaid dividends Die idends accrue at 5 143'.'. per annum and will b. treated as interesi . expense Both Ihe Class D and Class V siiares date been cl.issilied as liability nisrrinrnT.is arid «ere re.-i.nle.! al la:r value as | de-leiuiiued ai the closing ,.f il,e Wireless Tian-aeii.m j

De/Vn-rJ Tux Lml-rfilies

Certain defened taxes directly attributable lo the Wireless "lransattiun have been .aleul.ited b.i-cd on an analysis of taxes attributable to lhe difference between ihc inx basis of the in vest merit ui ihe nonconuoHuig mteresi that it arsumc-d compared to Verizon's book basis \s a lcsult Venrori reeoided a deli-ned tax liability ol appioximately 5 1 ,i 5 billion

v>pcrlriiin License Transat'tiuns

During the second quartet ol .'Oi l we eompkicil ireciisc ixehar.gc trausaetmris -.vub l-Mobiit ! :S.a ;o . veit.mge eeilain AWS and j PC's heeiises Ihe exchange included a n-.imbei ol swaps ibal we exp.-.t still rv-.ul: in it.-i-c i tin ler-r n-i. ol '.he AWS and PCS ] bands As a lesitll til these exe li.inges we icceivcd SO ') luiliui: | AWS ami Pf S srstelinin hccri-i s | i.r v.,|u, and we neoide.l an j imjtijicrui gain !

During ihc second quaric r of 2(1 U. »c completed imnsaclions piir^u.irit to mo arlonninal u'lceiiK iiu vvnb 1 Moriilc I ISA te nh respect to om lernairung 700 Ntll.t -\ block t,,ectiu:u lit t-nses Uneiei one agreement t-.e ^),! certain ol liirse loensesto 1-Mobile USA in exchange for cash ceinsiileialicii ol approximately $2 4 billion ami umki the seeeniil ajiieiiiifni m exchanged th remainder of our 700 Ml!/ A block spectuuii licenses as well as AVs S and PCS spectrum luerrses j.h AWS ,m.! I'CS si'tcnurn hci-usrs As result, we lecrive.! S. 1 I, h.V.um of AWS and IT'S ^pcetium hrer-.ses jl Ian v jlu, an.l etc icoidcd a pie-lax gain nl approeini.Ui-ly SO 7 billion m Seilirn: genci.il and adinie.isi; ,nvc expense on oui .or.itcnscd eor.-oli.l.itci! sMiemer-.r ol iiiconn- lot the nine rnorilh- elided Se-ptri ilier .*t! 20 \ -

Dunng 'icpiembci 2014. «_t , iilerc.l into a heciise c x, lunge agn e merit '.vilb .irfiliaie s "1 A'I A- 1 ;.i e xe b nij.e c eitaiu AWS .out ITS | spectium ]iee-use.s This non-cash exil.ange uhieh is subject n. approval l.y it:c- led. rai Coi-uninu, noris C.-rr.i-.ussioi: d'CCl ami olher eustom.uy elo:.ing eoiiditicns is expected to e lose in the liist quarter <-i 20l< l.'pou e o.ri|.|t tion ui the tunsac Hon vte expet t lo record an immaterial gam

During the three arid uurr monlhs ended September 30, ;i)]4. wc aee.uire.l until,, otiier t. ueles- li.ens.-, ami iiiari.ei-. im c ash eimxicicr;r.io« tli.it S-.S noi s._niti: ant

"j." ?!."■!:

Cfii Julv J 20 \A vee sob: a n.tii -iiaiej: if W ueline husincss. umeli p.ovido e ommuriirai iuu- s.>lni;oi:- m a unri;. o! _f.₍,e cnut-.eiu agencies lor net cash pr.i.-eeds ol St' 1 billion ind iceoided ar. iminateri d p.jir.

(Jlhu |

y - 1 c... r, , nc. . , |

On October 7. 2f)l4 Isecfbux Instant by Ven/on. a vniiun between Ven/on and Rcduox Automated Retail LLC (Redboxj, a wholly-owned subsidiary of Ouiervvall Inc , (.cased prov iding service to its customers In accordance wilh an agreement heiwo_Ln the panics, Redbox withdrew from the venture on Ociobei 70. 2014 and Vcn/on will wind down and dissolve the venture dunng the next few months As a result ol ihe lennmaimri of the xcntiire, we expect to record a pre-tax loss uf appro niri.iieh SO I billi.m in the foonh quarter of 201 4

to Regulatory and Co , ol Tinancial Condition

] Regulatory and L'ompetitiv e Trends

Thcie base been no malc-iial changes Management's Discussion and .Analysis ffirthcyv.tr ended IX-tcmher 71.2011

.pc-lilivi; Trends as pie nl Results ol Operation

usly disclosed in Tan II, Item 7 u oui Annual Report on Fonn Ifl-K

iionmenlal Matters

During 2001, under a goveinmcni-appioved plan, ie median on coiiimeiieed at the site of a former Sylvanu fneilily in Iltcksv illc. New Yr.uk that pieicessed nuclesr fuel rod*; in the l^iOs and 1S>o0s Remediation hevond original expectations pioved to be rieCe'.sSJ/y jnd a ic as Sesime nl ofthe annotated rcriii'duiion cosis Mas fondue led A re-asscs-mcnl of coils r-Jarefi in renuuiuliati el forts at several other tomier facilities was also undertaken In September 7Wb. the Anny Corps ot Engineers (ACi.) accepted the Hicksxille site into the Formerly Utilized Sues Remedial Action Program This may result in the ACT: pcrioiming some or all ol the lemedianon effort foi ihc Hieksville sue with a conesponding decrease in costs to Vcn/on To the extent thai the ACE assumes responsibility foi remedial work at the llicksville sue. an adjust me nt to a reserve previously established for the remediation may be made AdpisimenlS to lhe reserve may also be made based upon actual conditions dist ov eied dunng the lemediatton al ibis oi any other site requiring remediation

[ Recent Accounting Standards

In April 2014, tbe accounting standaid update related to the reporting ol discontinued operations and disclosures ut disposals ol components of an enlily was issued This standaid update changes the cnteria I'd reportm c discontinued operations and enhances coni crgi-nce of the reporting requirements for disconfmued ripenrlnini As a revulr of ifirs si.indanl update a disposal of a component of an entity oi a group of component* of an entity is required to be reported in discontinued operations if ihc disposal represents a strategic ilufi thai has, or will have a major cited on an entity's oper.it urns and financial results This standard update is effect it e as ofthe first quarter of 201 however, earlier adoption is permitted

In May 2014. the accounting standard update related to ihc recognition ol revenue horn contracts with tusiomcr* was issued This standard update clarifies tbe pnnciplcs for recognizing revenue and develops a common revenue standard for US generally accepted accounting pnnciplcs (GAAP) and International Financial Reporting Standards The standard update intends to provide a more robust framework for addressing revenue issues, improve comparability of rev enue recognition practices across entities, induslncs, junsdicuons. and capital markets, and provide more useful information in users of financial statements through improved disclosure requirements Upon adoption oflhis standard update, wc expect thai the allocation and liming nf revenue recognition will be impacted We expect to adopt this standard update dunng Ihe first quarter of 2.01 7

There arc two adoption methods available for implementation of the standard update related to the recognition ol revenue from contracts with customers Under one method, the guidance is applied retrospectively to contracts for each reporting period presented, subject to allowable practical expedients Under the other method, the guidance is applied to contracts not completed as ofthe date of initial application, recognizing the cumulative effect of (he change as an adjustment lo (he beginning balance of retained earnings, and also requires additional disclosures coinpanng the results lo the previous guidance We are currently evaluating these adoption methods and the impact that this standard update will have on our condensed consolidated financial statement i

In June 2014. the accounting standard update related lo lhe accounting for share-based payments when Ihe terms of an award provide thai a performance target could be achieved after the requisite scrv ice penod was issued The standard update resolves the diverse accounting treatment for the*e share-based payments by requinng that a performance target that aftecls vesnng and that could be achieved after the requisite service penod be treated as a performance condition The requisite service penod ends when the employee can cease rendering service and still be eligible to vest in the award if lhe performance target is achieved. We will adopt this standard update dunng the first quarter of 2016 Ilie adoption of this standard update is not expected to have a

significant impact on our condensed consolidated financial statements

Table ! ("nit«i«

In this report we have nude forward-looking statements These statements are based on our estimates and assumptions and ate subject lo nsks and uncertainties Forwaid-looking statements include Ihc information concerning our possible oi assumed future results of operations Forward-looking statements also include ihose preceded or followed by the words "aniieipaics " believes.' "estimates ' hopes" or simitar expressions For those statements, we claim the protection uf ihe safe harbor foi forward-looking statements contained in the Private Sceuniies Litigation Refuirn Act of 199?

(! in oihe-r tilings with tin- Sec unties ililler materially Irom thi^e expressi

[l tins report a

Ilie following liv.poiijr.l laeMis. along wilh those discussed elsewhe; r.vcliar.ge Cnmmrssior. {SFCl. couid affect future results and eould ca lhe loivcid-lo. l.iiie slateriunLs

llu- ability to realize the expected benefits ul the vVuel

s 1 ransaclion in the titnctran

s alfcc

the cost,

n technology ot tec hn>d ,cy suppliers" provision.

[edit n

siginlicB'iilv increase chani-es in lax laws o advcise i onditions in material adveise chat

material clungi disruption 01 ui

, hiding uuci.-sl latcs and/oi Ml', the vVi,des< ft ansae H

u:y subsiiiuini]

bleaches ot nelwoik ot niLuimation leehnoingv -eciintv natural dis.i.lcis '.cnorisi .Minc 1 » ">i ads of «.ir or <ignifie.^,ni lilieatior. and any resulting financial impact not ,r veied Hy ui'-unnie

Tiblf ef raalrnli

Item 3 Ouantitalive and Qualitative Disclosures About Market Risk

Information relating to market risk is included in liein 2, Management » Discussion and Analysis ol Financial Condition and Results of Operations undei the caption "Market Risk

Item 4 Controls and Procedures

Oui chief executive officer and thief financial officer ha\ e e\aluaied ihe eflei iivcncs.s of the Company's disclosure controls and procedures (as defined in Rules 1 3a-1 5(e) and ! 5d-l Sle) of the Secunties Exchange Acl of 19 34). a< of ihe end of ihe penod cos eicd by this quarterly report Rased on this ei aluation our chief executive officer and chief financial officer ha\e concluded ihat oui disclosure controls and proccduies were effective as of Sepiembei 30 2011

In lhe ordinary couise of business, wc review our system ol internal control o\ei financial reporting and make changes to out systems and processes intended lo ensure an effective internal eontiol environment We arc continuing an initiative lo implement new financial systems Out Jill continue ill phases over Ihe next several quaitris W'e are also continuing an initialise 10 standardize and centralize irjnsaciion-piocc.*siiig acitMiies within out accounting pioccsses, which wc expect to continue oxer the next seven! years These initiatives will intoiporate certain changes in personnel as well In connection with these initiatives and the result mg changes tn oui financial system? and transaction-processing activities the Company continues to enhance the design and documentation of our internal control processes tn ensure that contioh uvei oui financial reporting remain effective

Exceot as noted abet e there were no changes in the Company's interna] eontiol over financial reporting dunng ihe third quarter of 201-1 that have materially affected or are reaxoiiablv likely to materially affec t our internal eontiol over financial reporting

Talk ul Contend Item IA Risk Factors

There have been no ma I mat changes In our n>k factors as preciously disclosed in Part 1. Ilem 1A of our Annual Report on Form 10-K fur ihc year ended December 3 1. 201 3

Item 2 Unregistered Sales of Kquiry Secuntirs and t'se of Proceeds

On March 7. 2DI-. the Ven/un Huaid of Directors appioved a shaic buyback program which authorizes the repurchase ofup to 100 million shares of Venzon common stoek terminating no later than the close of business on lehiuary 2M 201 7 The program pennits Venzon to icpuieliase shaies o\ei tune, with ihe amount and tuning of leptuchases depending on maikci conditions and corporate needs

Venzon did not repurchase any shjrcs ol Ven/on common stock through its authorized shaic buyback program dunng the three months ended September 30, 2014 Al September 30, 2014. the maximum number of shares thai could he purchased hy ot on behalf of Venzon under our share huyh.uk pnigram was 100 million

Item I Legal Proceedings

On Sc-P 1 ember 1 5. 2010. the U S Hank National Association (II S Hank), as Litigation Trustee foi ihe Ideart Inc Litigation Trust (Linealion Tiust), fiit-J suit in US Distnel Court for ihe- Noillieiri District ol Texas against Venzoi) and certain subsidunes challenging the Noi ember 2006 spin-n|] of Vcn/on s former directories business then known as Id care Inc U S Dank, which leprccnis a group of creditor; who filed claims in Id care s bankruptcy, alleged that Idearc was insolvent at the time of the spin-off oi became insolvent shortly thereafter 1 he I itigation 1 rust sought os ei $f billion in damages In its June 18, 201.3 decision, the Dismct Court en I ere J judgment foi Vcii/.on and its subsidiancs and ruled that U S Bank would "take nothing" on its claims U S 13.ink appealed the decision lo lhe U S Court of Appeals for the Fifth Circuit, which upheld the District Court's decision on Juk ^J,0, 2014 The I iligation Tnm has until December 15. 20M, to seek funhei review of the decision hy the United States Supreme Court

On October 25, 20) 1, a Litigation Trust created dunng the bankruptcy proceedings of FairPoinl Communications, Inc filed a complaint in slate court in Mecklenburg Couuty, North Carolina, against Venzon and other related entities The complaint claimed thai Fair Point's acquisition of Venzon's landlinc operations in Maine New Hampshire and Vermont in Match 2008 was ftnicturert and earned out in a way thai left I'auPoint insolvent or led fo its insolvency shortly thereafter and ultimately to its Octet" 2009 bankruptcy 'Die Litigation Trust sought ay.piuximatclv S2 billion in damages Ve.iv/on removed tlie case to the United Stales Distnct Court fur ihe Western District ofNorth Carolina in November 2011 At lhe close ol discovery in February 2013. Venzon filed a summary judgment motion to dismiss the two counts in ihe complaintconstructive fraudulent transfer and actual fraudulent transfer On June 12.2013, the Distnct Court granted Verizon's summary judgment rflotion in pan, dismissing the Litigation Trust's constructive fraudulent transfer claim A bench tnal limited to the actual fraudulent transfer claim concluded December 13, 2013 On June Iff, 2014, Venzon and (he Litigation Trust entered into a settlement agreement, the terms of which are not matenal lo our business The settlement agreement, was approved by the Bankruptcy Court on September 1 it, 2014 and the mallei was dismissed by the District Court on October 16,2014

In October 2013. the California Attorney Gcncral'i Office notified Venzon California Inc and other Venzon companies of potential violations of California state hazardous waste statutes pnmanly ansing from the disposal of electronic components, batlcrics and aerosol cans at certain California facilities Wc arc cooperating with this investigation and continue to review our operations relating to the management of hazardous waste While penalties relating to the alleged violations could exceed $100,000. we do not expect that any penalties ultimately incurred will be matenal.

IXitc October 7S 2014

n Se-.luili t02 ul the Sarban.

c Section "un ol ihe .Sarharu

TmMr a* CaalrBli

Item 6-Exhibits

lixhibii Nurr.her

Description

Computation of Itatio of Lainings to Fixed Charges Ci rtifieaiion nt Clurt llxecntiv c Uitii.cr pnrsuanr to Certili.-atioii ot Chief financial t HI'ilc-i pi Certification oft "hie! hxc.utiv e ' Jt'ticer pursu,.ni io S l'enili.-ris-n '.'I ( hi. I I uiarisial i llltcer pursi;.ii:1 lo Se XHRL Insl.:iuc LK.eiimeni

101 PRli

:oi caL

XJiRI. Taxonomy llxieusion Schema Document \I3RI. Taxonomy Presentation l.ir.kbasf Do. ument XMI'.I. ■axori.miy Cab ulali.-r, I utkb.i-e [.).:. mucin XHRL I a>.oik.my I .ibt I 1 rnkda.-e [\>cur:u n: X-tRI. I'axoi.oiuv He!, ilsiu.i IVlliutioo Lmkbas, Dd *7

.■x-Oxky Ac sJJxlcv Act _L-,-<Mev Al-

of2002 .if2U02

TataV af Caul tat* Signaturt

Pursuant to Ihe requirements of ihe Secunties Exchange Act of 193-1. Ihc registrant lias duly caused this report lo be signed on its behalf by the undersigned thereunto duly authorized.

VFRtfON COMMUNICATIONS INC

Hy /s/Anthony 1 SI- ladas

Anthony 1 ^kiadas Senior Vi.c I'lesideni and t.ontrolo-i [Principal -XiYoiiriiirig (ifii.vrt

T»Mr vl Cohh bi

Kstnbii Index

(imputation ul Hallo ul hat 1111151 (o Fixed (.'bat grs Veni'on CommeuiKaiinus Ine and Subsidiaries

ogmzed on uncertain lax positions as income t: amingsio Fixed Charges

Kxhihil Nurr.bei

.11 1 .11 2

101 INS 101 SCH 1DI PK1^:. 101 CAL 101 LAli 1HJ Df.l-

Description

Compus.ilion of Ratio of liairurigs lo Fixed Onirics

Certification ol Chief F.xccutivc Uflicc-r pursuant lo ScMinn 102 ol llu Saitianes-Oxk'} Acl nf 2002 Certification o| Chic T Financial (Jluccr pursuant in Section M)2 ol ihc S nhanes-Oxley Ati ol 2002 Certification ol'Chief Fxeculuc Officer puisuanl lo Scclion °l)f> ol ihc Sarhari.-s4>xle> Acl uf20H2 Certification ot Chid Financial Officer pursuant to Section "Oft ollhc Sarbanes-Oxley Act ol 2002 MJH1. Instance Document

XLiRI- Taxoniiiny IImcii-.ioh Schema Document XHKI. Taxonomy Presentation I.itikbas-c Document XBRL Taxonomy Calcubtion Linkbase Document XBRL Taxonomy Label Linkbase Document XUHI. Taxonomy Cx!c-nsion Definition Linkbase Duciimerit 59

(dollars in millions)

Income before pros uion for income laxes F.qnit V in 1 .linings of unconsolidated busincs: Dn idends from uncnnsnlidaied businesses Inicresl expense i'i

Portion «f rent expense jepicsentiiig mteresi Amortization of capitalized interest Faming*, as adjusted

Fixed Charges-

Interest expense

1'oilion ofienl expense representing interest Capitalized interest Fixed charges

Ratio of earnings to Fixed charges

(I) Wc classify nnercsi expense rec js nol ineludcd in lhe Ratio ot I:

Nine Months F.nded Sepiembei 111, 2014

:xpensc and ilierefore such n

I, Lowell C Me ».dam, certify ihal

I have reviewed this quarterly report on Form 10-Q of Verizon Communications Inc ,
Based on my knowledge, this report docs not contain any unirxie statement of a rnalciial fact or omit 10 state a matenal fact necessary io make the siaicmenis made in light of ihe cncumslane'es undei which such statements were made, not misleading wilh re-jpeet to rhc period covered by this report.

Based on my Lnowfedge, the financial .statements, and other fina:ic i.if m'oniiation inrfudcd in ffiis report. fau(\ present in all maienil ie*-peels the linarieial cnn.1lnu.11. tcsult. 01 "peraiions .md e .1.- h U»n* 01 the registriini a< of and tor tin- pe:iods |-:cseni_L'd ir. this report

1, Francis J Shanmio. certify that

I have reviewed this quarterly report on Form 10-Q of Verizon Communications lnr ,
Rased on my knowledge, this report docs nol contain any untrue 1 laic mem of a matenal fact or omit to stale a nuicnal fact necessary lo make the sialernenis made in light ofthe circumstances under uhich such ^uiemenis were made, not misleading with respect to the penod covered by this report

* Based on my knowledge, the financial statements, and other fituiiciai lufoirrudon iiichufrd in (his report, fjtrls present in all inaiena! respecls the linaneial condition results ol operations and cash lb.us of lhe registrant ;u ol and lor lhe periods presented 1:1 tins report.

.iitamm,: ikselosun contiols and itl>I cxc'i financial reporting (as

The ie|.|i:rjnrs otlnr 1 cn ify ii-.:> otticer 1111; I an ;esponsihli for estahlislnn pteHeiiuie- fas dciiiied 111 llxchjiigc Acl Rules Ma ]f>(ciJiid I Nl-1 ;ie)I and dr.liricii u, r.xeh.iiu;.' Aei Hole- 11.1 -1 1 amf 1 >d■ I MD; im the -i-ir ,rii .md l;a

S bv othel, w:rhm

-d si.r:, disclo-,-.,:,- ch'.mIs .md pr.>Ci dines '.1. be designed urn relating l.> th. n gisiraiil unhiding its c on-olul.ited ii.ri.es partuulaiie duiini* the- periled in wbieh this report is

sul:.,ic|iancs is made km>< b.-,ng picpaied

(hi Designed suJi infe'ii.al corirn^- oi,-r t:i:nei.if r-p-ir.i.i: or ^ae-c'.f s.u fi .ulcrn.il e.-ntro; omi f.n.inei.i; reporting to he dk-signid under our supe iiimoii to proi i.le n .iM-n ihlc assurance 'iganfinit the reliability ol iinaneia! repoiliiii: and the piepaiat 1011 of Isiurie tal slaleiiienis 1i<i cucnial purposes in .u 1 urdaiiec «itli generally .111 rplcd aceouiiiing pen. iples.

.sine lommls r::t

■111.1I lepoiiuiL' (as

lhe registnun s othet 1 e-nifyiu^. oll'ieci arid I ate responsible for csLibli'-huig uiid 1 proceelurcs (js defined in Exchange Act Rules l3a-IS(e) and I5d-lj(,cj) and 111IC111.1I defined in F.xchaniji Act Rules ] la-1 it J') and I SI-1 S( |)1 1,,, il;e ,_t i;:si_r,,_ni ami lias e

(a) Dei igried such disc I.■■■.ore (intuits

nilrols and ptneedures m cm -ed se.el, dis. |sun: (uriir. :-. .md pro. cdme- 10 be designed under our snpeivisum:, to crisute ihal nu'erul infoitnalion rciatitig to the u.L.-isr:^iit uieluduig its 1 on-olidalcJ subsidiaries, is made known lo us by othcis within those entires pjitu iilaily ditriiig the pe nod in uhlch ihis icpotl is being prepared.

(ii) De-Mgneci sue/r ir:te-rrr.:( o.r:rrol ever ::runcrl rcpdiT/ng. or e.nrse.f sUi :i mrerrr.-.; enrro,' ou r .'irnnicii re-]iuriiig (u In designed under our si. per vision to pi ir- ide teasonanle assiuan. ■■ rcgardir,!: 1 he n li ibilils ol tin.incul reporting and ihe preparaiioii ol iiu.nie i.il si j;emciits l'-i estem.i: purposes 111 aceiudaii. e tsitii eencrjiiy .teeepted ac> ounuin: pun,, iples

I .net linaneial reporting that occurred during the or ie rt-jsonahly likels to r;i nenally afleel the

i and procedures and presented 111 this report oui ■oiTiliiie* as ot the end of ihe penod eo\ ered by this

fc) T\a)uxicd the effectiveness ol the rc-giMrani s disclosure

cdr.c lusifms about ilie cited ivcness ot the d'.scii.ojre 1 or.trols and pr. repent based on sueh evaluation, and

jiii-s b.-r.f ; diicc-tois (oi pi

(d) Disclosed 111 ilns report n:n change in the regisiraiu intenia! eou:i> regisifaru's most recent lueal quarter tli.n ha- m.ii.-iialK .ifieci.-.l ie_Si-_iiiani^,« internal e.u-.ti| osei fniiii.-i.il repo,tin;: and

11 ;e,.|.s:r.,ni s oihe: eertilyn:,- c.liieei am: : cjvr disch^cd b.-s.d c>n u :ir;.i.1eijl itportrilj' to the legi^lraiK - au.h.'.'ns .irnf rfn ^iiiK ,.,-i:imi,r\e perloinntij; ;ln equisalent tur:ctn.-:i' J

ii-nortiii!' which ue rr,isii-l.le hl.cls to .ilteel iru- :egi-.ti.'i

firianeial uilotinaiioii and

ccdures and piesenied ir. this icpoc. as of ihe end of the period eovete'i't by I

tc) llvaluatcd the effeetiveuess of the tegistiaiu's disclosure eontiol; and ; con el us ions about the etfeciivc ne« ot the diie losure control' and pioi c.l'.ti report based on such evaluation, anil

(d) Disclosed in this lepon an; change 111 the registrant's interna] con.ro! ovei financial reporting lhat oceurreu dunng the tegislrjiit's most recent I1sc.1l quarter that has rnaienally alleiti-d o; is rcumn.ibK likely lo materially allot the-tegistraiii's internal cmxIks) m-er financial reporting, and

.! I base disclosed based e rr.'rs ^rrJ (he Jciedl conrr.-rr

The- registrant s othci ecrtiiyir.g ottiie' firufieia) u p.-titrug. 10 the fi fislia.'!''» peilorr.ung ihe equivalent ttinrtiotis)

01 iiiii'i:,al (

(a| All Sig.111lie.1ui dcln icncies and ieprtuig scinch are reasonably i.i-fir.aiicial uifi.rmjlion and

Hate October 2K 2014

[>^ie Octobei 2S. 2014

■ ■Lowell C i\U I owe-11 t' NK-

i:l 1 raneis J ^!;j:n!i IrJncis 1 Miar-.-.n

EXHIBIT 32.1

EXHIBIT 32 2

c H iificai ion oi^: chief executive officer piuvsuant to section 9ut> of the sarbantts-oxi.ey act or 2002.

PURSUANT TO SECTION 1350 OF CHAPTER <>3 OF TITLE 18 OF THE UNITED STATES CODE

I, Lowell 0 Mi Adam. Chairman and Chief Executive Officer of Vcn/on Communications Ine (the Company), certify, ihal

the report of the Company on Form 10-0 fur the quarterly penod ending September 30. 2014 (the Report) hilly complies with ihe requirements of section 11(a) of the Sec unties Exchange Act of] 1*14 (the Exchange Act), and
the infiifiiurtioii contained in the Report fanly proenls, in a]] materia] iespec;s the financial condition and results of operations ofthe Company as ofthe dates and for the penods re fened to in the Report

Date October 28 2011 -s-'Lowell C McAdam

Lowell C.TTcAdam

Chairman ami Chiel F.xrcutu e Officer

A signed onii'nal of this writien staieineiii rcquiicd hy Section 'lUfj. oi mher document authenticating, acknowledging, or otherwise adopting lhe stiriiature that appeals m typed form withio the electrninc seismu of this wiiiien statement required by Section 90ti, has been provided io Vernon Communications Inc and will be retained by Venzon Communications Inc and furnished to lhe Secunlies and Exchange Commission ni its staff upon request

L ERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT To SECTION 906 OF THE SaRHaNI S-OXLEY ACT OF 2002. PURSUANT TO SECTION 1350 OF CHAPTER (.3 OF TITLE lit OF THE UNITED STATES CODE.

I, Francis J Shainmo, Executive Vice President and Chief Financial Officer of Vcn/on Communications Inc (the Company), certify that

(1) the report ofthe Company on Form 10-O. lor ihe quaneily period ending Sepiember 30. 2014 (ihc Reponj fully complies v. nh the lequiierneiits of .section 13(aj ot the Secunlies Exchange Act of 1934 (the Exchange Act), and

(?) lhe infonnation contained in the Report (airly presents :n all matenal icspcvu, the financial condition and ie suits of opeiatinn.s ol lhe Company as ol lhe dales and loi lhe penods rc Icncd !<; in the Report

Date October 2.S. 2014 /V Francis J Sh.nr.mn

Francis J Shammo Executive Vice Piesidcnt and Chief Financial Otlic ci

A signed onginal of this written statement requited by Sec tion 90(j, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this wnttcn statement requited by Section 900. has been provided lo \en,:on Communications hie and will be retained by Ven/on Communications Inc and l\iunshed to ihe Secunlies and Exchange Commission or its staff upon request

I.Mr 1,1 C»_Ul,»i>

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington. D C. ?0549

FORM 10-K

(Mark one)

LU ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31. 2013

D TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF IHE SECURITIFS EXCHANGE ACT OF 193-1 For trie transition penod Irom to

Commission file number 1-8606

Verizon Communications Inc.

(Eutt umi of raglibanl it ipaclflad In ib chsrtar)

Delaware 23-2259 B84

(Stale Of olhai jurisdiction (1 ^a S Ervploycr iee«iiti(.jlii)i. Ng )

140 West Street

New York, New York 10007

(Arttirr;- nt pnncfial i;jM'ruii»(' otdi.r-'.j \7_.p C«i>l

Registrant's telephone number, Including area code: (212) 395-1000 Securities registered pursuant to Section 12(b) of the Act

Name of each exchange

Titlo of each class on which registered Common Stock. $.10 par value New York Stock Exchange

The NASDAQ Global Select Market London Slock Exchange

Securities registered pursuant to Section 12(g) of the Acl

None

Indicate by check mark if the registrant is a wclUinown seasoned issuer, as defined in Rule 405 of the Secunlies Act.

Yes ^_No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Acl.

Yes No ✓

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 dunng the preceding 12 months (or for such shorter penod that the registrant was

required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ✓ No

indicate by check mark wheiber Ihe regis Irani has subnutted electrically and posted on its corporals Web sile, 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) dunng the preceding 12 months (or for such shorter penod that the registrant was required to submit and post

such files). Yes ^_No

Indicate by check mark if disclosure of delinquent filers pursuant to Hem 405 of Regulation S-K (fj220 40b ci this chapter)

is not contained herein, and will nol be'cbnliiined. lo the best n( registrant's knowledge, m definitive proxy ot inlnrmalion

stutemenls incorpoiated by reference ui Part HI ol this Form I.O^K o; any amendmen'.^this_Forrn 10_:K ,

Indicate by check mark wtictltcr the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a -smaller reporting company See the definitions of "large accelerated filer' 'accelerates filer' and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one)

Large accelerated filer s_ Smaller reporting company

Accelerated filer Non-accelerated (tier

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes No *_

At June 28, 2013, the aggregaic market value ot the registrants voting slock held by non-attiliatcs was approximately 1144.030,746.074

At February 24, 2014. 4.141,140 749 shares of the registrant's common stock were oulslanding, after denuding 101.733.491 shares held <n treasury.

Documents Incorporated By Reference. Portions ol ttie registrant's Annual Report to Shareowncrs foi the year ended December 31 2013 (Parts 1 and 11)

Table af Canieau

TABLE OF CONTENTS

ltn> Na r>>fr PART 1

Item 1. Humii»ss 2 Item IA Itisk F^eiors is Item Hi I'me^lsed Matl C.irrimniis 1K lt«m2 Properties 1* It.mT Legal Pr..... d.ngs D» (rem 4 JWinr.SarVd Disclosure* \9 PAH I 11

Iti ln S Marku fur Kip.isli ant's (.iiinmon E.piiis . K. lat. d Sunkhi.ld. r .Main is ami Issu. i Purihascs nt 20 Kquii) Securities

Item 6 Silrelid Financial Data 20 Item 7 alanaiyAirnl't Discussion and imlv.iii ufFij.an. rjl Cvndiri.iu :,,i Ji. iulls r»/ Djii-r .Mi->m 20 Item 7 \ Ouanluatne and Qualium e- Di^ l.isui i s At>oul Maikil Risk 20 Item H Fmani ial Stitt iiieuis and *iirppl< mi-nun D.it n 20 hem Changes in and DiMtgi erments with AetiHsntaiits mi u i i.uiiiin<: and Fiuaiiii.i[ IHsrhisun 20 hi-in "A ( onln.U anil Prim-flutes ? 1 fum VB Olhei liilnimatinii 21

P-xHTlll

Item 10 Dir i r tcs En cum c Urlneis and Cur par ile Coier n mcs 21 hem 11 EilcuIJm' Cuillpeiisali.in 23 ll< in 12 .Si i mill Own. i ship !( main It.n. ti.ial I >«inn and .Maum;. in. nl and K. land M.i. klndil. i .Matt, is 1\ Item 13 Ceriaii, Relationships and Ht l Hid 1 iansa. Hons and l)u»■« fur Jr.depi nd.ix e .'4 Hun la Priixiri.il Adrtuiiliug I ns jnd Utilises 2-i

P VI* "1 D

Ium)> Exhibits Financial M iMn.nt V h. ilul. s 24

Ccrdflcadou

i i

I (icnrral

2 12-395-1(1001

Vi-iizon Commniiu .itinns Inc (Wriznn. or the Company) is a holding company thai, acting through tl> subsidiaries is one nf tho ucitIJ's leading, providers ol comn-,unia'.ions. information an 6 tnierummcnl piouutls ami services lo cnn.sumers.businesses and governmental agencies with a ptesencc in over 150 couiitnc-s arnuni! ihe world Formerly known as Dell Ailanlic Corporation vie \u-'C incorporated in I9K3 under the laws of Ihe Slate of Delaware Wc began doing business as Venzon on lunc st) 2000 following our merger with CTIX orporanon We have a highly diverse work force of approx nnaicly 176,80(1 employees

We have Iwn reportable segments. Wireless a ciijiani/.e by pioducts and services

Oui principal ctecum c olliccs arc h» aied at 1-10 West Sireei. New York. New Yoik 10007 ftclepho

:« mi lu.le wiiclcsi

and data s

s' and equipment ited States

sales which aie ptovided to

is the U

1 Wireline, which we oper.ne ar.d manage as strategic business segments and

is priidin.ts and s i.bu

lint following poili.j Over, lew" <

. nrporjleil into tins report

to the consolidated financial sltilcr

Wireline s voice, dm and video rnmmunicaltoris products and enhanced services include broadband video and data, corporate networking solutions, daia centei and cloud sere ices, security and managed network services and local and lung distance voire services We provide these products and services io consumers m the United States, js wcl! as in camera, busmesses and government customers both in the United Sidles arid in nvc-r 1 SU .itlier (outlines around the ti«iltl

ot ihc 2'ii 1 VeriZnn Annual Report to Shar paijes 10 through 12 and.

on pages 1 7 through 22 a

'Segmeni Results ol'Oj e.5 through (.7

Background

Our Wiiclcss segment is pnmanly comprised of Cellco Partnership doing business as Verizon Wireless Cellco Partnership is a jiniji \entuie formed in April 2110(1 liv the combination ofthe US wireless operations and interests of Venzon arid Vodafone Group Pk (Vodaloric! As of IX-ccnibcr 31, 20M, Venzon owned a contiolling *\'m inteiest in Venzon Wiiclcss and Vodafone owned ihc remain 1115 45% Venzon Win; less piovidcs wireless communication services across one ofthe most extensile wireless network 1 in The United States and has the largest fourth-generation (4G) Long-Term Evolution (LTE) technology and tbird-Ijcneralion (3G) Kvolution - Data Optimized (EV-IX'J) networks of any U S wireless service provider

On Sepieinbcr 2. 2013. Venzon entered mio a stock purchase agreement wilh Vodafone and Vodafone 4 Limited, pursuant 10 which Venzon agreed to acqune Vodafone s indued 45V. inicicst in Cellco Partnership d/b/a Verizon Wireless for aggregate consideration of approximately S I 30 billion (the Wireless 'I r.msaclmnj Ut completed the transaction on February 21. 2014 and acquired 100% ownership of Venzon Wireless The consideration paid wj* pnmanly comprised of cash and Venzon common Stock

Venzon Wireless 11 the largest wireless service provider in the United Slatca ai measured by retail connection* and revenue Al December 31, 2013, Venzon Wireless had 102 S million retail connections and 2013 revenues uf approximately SHI 0 billion, representing approximately 67% of Venzon "s aggregate revenues

We have substantially completed the deployment nf our 4G LTF. network Our 4G LTE network is available to 97% of the US population in more lhan SOO markets covenng approximately 305 million people, including ihnne in areas served by our LTE in Rural Amenca partners Under this program, wc arc working with wireless camcn in rural area* to collaboratively build and operate a 4G LTE network using each earner's network assets and our core 40 LTE equipment and 700 MHz C-Block spectrum Our 4G LTE network prut ides higher data throughput performance for data service* al a lower coil compared 10 that provided via 3G networks

Titlral Cnicms - V '

Wireless Service and Product Offerings

Our wireless services are available 10 our customers icceiving service under the Verizon Wireless brand In addition, obtain wireless products and services that operate on out nerwork from reseller! ihal purchase, network access from wholesale basis

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Wc Oiler our wireless scrv ices on a postpaid and prepaid basis Retail (non-wholesale) postpaid accounts represent retail Ci under contract w ith Verizon Wircle; s that arc dirrttly served and managed by Vcn/on Wirelei.s and use 1;; branded services Our postpaid account plan* include More Everything ' plans, single connection plans, [dans tailored lo lhe needs ol oui corporate customers, a.s well as legacy single connection plans and family plans that wc no longer offer to new accounts \ single account nuy receive monthly wireless sctr-ices tot a variety lit connected devices Postpaid dinncv.tions represent individual lines ot .seivicc: Toi which a customer is hilled in advance a monthly access charge 111 leti.m foi * monthly network service allowance laccess service revenue's) and usage bej ond ihc allowance rs hilled in jrrcar. (usage .service rev eriues) Appros imateiv 94*,, of our retail connections received our wireless services on a postpaid hasis as of December 21 2011 Oui prepaid service enables individuals lo obtain wireless serv ices v. iihoul a long-term contract or credit vcnlicjucm hy paying tor all services 111 advance

Our wireless plans oiler 1 anous packages of services thai allow customers, regardless ol the dev ice 10 select the plan th.t best matches their network usage patterns On February 13 2014, wc introduced our More Everything plans which icplaced oui Shaic Every thing * plans and provide more value to oui customed These plans, whn-h aie available to boili new and existing postpaid customers, featuio domestic unlimited voice minutes, unlimited domestic and international text video and picture' messaging, cloud storage and ;i single data allowance that can be shared among up 10 10 devices connected 10 lhe Venzon Wireless net vi 01k Customers with Venzon Edge, w hie Ii provides a device payment plan option, also will receive discounted monthly access Ices on More Everything plans For an additional monthly access fee. our customers have the option ol sharing long distance and mammy minutes among their devices foi calls from ihe United Slates 10 and calls while within Canada and Mexico The More Everything plans also include the Mobile llotspot service on .1111 smarlplmncs al no additional chatgc The Mobile lloispnt service allows a customer In use nui uctwoik to create a Wi-Fi net wink ihal can be used by Wi-Fi enabh-J devices Vcn/.m W. id ess also oll'iis shared data plans fen business, with the Moie Everything plans for Small Business and lhe Nationwide Business Data Packages and Plans A.s nf December 31, 201 3, Share Everything accounts represented appioximately 46% of our retail postpaid accounts compared to appioximately 23% as of December 3 1. 2(112

We offer a wide variety of wireless servicei; including Internet access, via out broad range of devices Out cusiomeis' c an access the Internet on all of our smartphones. a.s well as our basic phones that include HTML web-browsing capahilnj We aNu offer sere ice ihal enables our customers 10 access the Internet wirelesslj al broadband speeds on notebook compuieis and tablets thai either have embedded 40 LTE or 3G EV-DO modules, or that arc used in conjunction with separate devices thai enable access 10 this service, such as imartpbones and USB modems ai well aa Jctpack* ^ll*and other dedicated devices that provide a mobile Wi-Fi connection These devices can be added 10 the customer's. More Everything plan tor an additional monlhly fee, nr the customer can obtain a separate plan for the device it vanous pnee points, depending upon both the size of lhe data allowance purchased and ihe device covered by the plan

In addition, we olfer messaging services, which enahlc our cusiomeis 10 send and receive test, picture and video messages Out customers can access multimedia oftenngs. mosilj provided by third panics, consmmg nf applications providing music, video, gaming, news and other content, while our business-focused olTcnngs, which are designed to increase productivity, include solutions that enable customers to access the Internet and their corporate intranets, as well ai products tbat enable wireless e-mail across our diverse portfolio of wireless devices. Our location-based services provide our customers wilh directions lo their destination and enable our business customers to locate, monitor anj communicate with their mobile field workers Our global data services allow our customers to access data services on our Global Ready Phones from hundreds of international destinations and lo access the Internet at such destinations with laptops that arc either Global Ready, tethered lo a Global Ready Phone, or arc used in conjunction with other Global Ready devices, such as certain USB modems or Jetpacts In addition, our customers have access 10 more Lhan one million applications and services developed and disinbutcd by third panics, such as those offered via Google Play, accessible on our smart phones running 00 the Google, Inc (Google) Android operating system, those offered via tbe Apple, Inc (Apple) iTunes store, accessible through smart phones and tablet* running on the Apple 1OS operating system, lb use offered by Microsoft Inc. (Microsoft), via Microsoft's Windows Phone OS operating system and those offered by Black Berry Limited (Black Berry), through its BlieiBerry App World webstort

Our customers can make and receive calls on their home phone handsets using our wireless netwoik through our Home Phone

Connect service or Venzon 4G LTb Broadband Rontcr with Voice service Wc also offer HomcFusion * Broadband, a high-speed In (em ft service that provides customers with Internet connections in their homes using our 4G LTE network.

In addition, we provide network access and. in some cases, enhanced value added services to support telemetry-type applications, which are characterized b> machine-to -machine (M2M) wireless connections Our M2M services suppon devices that arc used by a vafidy of vertical market segments including healthcare, education manufaciunng. utilities, distnbuuon and consumer products For example, companies purchase network access and, in .some cases, enhanced services from us in order lo connect with and monitor equipment, such as medical dev ices used to monitor paiiems, fleet management devices used 10 monitor companv operated vehicles and utilily monitoring devices used for small gnd applications Othei companies purchase nt mini access and in some cases enhanced -eivices hoiri us to suppml dev ices thai me included in * sc-rvie e rlu i . in luiu. sell t<> end users Wc also support :elern;;iics seniles lor \0111r 1,1 ihe largest auiinmitive ir.auula.Hirers We opee: llu' .onsurnei use nl M2M wireiess connections such as home muinionng, health iniinilonng incrrv manageuienr and ui:liiic< management Mill lncicas. as coriMimcrs integrate these ii. v in > nno il] 11 mobile liiesiv, U

rs, including smart phones, tablets and other Internet access devices as well as basic

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Wc offer several catcgones of wireless devi phones

Smitriphioncs Our device I inc-up includes an array of smart phone) ihal are enabled to utilize our 4G LTE and'or 30 F.V-DOhifjh-.speed data irn tees and nin on vanous operating platforms, such as Apple lOS Google Andioid. BlackMcrry OS and Windows Ph.ine US In Augusl 2(11 1 wv l.nni.hed liie neve V.11/.111 Edge device payillcrl! plan oplioii which now allows c usl.nncis lo Hade ill then pt-.otic fen a new phsmc; iTu-i .1 mini mum of ihmy d.cvs. <Aib}<;ct '.11 eeisaiic c otidiiionv

[ableit uiui t)th,; Internet I)< 1 nv. We olTei j vjnrty of 40 LIE and/m "Wi LV-DI >-eiuhled :.ihh-!* lio;n multiple manufac tiur.is that inn pnmaiily on cilhci the Apple 1OS. dogle Android or Mieiosofl Windows 1.penning system In 201 ?. vu launched the

Flhpsis 7 tahlel, vvhiJi is available exclusively trum Veii7.ni Win I. _:._s The tabids eev orici also pc 1 oui .-usi.oneis 1.1 tf;c

lnieiiiel via a Wi-Fi coiinectiori In adili'.i.oi, "e oiler dedicated devices ihal proi ide a mobile Wi-I 1 Jti 1.11". and.'m 30 L\'-I.K") connection, which we refer 10 as Jciptu k*. capable of eonnccnng multiple Wi-Fi i n.ihlcd dei n cs in ihe Internet H one nme Ou: cu.ioiuei.s can aLsn access lhe Internet wnelessly at hn.adliand speed j on Ihen comiuiters v ,j data cards. IJSH inodeir^ or through ihe use ofcerlain laptop compuiers and r.eihooks with embedded 4(.; \;\\-_ and 3(i LV-IXJ Mubilc broadband mociuic. olfeied by ongiri.il equipmcnl iniiul'aiHirer-, (Dl-.Msl Diiriiii; 2fU3 we Contiiiuc-d lo expenriicr str,,_rig Mihccriher dc:n-rni tor lablet- and cIhci Interne! devices and llic pelie-mage of 01:1 rel^il postpaid conrieciioii basr :ipresented b\ mrineclien' lo liieie dcvi.cs continued 10 incieasc

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We puich.ise w-ncless devices and ai cessorics liniii number ol rr.jiiu!ac;urrrs. vc ilh the sahstaniial Irom Apple Moiorola Mnbilnv. Samsung LO Flecir.inics BlackBerry HIC Hitachi and O'a.diiy ' puj chase Pan lech drv nes and acccssonc.^j

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A key component of all wireless devices is lhe chip: our 4C LTF.-cnahlcd devices .tie maiiufailtiied by manufacture- and supply ol our CDMA-IXRFl am Incorporated (Qu.ilcomni) Wi also sell pboms 1h.1t undei license fienn (^ualconim In addition, ilierc j various electronic component ir.anulaciureis that we

■1 winch cnnljiiis ihe intelligence olthedeviee I he l.TL clnpscts used m annus coitipjiiies each using its own 4<J LU: duplet 'cchnology Foi ihe l:"V-DO chipsets most .i! our wneless lievne suppliers re'lv on Quakoiiin: nclude CDMA-1 >.K TT and l".\ -IX> chipsets ni.iriula. mr. if bv VIA Telecom c a. number of olher conipcmenls cuinmon lo wirele%» phunes pun nicd by In not deal with dnrcily

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Strategic Initiatives

We- have undertaken several mitialKes to develop innovative- device- daia sen:... ar.d appln a.|.:i^ _Ji.l,l,i_lneiw.uks. including ihe lollowir.g

■ Mobile Video Video runlcril is pmircled lo accmmi loi a maji.irtv ol mobile neiwoik liillie by 201.=. Wc henev video cor.sumptior. using mobile devices provides us with .111 oppunurniv lo: rcveu.ie ;i.n\ih We "is r 111.1 Jc concilling, techri.doj'ies ar.d -;r-. ices 1:;-olvi:-,,; ecrileni delneiy netwi-ik.v. video ^::e:.m':,: .ir': :ei. led I'lisi.r: leveugc rieice.inier-.I ui...ih )s (Jul 4*". L I I." ::t n...:k c-naliies u- to rn.-va:d^ a uniii;-.! ■01 ■lioief. tl.at p .r advantage of ilns growih oppoituuitv loi tsample- wc arc using Miilintiedi.i Broadrasi N'.ul:ic's| ^ciMc'e develop our LT1: Multicast serv ice Tins srivice has the potential to enhance nut network t-rtieiencv and pun nlc with access 10 |j\r streaming v ulro 1 (jni;nt « ith v uiiialK no bullcnn)! zegaidh -.s ol the nurni'c r ol de v ;co using

- ,l/».Ai/i'C.iifi»Wf<i- fiierv ilav l.uge- i d'arncs f iransai tu.r'.s .11. .am, <l acioss c:r nc lw.uk As.,iesi;li w, belie po^itioi-.c-il ici inlhlcnce and henet-.i tri-tri ihc i.ijnd j-i.i-.tli n| the nrn'-iic ei'mrneiei niuk.'t 1l1.1t 1^ bung di.nu ac!c antes such a- iIk pio 11 feialnms of smailphoiu > and labkis l-is. a inobih ccnimcicc pi at form re pics, rits tin 1111: iiitti.nives to addicss this .ippor.unity l.jirnched m November 2012 as a joint ceiiiuTf with AT.tl Ine t. Mr-rnle USA. Inc (1-Mohiic USA). Isis cnanles cust.Mncis 10 pay lor poiru.^f.0!.- purchases sia their mohilc pirn l:e|J c-inrmiiii. atim.s teehu<>l. = L-v rathei than ravir.g with ,.^l. or a in-.ln ear.i Knwu .is the IM'- M.-l-ne W_;,i._f

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//iihm-,i:i(.ii . ,-»ier\ We operate irinos-jtion ccnlcisin Wait ham Mjss.i.bnsciis and Ssn f r.incisco We bcheir 011 hs caialv sis foi ihc dev elop:r.?ni of non-(iJ.!:lion.il dev ices sc^ ires and -lpphc .11 ion* tli.it tat C S■ ■ i 1 aits .-iiiiagc' . n.-iu-ork 1 lie 1 en rets '.crk wir(; nuns cl our st:.I;-|;i< partners r.p:. s.-itnig Vonn.i'. iri.liiN.rii's to l.i |p i;n i;i

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We have llic laigosl JO LIE and 30 I:\ -HO network S ol anv service piovidei in llic Umicil State*, wilh licensed anil opeiational _lflu-i:ifi' ill all "I the 100 most populous-!.) S metropolitan arc-as As ol January 21. 2014,-oui-4G I.TI: network covers approximately 305 million people in lhe US , including ilmse in areas served hy out I.TI: in Rural Amenca piogiam

W_e strive io provide our customers with the highest network reliability I'm then wireless services We design and dcplu) nut network in an elTicienl mannci that we believe maximizes ihe number of successful data sessions and completions ol large file downloads and uploads while de In eimg on oui advertised throughput speeds and thai maximizes ihe number of calls that am connected on the fint attempt and completed without being dropped We plan to continue to expand and upgude our netwuik pnmanly to increase capacity, as well as explore strategic opportunities to expand our national network coverage thiough selective acquisitions of wireless operations and spectrum licenses

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In addition to oui own neiwurk coverage we have roaming .igteements with a number ol wireless sciv ice pre" idei.s to enable our cusiomeis to receive wireless service in nearly all olher areas in the United Slates where wireless serv ice is available We also offer a vanety nf international wneless voice and daia services to oui customers through roaming arrangements with wireless sen ice piovideis outside ol lhe United Slates Certain of oui loaming agreements aie te-imiiiable at will by eilhei party upon several months' nolle e. however we do nol believe that lhe termination of any of these ai-will agreements would have a material adve-ise effect on our business

Technology

Our primary netwoik technology platlonr.s ate 4G LTE and 30 Code Division Multiple Access (CDMA) 40 LTE ptnvjdes bighei data throughput periomiancc for data services at a lower cost compared lo those offered by 3d technologies Wc continue working lo expand 4G LTE coverage be)ond our netwoik foolpnm through our LTE in Ruial America Program We timenlly have 20 commuted program participants lhai have lhe potential to piovide 4G LTE coverage to approximately three million people under lhe program and lo dale, sixteen participants h.ic e commenced opertitions mi such neiwoiks

In 2012. we began testing our mobile Voice over Internet protocol (VoIP) netwoik known as Voice over LTE (VnLTF.) This technology, which is expected io he used in addition to the ctinent voice Icchnnlngv is anticipated to launch commercially in 2014

Our 3G CDMA network is based on spread -spec tram digital ladio technology CDMA-IXRTT technology is deployed in nearly all of lhe cell sites in our 30 CDMA network In addition. FV-DO a 3G packet based irchnology intended pnrnur.lv, foi highspeed daia transmission, is deployed in substantially all ol ihe cell sites in oui 30 CDMA network

Our network includes vanous elements of redundancy designed io enhance the reliability ol mir service Power and backhaul transport facilities can often become a network's vulnerability Consequently, wc have battery backup ai every, switch and every cell sue in our network We also utilize backup generators ai a majority of oui cell sues and ai every switch location In addition wc hai c a licet of portable backup generators lhai can be deployed io cell Silos il needed Wc further enhance reliability by using a fully redundant bjckbnne Miiltipiolncol Label Switching netwoik in all critical loci'mri*

The spr-cmim licenses we hold can be used foi mobile wiieless voice and daia communu alums servjers We have licenses to piovide these wireless services on portions oi the K00 MHz band, also known as cellular .spectrum, the 1 KOtMWO MHz band, also known at Personal Communication Services (PCS) specinim. and the 1700 and 2100 MHz hand, also known as Advanced Wireless Services (AWS) spectrum, in areas that collectively, cnvei nearly all ofthe population ofthe United Stales In addition wc hold licenses for pontons ofthe 700 MHz upper C band, including ten licenses thai can, together, he used in provide wiiclcss service cnvciage to the entire United States and the Gulf of Mexico

Since 2012 we have entered mio several speclrum transactions including

In 2012. Venzon Wireless acquired AWS spectrum in separate transactions with SpectruinCo. LLC and Cox TM1 Wireless. LLC for which U paid an aggregate of S3 9 billion at ihc time of ihe closings Dunng 201 2, Ven/on Wireless also completed license purchase and exchange Iran sari ions with Leap Wireless. Savary Island Wiiclcss. which is maioniy owned by Leap Wireless, and a subsidiary ol'T-Mobile USA As a tesuli of these transactions, Venzon Wireless received an aggregate S2 6 billion of AWS and PCS licenses al fan value and iransfencd certain AWS licenses to I-Mobile USA and a 700 megahertz (MHz) lower A block license to Leap Wireless
Dunng the first quarter of 2013, we completed license exchange transactions with T-Mobile License LLC and Cnckct License Company. LLC, a subsidiary of Leap Wireless, to exchange certain AWS licenses These non-cash exchanges include a number of intra-maxket swaps that wc expect will enable Venzon Wireless to mike more efficient use ofthe AWS band As a result of these exchanges, vie received an aggregate SO S billion of AWS licenses at fair value

■ Dunng lhe third quarter of 2011, aflcr receiving the required regulatory approvals, Verizon Wireless sold 39 lower 700 MHz B block spectrum licenses to AT&T in exchange for a payment of $ 1 9 billion and the transfer by AT&T to Venzon Wireless of AWS (10 MHz) licenses in certain markets in the western United States Venzon Wireless also sold certain lowei 700 MHz H block spectrum licenses to an investment firm for a payment of SO 2 billion As a result, we received SO 5 billion of AWS licenses at fair value

Dunng the fourth quarter of 2013, wc entered into license exchange agreements with T-Mobilc USA to exchange ccnain AWS and PCS licenses. These non-cash exchanges, which are subject to approval by the Federal Communications Commission (FCC)

and other customary closing condition), are expected lo close in the first half of 2014 Tlie exchange includes a number of swaps that wc expect will result in more efficient use ot the AWS and PCS bands

Table ml Canieati

Subsequent to the transaction with T-Mobilc USA in the fourth quarter uf 2013, on January 6, 2014, we announced two agreements with T-Mobile USA with respect to our remaining 700 Mllz A block speclrum licenses Under one agreement, we will sell certain of these licenses to T-Mobile USA in exchange for cash consideration of approximately S2 4 billion, and under the second agreement wc will exchange the remainder of these licenses for AWS and PCS spectrum licenses These transactions arc subject to the approval ofthe FCC as well as other customary closing conditions These transactions arc expected to close tn the cuddle of20l4

We anticipate wc will need additional speclrum to meet future demand This increasing demand is hring dm en by fmivih in tiiMomri connfcnons and usage of wiiclcss broadband snvires which use more bandwidth and require ever lister rates ol speed in siay competitive We can meet spectrum needs by arqiiinng license* or leasing spectrum Imm other licensees, in bv acquiring now spec mini It. enses from the i'CC if.ind when oflcred hy the FCC in future spc'ctiUJii auction* Although the- av a liability ol new spec tnnn loi commercial wireless sen ices and Ihc pr-ssibh- dar.s ol leiiuic I CC spectrum am Hum aie uncertain .n rhrs mm., ihe FCC and ihc ennent Picsidenujl Adimnisliatiou have been seeking ihc iclca-e cd additional ir.ob.le use spectrum lhe I'CC is expected to .undue; an auction lot AWS-3 spec [nun in late 201 ■! In addition. Conine ss has adopted h gtslat inn that pros ides :.>i Ihe csiahlishmeni ol a national public safety nrivnik and lhe reallocation am; auction, thro.igh the use of volum.iiy incentive audioes by 2i»22 of pnr;i"iis nl ihe existing bi.vule^s; spec-.r.nn The imcniivc .ni-.-ii-.r; related ;.■ 'he oi*0 MHz band is c xpecicd io take place m riiid-2015 although the specific timing of the AWS-3 MIO Mil? and othei aiicinnis wiil be dcientuncd bv future regulatory proceedings

Since we and .iimpcting wireless scrvnv jnovidcrs hav expcNciicLel sp, i.ir.mi sli.niigis ir. certain market* .nut innv hav; -pcclmin »uipluses in others, we have at limes exchanged spcclr.-rn ]icc:i*es w it:i el her ;ci -. ice prm icier* llnn-.igli secondary market swap transactions We expe. t to cunt nine fo pursue snruLii opportunities to lrade spe, mini 11 r enses in o:dc r if ineei e. nam of <>in capacity and expansion needs in ihe fiitine In othei cases Vcn/on Wireless h.is cnteied nun inii.i-mjrkei spectiinii swaps designed lo increase lhe amount nl contiguous speeliuin wnhin Iiequeiiiy bands in a spec, lit rn.nkel ('oiii-punus spr.-tiiiiii nilpnives netwoik peifminame and efficieiuy ITiese swaps as well as anv spr. ticm pm.h.nes ate 'uh.ee: to obtaining governmental nppioval* for i be Uanslcr of spectrum licences in each msi.nicc

Network Equipment and Builrf-oul

Ale-alel-S.Uceii: and iLiiesson are eiinciiily our pnmary nefaoik veiid.n* fo: oui I. I I. m iwoik deplov men;* for nia.ie- file-, a* well a* small cells Our primary CDMA cell sue equipment inlrtistrueturc i sudors are Alc.itel-l ucenr winch provides ruoic lhan r.al! cd

our CDMA cell sue equipment. »nd Nokia Siemens Networks iNSN) and tin i wbn h '.ogelhci piovide nearls all u! our

remaining cell sile ec]iiiprneiit W_t also lely on Alcaicl-I,nceiil, NSN" and Fiussori ;'■ n siiitchm.: c-qiiipinrni

As we con;nine to build an:: upgrade our existing netwoik. we mil*! complete a v .met; cl *iep'. in. ludinj: scvur.ng r.i-h:* in a

laigC riinnbci i;l .sites and obtaining zoning and other gin Cninirrila] appi.ivals l"r niacin site*, small cells in-building -ystem* .md antennas anil related ladio equipment that comprise distributed antenna ss. stems Vs _r utilize n.urr *:tr man age men! firms sut h as Clown Castle International Corp and Amcriean Ttnvei l '.iipi-iat:cm. a* levels ci manager* of a po:'.in i.f ,un e > i*lin;: luiei sile* tipori which oui upcrations depend

Mai kcting and Distribution

Our rr.jiketin;; strategy is tticu<c"d on olli-ring solutions ljilorcd t.j the needs t>: our v .irioii* eir-Suim : nijr:-.;: g.rcnips prorTVt.its

■ iur brand. Id ci.ig.ing nui exi-.nsnc disinhutien netwoik. and ;<wU :ri .isc'iitr .«u: ; ;od.iei- i.n.i *crvic*' ^ lug.- l-.n-.r*; and

gov eminent cusiomeis with Venzon"* Wiclinc businevs onus t.'iiiiiigl; Vcn/.m l.nicrpnsc .loiutiuns a *alcs and mtirketmg

oig.ini/alion that eiicompasse-s all ol Verizon's solutions lo: nudum) jtid large business and g.ncninnn! ciisi.Tiiei* g-obalK Uui

marketing pi: icludes a cnoidinale'ci program of lelei i*ion punt udio ouidsmi sigiug; Inlerr.ei and poirr...il-sale media

induce and alteniatii c disinbulion e haiinels m v:der to iiurcMsc ciisio.risT g:nw.h w|-.;!e ledu; ng _Lu*H'iiici a.-;|'.!isil.r<ri cost.

Corrip.ui>-operated Sloics arc j core cOinponeul ol on: disTnbuinin Mralcgy ("».ir dnect cfianrn I which ir.r ludcs our Inisniess.ici.

husnie-s, sales opciaiionsarid *vs'.cnis nri-ani/almri. is locuscd on si.ppr.r-.mg lhe cmelcss corri:iiunifatio::.s ncceK >: ri.iiM.mc:* and

local, re-j'iuri.il and naliorial hv.s.ncss cus!.im;is In .uid-.t ion we have tc L'lii.i rL el .n ' tie: lor.,- ncli. .,l;il I I.aidln,' ni. .mn.-g

calls hi m eiislorners and Wv oiler lully^lliioiiial.d _kr:d ro end web-b isc-d c! w.iehss .\vm.s a.ee-.sorie, I i.ivi, ;.::.:]>

In November 201.1 vec launched on: fn*-: Ven/On I.Vstniation SI on ii Mall America in liloonungiiin Mi:ii:e*ina Ihe store l.vus.-s on tin- rn-b.le lite sly k and h ig hi igi-.rs .he ruariv v a i s , nnsoru'r.* . an il*. wii.lt ** ie. liimluj-s i.-. rh. :r .L.ilv In, s 1 l 't.'ri

"ledesignc-if locations showcase ihc same mobile lifestyle- /ones as 1 >ic Vcn/on Destination »turc but on a airuller jljIc IJuniif ihc iic.xt few yeais. we plan lo open additional destination stoics in high traffic locations across lhe country In addition, our online -We'and Gadgets & Gear "iinnal havc~alsci been Tedeji^ned in iMnei a consistent shopping expenence tot customer across browsers and mobile platforms

Our indirect channel includes agents that sell our postpaid and prepaid wireless products and sen ices at retail locations throughout the United States, as well as through the Internet The majority of these agents sell both our postpaid and prepaid products and services, and do so under exclusive selling arrangement wiili us We also utilize htgh-pjollle, national retailers, such as Best Buy, Wal-Mart. RadioShack and Target to sell our postpaid ar.d prepaid wireless products and sen ices Stotes such as Dollar General and vanous drugstore rhains sell our prepaid products and services We have also entered into agenty agreements wilh a number of broadband, video and » oilc service providers through winch our piod lists and services aie sold on a stand-alone bans oi bundled with then services

1ible«l Curiums / . ■ ■ * ."' Competition

We operate in a highly competitive industry We compete against oilier national wireless service providers, including AT&T. Sprint Corporation and T-Mobilc USA, as well as various regional wireless service providers' We also compete for retail activations wilh resellers thai buy. hulk wholesale service from fjcili'ics-bascd wireless service prouder* lor resale, including those that buy finm us Wc expect competition io intensify as a result ol" continuing increases in wireless market penetration levels, network investment lhe development and deployment of new technologies lhe introduction of new products and sen icc-s new market entrants, the availability of additional spectrum, both licensed and unlicensed, and regulatory changes Competition may also increase as smaller, .stand-alone wneless service piovideis im ige or iransfei licenses to Digei. better capitalized wireless seivue providers

The wireless industry also faces competition tSorn other communications and technology companies seeking to incte.'ise then brand recognition and capture customer revenue wilh respect 10 the provision ol wneles* products and services l^:oi example Microsoft, Google, Apple and others are n lie ring alternative- means for making wireless voice calls that, in tcnain cases can he used in lieu nl the wireless piovidei's voice service

We believe that the following arc the mcil impnna.ni competitive factors in our industry

■ Netuotk letiahihty eiip.icitv ond itiveioge We believe ihal a wireless network thai consistently provides high quality and reliable- seix ice is a key difTcicniiatoi in the U S market and a din ei of customer satisfaction Lowei prices, iinprnv ed ssix ice quality and new wireless sen¹ ire nifenngs, which in many tales include video content have led to increased customer usage of wirclcsSservices. winch, in Inm. puis pressure on network capacity In order to compete effectively, wireless srivicc providers musl keep pace wiih netwoik capacity needs and oiler highly reliable national coverage through then networks We believe thai our 40 LTE network wilt help us to keep pace with network capacnv requirements and meet customer demand for bir>hcr

Pricing Service and equipment pricing play an important role in llic wireless competitive landscape As the demand lor wireless serv ices continues to grow, wireless service providers aie oflenr.g scn'icc plans thai include unlimited voice minutes and to. 1 messages and a specifit amount ol dat.i access in v.nving megabyte or gi^abv k- sizi s ut. in nunc cases unlimited daia usage In addition, certain wireless service piuv idcis aie :il.-:u ottering minuies-shanng plans, laigcr hundles of inc luded minutes with no miming oi long distance charges, features that enable customers to place and receive calls bom a jroup ol" self-designated US phone numbers (including landltnc numbeis) at no additional charge, and both prepaid and postpaid plans oflcnng unlimited voice and daia usage Wireless service providers aie also oflenng pnre plans that decouple' service pnt trig finm cquipmcni pricing and blur lhe traditional boundary between prepaid and postpaid plans hi addition, some wireless service providers are offering a credit lo new customers to reimburse early leriTun.ilion fees paid to their former wildest sen ice provider, subject io certain limitations

We seek to compete in this area by oflcnng our customers price plans lor our services, as well as equipment nlfcrs, that ihey will regard as the best available value for the pnee - Ciisiomer service Wt believe that high-quality customei service is a key factor in retiming customer; mil ait tiding new customers, including those of other wireless providers Om customer service, retention nnd satisfaction programs are based on providing customers with convenient and easy-to-use products and services in order lo promoic long-lcnn iclationships and minimize chum Our competitors also recognize the importance nf customer service and arc also locused on iinprnv nig in ihis

Product and sen ice drx-elopment As wireless technologies develop and wireless broadband networks proliferate, continued customer and revenue growth will be increasingly dependent on the development of new and enhanced dau products and services Wc continue to pursue (he development and rapid deployment of new and innovative wireless products and services both independently and in collaboration with application service providers We also collaborate with vanous device man ufactu rets in the development of distinctive smartpboncs and other wireless devices that cin access the growing array of data applications and content available over the Internet Wc continue to fncus on increasing smartphonc penetration throughout our customer base

Sitle-i and distribution. Key to achieving sales success in the wireless industry is the reach and quality of sales channels and distribution points We believe thai attaining the optimal combination of varying distnhution channels is important to achieving industry-lea ding profitability, as measured by operating income Wc endeavor to increase sales through our company-operated stores, outside sales teams and telemarketing and web-bused sales and fulfillment capabilities, as well as through our extensive indirect distribution network of retail outlets and prepaid replenishment locations and net book and notebook OEMs In addition, we sell network access to both traditional resellers, which resell network services to their end-

u»e,n, and to xanoui companies to enable wtrekss iriinnivmiciUons fot theu M2M dcvw.es or for their provision of telematics services.

Capital lescurtes In order to expand the capacity and coverage of their networks and introduce new products and sen'ices, wireless service providers require significant capital resources. Wc generate significant cash flow from operations, as do some of our competitors.

Our success will depend on out ability to anticipate and respond lo various factors affecting Ihe wireless industry, including the factors deftenbed above, as well as new- technologies, new business models changes in customer preferences, regulatory changes, demographic trends, economic conditions and pnemg strategics of l ompctnois

Table *f Canlcatt

| Wireline j Background

Our Wireline segment provides voice, data and video communications products and enhanced services including broadband video and data, cuipoialc networking solutions, data center and cloud sen ices security and managed network .sen ices and local and long distance voice services We provide these products and services lo consumers in the United Stales as well as lo emu is businesses and gov eminent custnineis both in lhe United **tjics and in over lr" oilier countries around ihc w,-,_r|d In 2015. Wujliiic revenues weic S^¹ 2 bliiion representing ppro.xim.iic-ly i oi Verizon * aggrejMlc revenue s

Wireline Service and Product Offerings |

We oigaiii/e our service and protlin 1 nlhnings by tin- pnm.ny customers ■iige'e.l by these ollriiugs - m.i.ss maikel* global enterprise and global wholesale

hi 2012, \ enzoii iicquiied Hl.'t dILS 1 elem.itif s Inc (lll.'OI ICS 1 eleiuat't .; i he jiiiuisiin.ii b.is .ice eleiaied <.<ir alnlitv i hnrii' more le'leniatics offenngs 10 maikci fin exiling and ikw castomets' Iocs* olieiings tiieludc' olii siiiic ol real-iniie vehicle i oiiiimiriicalions services and applications vvhnh siinncet at.loiiiohiles with conlciil applications and serines Wi provide services to new vehicles in the limlcti States and in 21)13, ivc esiended out aerecineru cvnli imi, .mio rr.ariulaclin^is to provide service* for new vehicles in China and in Ijurope v;,._t. Sij.vcgic hiiiativ es Ven/on I eletr-.aiic s ' lo: addition ji mfonnaiior.

Dining 201 1 we enhanced our otlenngs ol cloud serv ices hv aclliiimg lencmark Worldwide Ins iTcnem.irk 1 a ginhal prm trier of information technology inirasiructurc and cloud services and by acquiring a provider of cloud software technology These acquisitions improved Ven/on s eomperitive nosition in ihr inimaeed hosting and i loud scrv ie cs spat e. erdi im cd o\n otlenngs in bllMliev and gtiV eminent eUvkmiei*, globally al\c! cOiHtibc.lsJ le' "111 glovvlh if. ictvetiUes

.Ifnvj Market*

Mass Markets opeiatioiis p:ov ide broadband service* iiricluding h-gh-spced Internet i"nJS Inttniei .md hdb Video seincesi local cxitiangc (basic scrvu e and end-user acc ess) and long distance (in. luding regional loll! v nice scrvu t > in re sittential and small business subscribers In 201 3 Mass Maikeis revenues were S 1 7 3 billion icprcsentirig approvnnaiely 4-1 "i nl Wneline s

/Ann sen -ccs We oiler hOS broadband and Inith-speed litlernet data products with v .irymg downstream ant: upstteam pioces^mg speeds, including I'lUS Ojanlum Willi I'iOS (.'uaniiirii customers can achieve download speeds up to inegabytes per scrond (Mbps) and upload sprrds up :c> UH) Mbps W.- brheie thai as . o.'isuiin-i-. po"n m«ie devices j:i,I ui,-;im iiikk M.lro th.-v will require inei. ase.E b:oadb.ind speeds As of December \\ .'01 j. approximately - ■■ ot oui i"il 'S Inieiiiei subse rib. i, _:ubsenbc ti. I'lOSQuamum

I'ir/iii .Wnnci Wc ollel video service over nur libei-opnt rvelwotk As oi IVicmhei 31, 2013 I"iOS Video it .nailahle to approxinijlelv 1 5 million homes ncit'ss 1 "! si.ncs, as w-cil a.-, il' l)is'.r:c: of Inn'bia Wc iieiieve 1 iO> \^,id. c l * Ic.mh * ih.i: diiiercnunte n Irom the tnmpeliiion. including Us i h.mr.cl linr-up Intfi.i.'iive Media (ijide Itoiiic Media I'VH ind bic.id.i'. i.| high dei'niitiori eonieni as well as the lolfowing

 Hex t /cm _ Wilh l-lcx View hOS customer! ran waicfi eentcu! any tune an;, -.e h. rc an jriy ;!,'vu, 0.;-i.m i* «h<: ui -.(Mbc to

hltf Video and internet also have the abiliiv to upload then photos, mc-vic and videos to t:it ii perst>n.,; i les View I ih.-nry j which gives ilic-m easy .ucesv lo tins . ontcni \ i.i anv d.iia- anable device 1 hr HH< 1 t/tl otlenng prm ides cunnmcT* with 1 '.nilimiled access lo HHO programming <>u any J.nj capable- device Veri/.in < I'iOS video miIim ubers can al* j.uss Tnriici Umadcas!ing's online ptogrammnn; dnn lly i,n liie I US and f Nf site- a/of ilm u,'.f. V'c:i,M!i 1'n.i;." \ iclco r.liilnie i .utJil.i-n ' through l:OS 1 V Widgets, v icwcts have uuc-toi:t 1: on .Icinand acces, to loe.d we.ith.-i. trallu and t ornrnintitv nit'una!.or. and popular social media applications, such js Cacebook, >oultibc and Ivitlri. as well a> online commerce opportunities lhe 1 wideel I'lalV.iTiii bas ceolv. J n. an open tic >. lo|n:ie W t n v I looriieul. .thiji pint «!is upponun il :t s t<<i itid par", i, s de . rl.-j-enhan. e.i c us'.omei feiiuies via ihr Fn ^ \'idc-o pio.hu i 1

 1 usionw /'--,.,.,■ rf_v_(/ ,,,;,.; <■/».■. ,i.',r/r.l - We vOiitinue m part lie I w .11: iT.ajor e oiporarion* is-ulfer riull.ei mic rope rab.l 11 y j

with vanous pitidu.-issu.l. a' video game ensohs s:n.i:i ic!e e-.'ions arid tablet* lim it s Inioloj-v iiuthr expands our initiative :.)l-j.i-.:decu-io:iKiswilhb"eab:liiy to w.it! 1: eorier.l n:u 'irnc any where mi any ■tai.i tap i'iJc d.-s i.e 1

l.mc sen-ices Wt o'.ler \o\te seivt^es He n ir^ie-.d- l.-cal s^i.tuiigc- regior.. l-ni-,-. ctt* ta::c: wit-- t:;.iiii.<i'.an<:_c .end vo;_u(- ! mesSJi'inp services, as well as VoIP services, whieh i:se liie Internet oi pnvair bioadhand iici«i«ik' tu ir.iusrrui vevue I

OIlllllllIItLHhOlli

Global t'nlrrptlif

Global linierpnso ofieri Strategic Kr\ 11.1:1. including networking products ind solutions, advanced conimunicilioiis scixiccs. and oihci core communications services 10 medium and large business customers, including muliinaitnnal corporations, as well as state and federal government customers Global Lntcrpnse jointly markets these services with Venzon s other business units through Venzon Enterpnsc Solutions In 201 3. (iltihal Ilntcrpnsc revenues were S 14 7 hilhon, representmg approximately IX".; of Wiicline's aggregate rescnues

Si'O'cgn sernir.i- Slrjtrgie service* ionsist of networking products and so Jul, oils ,-idvancrd ciunmuniraliou scivjlCs for voice and video, and secunty, infrastructure and cloud scivn.es

Networking products arid solutions primarily include

1'nviiit' IF - 1 his service built on multiprotocol label sw ill lung enables customers 10 lev erajje the efficiency perfnnr.anee jnd value of II' in a secure manner Our Private IP ncl work allows customers in communicate over a private, secure network in more than 120 countries using a v anety ol access methods, including Liheme; and Verizon Vi ireless 4G LTt
Oihri nir/'orofr iiefnorLmy n-txnrt - Other serviees primarily unhide I'themel access and nnj; services, Tlhcinet services allow customers lo cornier 1 network environments around the world and enable applications and technologies to work seamlessly and with little disruption Ring services include technologies tha; help customers handle hjiidwidth demands and control then costs

Advanced communication sen ices pnmanly include

//' utmmunii lUior.t - Our IP communications services, simplify network management and drive operational efficiencies by enabling the convergence id voice and data iiaflic un ihe same access connection

Inj'rasliuctitie and chiud services - Our infiastnieturc and cloud services include tufrasliuctiiie- as a Setvice [laaS) and managed hosting scrvirrs thai provide crilcrpn<c customer, with data center computing, daia stoiage anil m tvvork taeililies cnnnceti vii). security. aiclnicLture and support, daia center allocation services that house and piotecl customers' cniiL.il applications and systems including several facilities that nffci extensive earner ncutrtil options, application itiaiiagemciii services* thai provide customers with comprehensive monitoring and management o! applications and advanced ente-ipiisc-cl.iss cloud services ihal provide organizations wnh the ability in vmuah/.e II icsouiees such as computing memory and storage, enabling their constituents 10 produce stole, process consume diid share infonnation

- Machine to-Mnc/iiiie (M2M) Senn rs - Out acquisition of HUGI1ES Telemaiics 111 July 2012 provided a technology plalloim thai wc arc leveraging in M2M maikeis which has cnahled us lo lunhet develop siiatcgtc pannerships in ihe automotive Iransponauon, energy . health monitoring, education and insurance industries M2M services permit cusiomeis 10 connect and monitor equipment, such as medical devices, fleet management devices and utility monitoring devices We believe' thai these, services, which are enabled on a large scale by 4G LTE wiiclcss technology, have ihe ability lo reshape the way businesses operate and the way consumers interact with devices around them. Verizon offers platform-based solutions tailored to specific industnes to enable value creation and new eommeictnl business models Our goal is 10 be a leader in implementing the next generation of connected services for vehicles, centered on a core p 111 form of safely, secunty, llcci management, convenience and other offrnngs targeting commercial fleet operators, individual consumers and other customers

Security We pros ide integrated solutions to help companies secure their networks and daia through the following sciv ices

⁰ Sri nrr/i piafewioiutt it-rvrr n - Secunty consultants thai cunsiiucl security plans [aliened to ihe needs ol out customers,

⁰ Governance, risk and compliance - Allows customers to assess tisk levels based on current secunty controls and dev elop plans to address tecum) -related compliance objectives,

⁰ Idennn management - Provides identity-based access management for customer data, application, and systems across multiple IT ens ironments,

⁰ Managed wuinv We design, implement, and maintain a secure IT infrastructure for our clients and help them prevent, delect, and report security threats

Other advanced communications sen-ices - Other services pnmanly include dedicated Internet access, winch provides cntcrpnse customers with high-bandwidth dedicated access to Venzoo's global network, unified coaununi rations and collaboration capabilities, which enable customers lo communicate in real time through VoIP and IP conferencing, and emergency communication services, which allow customers to respond effectively to emergencies while maintaining business continuity

Core j-ervic.fr Core services include core voice and data sen ices, which consist of a comprehensive portfolio of global solutions utilizing traditional telecommunications technology, such as conferencing and contact center solutions, and pnvate line and data acc cm network 1 Core services also include providing customer premise equipment installation, maintenance and site services Wc arc continuing to transition cu Homers out of histoncal core services such as Frame Relay and Asynchronous Transfer Mode »ervices-

Global H httlcsalt

Global WliQlrjalc provides communications services including data, voice, local dial tone and broadband services pnmanly 10 local, long distance and other earners that use our facilities to provide services to then customers In 2013 Global Wholesale rev enues «tre J6 7 billion, representing appioximately 17 "A of Wireline's aggregate revenues A portion of Global Wholesale revenues is pcjiriaird by a tew large tclriiimmiinitalrons 1 nmp.nnes mo-t ol wlnrh coinpi re dirci sly with ne

Table af Central!

Global Wholesale provides the following services, which it jointly markets with Venzons other business units through Venzon Enicrpnsc Solutions

/Jufo services Wc offer a robust pon folio of data services wilh vary ing speeds and options 10 enhance our wholesale customers networks and provide connections 10 their end users and subscribers Our data services include highspeed digital data nffenngs. such as Ethernet and Synchronous Optical Ncl work, as well as core data circuits .such a.s PS Is and DS3s In addition, data services include special acces* revenues thai arc generated from earners thai buy dedicated local exchange capacity tn support ihen private networks

New I'lhcniel connectivity m the United Slates tepitscnis the largest data growth oppottunilv :u wholesale as see pursue oui technology upgrade initiatiw and titsloincrs look To ihe tuiurc and highci tapjcity demands I In -c .'us>"iiieis .110 al'o migrating netwoik s fiom lime division niiiiiip!csini: 10 l-jhrniei. which will bcliei s,-.il, :₍nri -.nice llic ni,».-.:i 01 nm.idh ,ud setvices dnven by sniariphones. mobile broadband and mobile 1 nlen Global Wholesale oilers a complele :u;tr ol services to suppoii the expansion of4i.i and i( \ netwoiks

Pata seivi.rs .,[ include iriiani valae-idded business services whieli leverage in.au > ofthe saute ollrinys vailablc 1:1 the 1 liobal IlrKCTpnsc poll !o I in inc luding

^lJ Mi'migcd sen ice* - f 'iters wholesale customers the opportunity to outsource the management oi their net vi oik*

sccuiuj, leinote access, and web applie.11 tons to Venzon, ^u Miibtliti - finable S wholesale eiislonieis to enhance their portfolio to triple-play or quad-plav 1 apaUihiv bv le v engine

uirelesi- de vices arni services u;rrre J thrugh Verizon Wireless .if id paekafte-.f and rcoid un.Ier their ■«in earner (■rand

^c St carta - I'rovides wholesale 1 usiomcrs integrated solutions 1.1 help ihci: ciiic-rpiisc end us.is secure then n.-tevnrks and data

■ lr.it e u'n-uct We provide svtlehed access seniles llial allow cailic-i* M eorllideto then c-n-Uisci cails rhl oninuale 01

Icnmnalc within oui territory

hnctl \en-.cc Wc oflei an .may of local dial time and broadband se-ivices t» competitive local exchange . .urieis. some ol which arc oflcred to comply with lelecommuniraiions regulations In addition, wc offei serv ices such .is roWanon. resale and unbundled network tie merits in t omphalic e with applicable legulalions

Olher

Other sen ices include such scivices a.s Joc.il orfiaii.'.'i- jnd Jong di-rariff sen ire.* derived ;nir:i /nr:rir MCI .-:r.:n rr:arkc: c:ii!(this and operator services In 201 j Utbci revenues wen SO 5 billion it pn seming approximately I ot Wuc-h:'.e s .iggregati revenues

Sir Jiegic Imnanves

rcehnology tlci elopn'.cnts inlcr;o:inecied inarkels. slutting consume! needs ar.n . i,-nv crgsng. md-isir, c.-o .j ^icm-. aie . r;.si-.i:i-

designe'd 10 deliver hesl-m-s-Jass pnxhrcls ami .ec-n ife; Mrerr;;:frcn our i(i::ipei:(iie a.le .inl^j;e rn :he :u.irf.et;ilaet .ni.f dne e .r hie'li quahly expenence foi out cut-iomei* fo take advantage of these market trends, we hav e undcn.ikcn scvcial stuiei i: mitiatnes to

Rt.i.tdhuntl Customer arc mcicismgly consuming largo amouiiis: ol broadband nata as niimCtiCii iUvicc; and associai^i: online .ipphc.itioiis touliiiuc to t vpeiience' signiricnil giowlh US lno.n!b.;r>.l osacc has r:o>ic tli.in doublid in the p.ist two years and eve expect broadband usage to continue' 10 tin ie:.>;.e O111 I'iOS nclwoik positions 10. in the iridi:*iis. wnh kadinv 1'ioadband spr-ed* and rrJialviljlv- IJioaJbar:d icpieirjil.s :> gjuivil: op|n)iIui:nv io.- im rf' ihe u-e >'/ infi trie :o|: 1 rdco. use; generated 1 anient and daia and con rid red homes and devices 1 :>ni nine rn ,i,rclcra!r
l\,.tsiiiiic> and F.nier pi iw Vide., i.mr FiOS Video service ceniinues ls> experience con'U.'i.et growth We are enhancing .un Tn'S mtv ice hv pro\ id ing c usromeis mrh increasing mubihry options to t «:w eintciii 111 and our ol th.- Ii.mii to me.-: the .It main! to; v .deo consumption anv where and at any t:me
( l,ntd Sri u. i' Capital! zing mi ruaikct growtii ;r. cloud seix i.es and on entt.ipit-c: ite-inK tve. id ou!-o.,n m-: il 11-.I1 i-.tiiie'.un

punlie Cio.nlsar, boill c'n.iblo'.g <t:s;oiticis ot a! I si/rs to r.0.1 :n!e ant.ige ! the iitihtv and ,. ,01011.1. fn u, !-.i r ., ot r .c [".iblu

cloud along with ihe K-lu'jilny ■ml stale ol'an ciileiprise-Jevel >cnice while maintaining eontiol ol peifomianec Virtual machines' (soflwaic-bascd computer* and server,] ran be created and deployed in second;, and users build and pay lot w hut they need -

Our clnud infrastructure ako enables real-lime analytical capabilities for our M2M customers, providing an end-to-end capability where custdncTS can stoic process and analyze large amounts of data on a real-rum- basts ("ur cloud itifrastnacfuie also has ihe ability lo handle multiple instances of an application providing global support and availability of lhe applications w rthoui increased latency Ihe integration of our i loud tnfhtst incline with our telematics assets provides oui customer*; wnh new and innovative service capabilities that arc sejlablc. and which we believe are operationally superior to other bifuicatcd approaches

liiBlrofCunltult ■ ~

Security Wish nc* technologies changing how cuieipn*es do business, lhe cyhrr secunty landscape continues to evolve We believe lhai businesses arc making business and customer data protection one of their highest priorities in older to protect their brand and enhance customer loyally We believe thai Venzon ha< an advantage in Us ability 10 reduce cyber nsks and mingate the damaging impact oi advanced cy ber attacks due to the volume ol tnillie earned globally on oui networks We will continue to advance oui portfolio of fuicusit*' services and managed security services building new capabilities io identify risks and threats and expanding our IT Secunty professional services and outsourcing

■ \euzon Telematics Out suite of real-lime vehicle communicaiioiis services and applications Connects automobile* ■with content, sen ices and call centers Our platform enables far lory installed anil af'eimaiker automotive safely and secunty as well ti local ion-based sen-ices and vehicle diagnostics We piovide usage-based data seivu.es lo new i chicles in the United Slates and in 201? we extended our agicement with two auio mantitaituieis to provide services foi iuw vehicles in China and ro Europe Through otu ln-Dnve solution, w-c have partnered w'lth a major automotive insurance provider to deliver us.igc-hased insurance programs and other connected applications Our Network Meet solution provides conimein.il fleet managers throughout S'onh America with real-nine access to data lhai yields operational efficiencies increased vehicle; ir-liability and improved driver safety Wc also provide this sen ice to approximately IX.OUU vehicles operated by Venzon We aie further expanding oui telematics portlolm io add asset tracking capabilities

In addition io ihesc .-tratcgic areas of focus, we are investing in Venzon Labs and the Software Center of Excellence to support software development and aichiteciine as well as development stage products and senues We believe these investment will assist us in bunging innovative next-generation products and service* to market and umovci new sources ol revenue increase rev en tie of existing projects and leverage oui strengths across the company

To piovide sen'ices in our customers, we operate- an advanced tc'leerinimuriicaiinns netwoik m the United Si ate.-, and around lhe world

■ Fit IS Our goal is 10 distinguish TiOS a.s a premier residennal broadband -civice in ihe United States As of December J 1 2UI 1 our FiOS *civice passed over IJi 5 nullum premises and oui laleii FiOS tjuanimii smite iillerin-'j now provide download speeds up to 500 Mbps and upload speeds up in 1(10 Mbps New sen ices such as the FiOS Mobile App arc also extending our TV experience lo a host of mobile dev ices We expect bandwidth demands in grow wilh tlie coiilinurd rmetgrni e ol new video and data applications and the proliferation nf IP devices in the home

The Passive Optical Netwoik technology upon which the FiOS netwoik is de-ployed positions Venzon to meet growing bandwidth requirements Our ncl work architecture provides lhe flexibility to adapt our facilities more easily to future product development For example, new optical terminals can be added io the liher-to-the-piemise net wort: proi id ing greater handwidih and new services without any additional field consirucucin Select field vnils have successfully achieved connection speeds of nearly one gigabit per second (Obpsk and when a more adv anced next-general inn technology has been connected to ibe fiberoptic network, connection speeds of 10 Cbps have been reached, demonstrating the significant growth capacity built into the FiOS platform

Additionally, this advanced optical network is also finding increased application opportunities in the business sector, especially as the industry seeks in migrate to Hihemel-based access sen ices * G/ufW //' Vernon owns and operates one ot lhe Largest global fiber networks with long haul mcuo and submarine cable assets providing connectivity to customers in over 150 coo nines Verizon's global netwxirk encompasses over 830,000 route mile* of terminal and undersea cable, serving the business community to support and enable far teaching international operations

Global IT traffic has increased substantially over the last five years and is expected to continue lo grow significantly This global business ts also rapidly evolving to an "everything-as-a-service" model m which business customers seek cloud-based, converged enterprise solutions delivered securely via managed and professional services With the continued deployment of its packet optical I ran .sport strategy. Venzon is creating a single, high-capacity global ncl work platform that combines optical transport with advanced packet switching technology The result is a global IP netwoik that can oiler powerful solutions to these service demands.

Although overall Wireline capital expenditures declined in 2013 compared to 2012 pnmanly as a result of decreased legacy spending requirements and a decline in spending on our FiOS network, we furthered our Global IP network expansion initiatives inlu Europe, Asia, Africa and South Amenca. as well as lhe continued deployment ofthe industry's first commercial 100G Gbps technology on OS and European backbone routes More than 13000 I00G Ultra-Long-Haul route miles were added to the global IP network in 2013. and we plan lo further extend our 1OOG technology in 2014

We believe thai oui continued focus on advancing our fiber-based networks and achieving cost efficient solutions through new technology deployments will help Venzon advance its position as a provider of choice to residential and enterprise customers.

T«Mr»r C*nf tall Competition

The wireline telecommunications industry is highly competitive We expect competition to intensify further with traditional, non-traditional and emerging players seeking increased market share Current and potential competitors include cable companies, wireless service providers other domestic and foreign telecommunications providers, satellite television companies Internet service providers and olher companies thai offer network services and managed enterprise solutions

In addition companies with a global picscnec uu rcasinjdv compete with oui wireline businesses A leiativcly small uuiribei nl telecommunication* and iiitegialcd senile' piov ider*. wilh global operations serve customers in the global eiitcqirisc and in a lesser extern, global wholesale iii.ukets We compete with these full or mar-full scivici pros id, is loi large eonir-.ieis to piovide micgratcd sen ices to global enicipnscs Many Ol these companies have a strong rn.ul.cl presence bland n fog union, aim c¹ isiing customer relationships al! of which contribute lo iii:ci:<iJr:iig competition .oui whit h may alien our i,iliire revenue growih

We heliei e the follow mg ale the mo si important competitive factors and i rends in the wireline nidus: n ,

■ ('iisiiimer tt-r i ice Customers expeci industry-leading sen ice' from ihen sen ice pro* ideis As ic-c hnoiogie> and sen ices c v oiv e lhe ability to excel in tins area is i cty important foi nistomer acquisition and u'leiilioii In Mass Maikeis We compete in ihis area through our sen ice icpicsoritativcs and online support In ' ilohai Kr.terjinse >e.- provide nn e i.sioincrs with ready act f s> lo then system and pcil"Iiiiaiive iilfoim;;:inn. antl we conduct pruactn e ic-siing ol i.u; netwujk ro idenlify is.sjes bclore ihey alien

initiatives

AVnn* icli.ihilin ,in.l htinJu-idih f._r,eJi A.s both consumers and small business tuslonier.s look io leverage high-speed cnnnecnons fnr entertainment, communications and produriiv :lv. we expert broadband penetration -.v::l continue lo mi -ease over ihe next sever.) 1 vean As online jnd orpine -enabled at nviiics inrc.i*r. so will bandwi Jib requirt merits, both down*tic jm and upstream To succeed we and other network-based providers mem ensure thai om nciwoiks can delivei against these increasing bandwidth icquitrmcrits Wc continue lo invest in o\n uclw-oik io V>e Me in mr/ci '.his 1utmr demand lu .iddiiron netwoik id lability and secunty are increasingly impoiiaiii eonipctiiive iatiors m the gln-j.il euicrprise markei

■ /'miuii; Cable, telecommunications companies and inter rated sen ice prouder u-: pr;ri:ig to capture marker share Irom 1 incumbent j Ihmng is also a significant taeioi as iic-n-irndilional modes of providing i utiimunit at ion services cnicT"e and new l enlianls compete fui tiislomcrs For example. \oll' and portal-based tailing is fret cn neaily fiee lo customer* and is often siipponet! by advertising revenues !

- /Vo./nc i lif,i u n\u;lti»i As a itsnh ni pi,cmg picssurt.x, piosuiCi* nccil \« diii;.!cn^-.i.ite '.nei: j-ic-Jui l-; and scr.n e* t. us¹ c-nwis. ( an- s!n fir rig then focus liorn jece'Ss to applications and an sicking viai * in kveiagi th; .: broadband uin! v ideo c;-!i:ift Hons Converged features, such as integrated vi ire less and wneline rur.cTinii.ility. arc I'Cinnur.g siitul.nlv important, rJn* cr hy both custornei demand and technological advancement

III the Mess Maikeis husiittSs. cable operators are signilicant unripc-titoi* Cable pcralors have nuieaseti the si.'e a:id digital capacity of iheir networks so lhai they cull oflci digital products .md <cmces Wc coiiiini.e :o m.irkci i ■ -ntj-c-ijiiv e hninlL-il o'.leiv.-ij.'.s tli.it iiitUidr high-^rsrd line met adtss (ii-zil.-.l lrle\-i-i«n av.et snue stnive* Se-sri.d uij.n e.-.'.-le -'pi-iaior al-." ,rtU-i bundles vvith w neless sen ices ihrotigh stuiegic relationships

In addition, wireless substitution is an ongoing competitive iiend whie'h w,- expeci to coniinoe .ts wnele** i-on:panie* [u.vition their seivice as a landlnic a!lirnative \\\ also lace im leasing conipctilKiii from c.ible e e.mp.inic-. .,rid oihe; fomdci-. ol Volf services as well as Internet portal providers |

As a result ol tbe Tcli-comiuuriicalions Ati of 10'Jii. uhicti re inures us lo allow pot, :itial compel id-is to pure base our sen ie, * tin j le'sale oi access components ol our netvvork on an unbundled basis ai a pie si nbrd co-t cinripctition in our local ,-sebange n-.arkets > conimues O.n telephone ojieraiuin' gtiieialiy have been icquncd to sell rlirir servi.es to i ompi.l;:n c local t vchange t arner:. a: sigiiiticani Jiscuunis Iic-iii the prices ou; telephone operaiioiis chatge thc;i retail n.s;euiiei.- lhe see-pe ■->I tJie.se ■hhg.-itioii* j.'i':r.g

torwaid arid the rates we re, rive are -ubjeei : ig-'nig rev irw ami tei ision by t|-.c | ( t" i st.,tr zegulat.ns (V>ee ICvulalon and

("omiietitive Tre nds in ilie 2U iVenzon Annual He port to iii aie owners ) |

In the plolul enterprise maiket. ihe cusronter s need to reduce rcchniia¹ comple-nv c.v.ipled w:-h ihe growih opp.Mtuuny .-rcai,-d | iodised on cmeiprng fields such as cloud comriiiirip io ft ware celt very . communication application* a:i*i othei c"ti;jiui:ni: tasl s |

idcoanJ data needs compeiitois tor ihis

make Significant inioads ml 11

i la lhe network, ulhci than on in-house math inc* Camcis have also utilized jcquisiiio enlcipnsc outsourcing maikeis ihal have long been dominated by ihc majoi IT ouisoun.fr.

Global Wholesale competes with traditional cainets foi long-haul v»k( ami IP seivn.es In addition n are diiving 4 greater need tor wireless' backhaul Network pros iders. cable companies and niche plai new revenue opportunity

[ Patents, Trademarks and Lir

Venzon ovens or has licenses lo vanous patents, copynghis, trademarks domain names and other intellectual property r.ghls necessary to conduct our business Wc actively pursue the filing and registration of patents, copyrights, domain names, trademarks and service inatks 10 protect our intellectual proper!) nghts within the United Stales and abroad Venzon also actively giants licenses, in exchange for appropnate fees or other consideration and subject 10 appnipnatc safeguards and restrictions, 10 othei companies that enable -nth companies to utilize certain Venzon intelledual property rights ami piopnetary technology as part of their products and services Such licenses enable such thud party licensees 10 <<tke advantage ofthe icsults of Verizon's le'scaich and det clonrneni rlTons While these lin-rm's result in valuable consideration bring paid lo Verizon, wc do not belrei r thai lo.*s ol such consideration, or the expiration of any ol our intellectual property lights would have a matenal efleet on our results nl

Venzon penodtcally icceives olfers from third parties to puichase or obtain licenses foi patents and other niicllectual properly nghts in c»change f.:i royalties or other payments We also penoditally receive notices alleging that out products or services infringe on ihtrd party patents or other in■.eUeciii.il property rights These claims, whether against us directly or against thud-party suppliers* of products or services ihal we m (urn. sell 10 our customers it sucvessfuT, could require us (0 pay damages or roe j) tics or cease offering the relevant products or services

Acquisition* and Divestitures

n Annual Report to Shaicowneis is 1.

"Acquisitions and Divestitures' on pages 32 through 33 of the 2013 Vet reference into this report

v and Co01 pelilis t Trends

' Kcgiilalory ar.d Competitive Trends' included in "Oho Fact ors "Ihat May Affcci E'u'.uie Results on page* .M ilnough 3*- ■.-.( the 2013 Vi nzon Annual Itepon to Share owners is incorporate tl by i.'iere.iii.e irilo this icport

j Environmental Matters

Environmental Matteis' Kepon lo Sha

included in Olhei factors' ['hat May Ailect future Kesulls ' on page 35 of the 2HI3 Venzon Annual icotporatcd by reference into this lepon

I Executive Officers

nd Corporate Governance ot this Annual Rcpun on form 10 K tor

See Pan III. Item 10 "Directors. Executive Ofticei information shout oui executive officers

nployecs Unions represent approximately

Aa of December 31. 2013. Venzon and its subsidtanes had approximately I76.H00 c 2K% ofour employ ecs

Information on Our Internet Website

We make available, free oI charge on oui website, our annual icpons on Form 10-K, quarterly reports 011 Form 10-0 current reports on Tumi 8-K, and all amendments to those reports at www venzon coin/investor Venzon has adopted a code of ethics, as that icim is defined in Item 406(h) of Regulation S-K, which applies to our Chief Executive Officer, Chief Financial Officer and Controller A copy of this code may be found on our website al www venzon com/investor Any amendments 10 this code or any waiver of this code for any executive officer will be posted on that website.

Table #f Caan-aii

Tibk rCanlraft

I Cautionary Statement Concerning Forward4,00king Statements

olher tilings with tbe Securities am er m.uciinlv Irom thn.e e*pres*cd 11

tKial and.ot operational

In this report we have made forward-looking statements These statements are based on oui estimates and assumptions and are subject lo nsks and uncertainties Forward-looking statements include the infonnation concerning our possible or assumed future results of operations Forward-looking statements also include those preceded or followed by the words anticipates," "believes." cs." "hopes or .similar expressions Tor Ihose statements, we claim the protection of Ilie sale harbor for lorward-looking ins contained tn the Pnvatc Securities Litigation Kcforni Acl of I 995

ould cause lho.ii- rc-ulis

a.tn

The billowing imporuni f.n tois along wnh those liscbange i"i.remission (SEC) could ailed hi lure re liie [inward-looking slatemcnls the ability lo ic.di/e lhe expected benefits ot tl

tb. lutings jjj. i.ie.i o markets ikeliil;'. the c

is a result .il the Wireless In

uijuding Lihoi

signiiiciinily increased leu Is o: ;n.icbi:c c hanges rn i;n laws or treaties, or in then

malenal adverse changes in labor matt impact

matenal changes 111 technology 01 leehnolngy suhsliliitioii disiuptnsn ol our kev suppliers' provisioning of products 01 s changes in ihe regulatory ens nonm. nt in winch wc- operate,

ludiri

our networks,

breaches of network 01 information technology sccuniy natural dis litigation and any ii-aiil:in« financial impact run cm ereil hy insiiiam e Ike effects, ofe'orripeiruor: in the rri.irkcif in which v changes m accounting asMinipiions that li-gul.iti.iv

rc-sull 1:

nil.-

1 eh C

r ihcii appl, ibcrutitptancostsoilo lent 0111 business slialcg

The following discussion of "ktsk Factors" identifies th* most significant factors that may adveiselv affect out business, operations, financial condition or future performance This information should he read in conjunction with "Management 3 Discussion and Analysis of Financial Condition and Result of Operations" and the consolidated financial statements and related >u/te< Tlie folio* ing discussion of nsks is not all-nuluvve hut is designed to highlight ivhat we helieve are important facioi3 to consider when evaluating our business and expectations These factois could tausr our future result' to differ materially from uur fmloru ul results unj fiom expei tuttims itflii ted in foiMurd-lonting statement

Adverse i nndttioHS in ihe U.S anil international et onomte* 1 ould imput I uur re.-ulti of iijierafinny

,1 profit*

luilavorable economic 1 oiieliliuiis. such as a recession 01 economic slowdown in the United Stales 01 else when- could negatively aiiecl Ilie alloidnbiltly ol and demand for home ot oui products and services hi dillkiill eceinoriu. . onditions. _L orisuniers rnav see I to reduce disitieiionaiy spending hy forgoing pnirlijses o; nur pindiiei*, elecmig in use fewer higiiei inatj'in *eiviec* or nhi.iiiiinj: i.:wci-cosi products and services offered hv olher companies Sinni.iily, under these conditions, the bustn-.-s* ciisinmei* tha¹ we -.eive may delay pun basing decisions, delay full implementation ol service ollenngs or leducc then use >>l seivi.es l:i addiiion adverse ecnnomic conditions may lead to an incieased uuinbei uf oui con-umei .md business customers ih.n unable 10 pav leu services It these ev run wcie to occur it could have a matenal adi erse elfeet on our icsults of opculions

HV face significant competition thai may lediur

We iat.e sign 1 lis ant competition in cun indu.siiy I be nipid development ul new tee htiologics, services and juoiluc Is has e hmin.it-. d many ul the traditional distinction* among wireless cable, tnteinet local and long distance communication scivn cs and brought new competitors 10 our markets, including oilier telephone companies cable companies wireless service provider*, satcllilc providers application and device providers, electric utilities and piovideis nf VoIP services « Tnfc these changes hav e rnabled us 10 offer new types nf products and services, ihey hav e also allowed othei provide;*, to hinaden the scope of then own compciiiiv e offei nigs O111 ability to compete effectively will depend nn. among othei things oui iir-tvvoik quality capacity and con-rage, the pricing of oui products and services the quality of our 1 ustomei Seix ice. uur development of new and enhanced product* and service, the reach ar.d quality of oui sales and distribution channels and inn capital ic-suurec's It will al*i> depend 0:1 now successfully we anticipate and respond IO v anous factors aliening <nu industry including new l cell no logics jnd business models changes in consumer preferences and demand for existing services demographic trends and econnmic . ondiltiiiis If see .'re nol able to respond surc-f.efully 10 these eoinju-tiiive challenges, we could expeneiic reduced piolns

ngmg consumer deniiiud en a tinirh ba iplentenl put business strategy unJ rv/i

// we are not able rn udapt tn changes lit tr, hnolngy mill ttilJicw < hu. experience u decline in the demand for our service*, be unable 1

_rrf.

(Jui indiistiy is experiencing rapid ihange as new lcthnoio^es aie developed ihat nffci coiisumei', an ati-jv ot choiic: for thctr . eunmunif .il:ori* need* lu oidei M glow and remain compeln: ve. wc will need to adapt lo inline 1 Manges in ^,.ec!.iiok>_i'y e.:l_:.u:, e cm cvisimg olieiuigs arid inliodiice new ollerings 1.) addiess oui cu*ion-,ers el'ing ing demand* I: w. aie u:;.,Me lo rne ei titture . h.dl<-nge-s liom competing technologies on a lime I v ba: is nt .it an a; eejuahle cost, we mulil lose- sii*:omci - 10 on: c;irri|)i-nt.i:s W'e may not be able 10 accurately predict Iechnologie.il iicnds 01 the success of new service* in the market In .iddiiiou iheie could be legal or regulator, icstmuiiv or. 0111 mlrodur.i ion ol new ser. ire* I: ou: *rr* ices tail to i;jm ac'.-ep'.incc in the nu:kriplaee mi!

and :iinarl tusrorrtris ould In' aiJvci.sety ajfei kd

: ic-thii

and

In ailditiou to introducing 1

■ and ollenngs wc must pb.ise oeii ontdaicii and unptofir serv ice-* 11 we aie unable 10 do so on a 1 o*t-e ticciive hasi*. »r 1 ould expenence reduced |iiotils In uddn-o or icgulalniy icstraiiiis on 0111 ability io phase out current scrv ices

HV depend on key suppltei s and 1 end_tn\ to picvidc equipment that *r need Tt> operate nut /nnr/n-.i

W_c depend 0:1 v.irrou-, key supplien and vendoi* lo pioutie us dnecily or liuougli eih.r .supplies* with e:

*iici: hs switch and netwoik eijuipmrr.i and handsel* 1)1.11 we need in order 10 operate our business jnd p

eOii:poiitUt* sacl. a* elo|:*ct.s u*ed 1 n 1 heir de 11. es Jlihc*c*u b*i* im !.!'! t.i nle-cl 0111 pe rlorr-iane c e.v pec tat iur: *. wi may hi.

1 seu.lor. la:

un be associated wild transitioning fiom one supplier 10 another uur business could be substantially disiujilcd if wc were

. lcqmrcd m ni chose to icplaic the products or-seiv.ces of one-01 more majoi suppliers with products m services from auothei

souicc, especially it the replacement became ricr.cssarV on short notice Any such disiuption could increase our cosls, decrease our operating efficiencies and have a matenal ads ene effect on our business, results of opeiatioiis and financial condition

The suppliers and vendors on which wc rely may also be subject Id litigation with respect 10 technology on which wc depend, including litigation involving claims of patent infringement Such claims have been growing rapidly in Ihe communications industry We are unable to predict whether our business will he aflectnl by any such litigation We e\peci oui dependence on key suppliers to continue as we develop and intinduee more advanced generations of technology

- t'sbk ul CuniJJIisVlJ"~ '" "' """ """ " " . ■

Changrs in the regulatory framework under which we operate tould advene/} affect uur busmen pro\prif* or ie>ult\ 0/ operations.

Our domestic operations arc .subject 10 regulation by the FCC and other federal, state and local agencies and our international operations arc regulated hy vanous loieign governments and iniemaiion.il bodies These regulatory regimes frequently restrict or impose conditions on our ability lo operate tn designated areas and to provide specified products 01 services Wc arc frequently icqunrd lo maintain licenses fur our operations and conduit our operations in accordance with prescribed sland.uds Wc are often involved in regulatory and olher governmental proceedings iclatcd to lhe application of these ici|uicements I; is impossible to predict with any reitjinty the outcome of pending federal and slate regulatory proceedings relating to our operations. 01 the reviews by federal 01 stale eouit.s of regulatory lulings Without relief existing laws and icgulations ma) inhibit oui ability to expand our business and introduce new products and seiviccs Similarly, we cannot guarantee thai we will be successful 111 obtaining lhe licenses needed to cany oui our business plan or in maintaining our existing licenses For example, ihc I^:CC grants wireless licenses for teims generally lasting 10 years, suhiect lo renewal 1 he loss of. or a material limitation on. certain m out licenses could have a matenal adveise e fleet on our business, t exults of operations jnd financial condition

New laws or regulations or changes to ihe existing regulatory framewnik at ihc federal, stale and local, or intcinnt 10n.1l lev el could iiMikI lhe ways 01 which we manage our wneline and wireless networks nnpo.se additional c.isic. impan revenue opportunities and potentially impede our abihly 10 prov ide seiviees in a manuei that would be attractive to us and oui customers For example, certain services could he subject to conflicting regulation by the FCC and/01 vanous stale and local authorities, which could significantly increase the cost of implementing and introducing new sctviccs As another example we hold certain wireless licenses thai tcqune us to comply with so-called open access' FCC regulations, which generally require licensees ol particular speclrum to allow customers 10 use devices and applications oi then choice In addition, our hioadband Internet acecs.s services .ire subjccl to various attempts to impose so-e.illed "network neutrality' rules some of which were all'inned and othets 1 aeaied on appeal in early 2014 Proponents of these rules wanl to limit lhe ways thai a broadband Internet access service* provider can structure business aiiangemenls and manage Ms network The furthci icgulaiion of broadband wirele'ss. and our other activities and any related eonrt decisions could restncl our ability lo compete m the marketplace and liunl the return we can opcc.t tn uchic ve on past and future investments in our networks

Cyber eMails 01 othei breaches of network or information letltunlogy security could have an advrrse effect on our hu*tne\\ Cyber attacks or other breaches of network or infonnation technology (IT) security may cause equipment failures or disruptions lo our operations Our inability to operate our wireline or uucJcss networks as a result of such events even foi a limited penod ot tune, may result in significant expenses and/oi loss of maikct share lo other communications providers In addition, ihe potential liabilities associated wnh these events could exceed the insurance coverage vie maintain Cyhei attacks, which include the usr of nialw-jie, computer viruses and olher means for disitipnon or unauthon/ed access, on companies, including Ven/on have increased in frequency, scope and potential harm in recent years While lu date wc have not been subjccl to cyber attacks or other cyber incidents which, individually or in the aggregate, have been matenal to our operations 01 financial condition, the preventive actions we lake to reduce the risk of cyber incidents and protect our information technology and networks may be insufficient to repel a major cyber attack in the future The cosls associated with a major cyber attack on Venzon could include expensive incentives offered to existing customers and business partners in retain their business, increased expenditures on cyber secuiiiy measures, losl revenues from business inteiTupiinn and litigation Further certain of Venzon\ businesses. including lhe provisioning of secunty solutions and infrastructure jnd cloud services to business customers, could be negatively all'ceied if our ability to protect our own networks is called into question as a result of a cyber attack In addition, if we fail lo prevent ihclheft of valuable information such as financial data, sensitive information about Venzon and intellectual property, or if we lail to proiect the pnvacy ofcustomer and employee confidential data against breaches of network or TT secunty, 11 could result in damage to our reputation, which could advetsely impact customer and investor confidence Any of these occurrences could result in a matenal udv eric efTeei on our results of operations and financial condition

Natural disasters, temrisl acts or acts of %-ar could <:«irtr damage to our infrastructure and result in significant disruptions im our operations.

Our business operations axe subject to interruption by natural disasters, power outages, terrorist attacks, other hostile aits and events beyond our control Such events could cause .significant damage tn our intra structure upon which our business operations rely, resulting in degradation or disruption of service to our customers While we maintain insurance coverage for some of these evenls the potential liabilities associated with these events could exceed the insurance coverage wc maintain Our sysiem redundancy may be ineffective or inadequate, and our disaster recovery planning may nol be sufficient foi all eventualities These events could also damage the infrastructure nf the suppliers that provide us with the equipment and services we need to operate

our business and provide products lo our customers A natural disaster or other cvcnl causing significant physical damage could cause us to expenence substantial losses resulting id significant recovery lime and expenditures to resume operations. In addition, these occurrences could result in lost revenues from business interruption as well as damage tn our reputation

Orr;#B*s debt Mas increased significantly and couldincrease, further if'Venzon incurs additional deJit in the future and does not retire existing debt.

As of December 31, 2013, Venzon had approximately $°3 6 billion of outstanding indebtedness, as well as approximately $6 I billion of unused bono wing capacity nndri its existing credit facility Since ihal dale, Vcn/on bas incurred $20 3 billion of additional indebtedness and became entitled lo draw upon an additional 12 billion of borrowing capacity under a 16-1-dsv

leq-.nrini; Vcn/nri to dedirate stgriilie.un ra*h Mow Irom npcrmions to ihe payment .1! pimnp.il, inieiesi and .nhci amounts payable on its debt and the p:e(ened slock issued by lite entilv an|ui;.-.l horn Vodalone nloeti wi:ld is.lu.c ihe ftirnt.s Yin/,.;; ii.it. ,:\ailjble for o hci parp^ses such as wi rknt;; 1 aptlal cajn:.:l upend; lure; an.l ai ijuistlions

Table ar Canirali

making H more difficult or expensive for Verizon to obtain any necessary future financing for working capital, capital expenditures, debt service requirements, debt refinancing, acquisitions or other purposes, reducing Venzon s flexibility in planning for or reacting 10 changes in its industry and market conditions. ■ making Verizon more vulnerable in the event of a downturn in its business, and

exposing Venzon 10 increased irilerest rate risk given that a portion of Hs debt obligations are .11 vanable niieresi tales

lu addition, the icivn loan agieeuient Ven/on entered into 111 connection with the Wiiclcss Irar.saciion requires Venzon to maintain .1 certain leverage ratio unless Ven/on's credn ratings aie at or above a certain level, which could limit Yen/or. s abiliiv in obtain additional financing in lhe littuie

■idvei se 1 hungfs in the < ledtt market! 1 oulif in, iea\e oui boi rawing c/.e/t and the avaitahititx of ft nam rni;

We require a si^niti. am amount of 1.1p1i.1l to opeiatc and grow our hn-iness We fund oui capital needs in part rhiuuith bono wings 111 th. public and pnvaie credit markets Adverse 1 hanges in ihe credit markets, including lncieHsi s in interest i.itcj l ould ineie a stout cost of borrowing and'or make 11 moic diifie'iilt for us lo obtain financing foi oui operations 01 ictiiianic i.xisiing indebtedness In addition our Sorrowing costs can he- .1 flee led hy short- and long-term debt mtings assigned by independent rating agin. ;es nInch are based, in significant pail, on oui performance as measured hy cnsioinarv credit meincs A decrease in iliese laiings would likely increase oui cosl ol boiiowing and/01 make il more difficult fin us Io obtain iirian. ing A seven disruption m the global financial markets could impact some ofthe fir.aurial institutions with which we do business and sm ll irsiiabilny could also alfi-. t e'ui access 10 financing

hit erases in costs for pension benefits and anise ond retiree healthcare benefits n\a\ redu, e our profitability ami mt rrase out funding.,.mmitmenn.

With approximately 1 76.80(1 employees and approximately 200.tH)(i retirees as ol December 3 1 2tM 3 ebgiblr to paim.ipate in Ven/on s benefit plans, ihe cosls ofpciision benefits and active and rcliice healthcare benefits have a significant impact on 01.r profitability Oui costs ul maintaining these plans, and the Inline funding le.jiiiiemenls (or these plans, are j!!s:,n-il by several lacior.s. including ihc continuing implementation ol the provisions of ihe Palicm I'ni'.ccnon and Affordable Care Act and the Itciillti Car. hducalioii Reconciliation Ail ot 2(110 rm leases :n heallhcaie . osts, deer, .isirs in investment returns on funds held by out pension rind other benefit plan 1 tints and 1 lianges 111 ilie discount rite used to calculate |>e:.siou .itid oil-.ei pi'sirctiiemem is pc-iises If we are unable lo limn fuiuie increa-es 111 tlie costs of out benefit plans, those csts 10 eld ic-.fui e 11.11 j>ru!;!.ih.lilv jmf nil re j.sc our minting commitments

.-I significant portion of our workforce is represented bv labor umon\. and *r could incur additional . of Is or ,■ spent nee nork slnppages a\ a result of the renegotiation of nut labut 1 onlrot Is

As ol Deeembe: -I. 2011, approximately 2S':i oi our workforce was represented hy labor unions We are ii.rientls eiig.igetl in eoiitiacI negotiations with labor unions lepn-scnting approximately 2.^'i.H) employers ol 011: win-lme business and wi will 1 ngage in additional nc goti.it ions as othei I a tun coiili.iv. Is expiie 111 the future I )c pending un the oateoiii. of these ric genial ions we .ould incur additional i osi.e and'or experience lengthy work stoppages wlinl, eeuild ail\cr-clv a licit our harness oju.r.iii...us im lu.lm;; 1 .rasing, a loss ot n venue and slrnr'cii 'el::t 10r.sh.ps w it); , nstnniitrv

HV air itibjet I to a sigmfri am amount uf litigation n huh 1 ould rrif litre nv r.i pay significant dinnages ot srltletnrnls- \

«'M: business lac es a suh; mriiia! amount nf liugaison including from lime to lime paicn; ;r.:'nngei-u ni lawsuits arinirtist 1 lass

sell"us. w.vgc ami hei'.'.r class actievtii nermiial uMiiry claims and lawsuits relaltnv. lu >vm ad"- rI'.ismg :.;ites. rvillxi-.j ar-it ciillei Uur, j

practices In addition oui vine less business al.sc> laces pei.1011.1] iri;i:ry a:id oriMimc! class action lausnns lel.itiug -.- alleged h.Mlll: |

effects ol wireless phones ci radio hequency iransmitiers and ciass action lawsuits thai fhatlciigc mar^cni;- piacnecs and |

disil.isnus relating to alleged adveise health effects ul h.'mdhcid wuelis't phones Wc- may iris 111 sigin:"ica'ii cxpii'.sis _M: .jetendmy I

tile so laws'.iiis hi addition we may be reepaned to pay significant awards 01 sctlleiiic nis

An/,-. ,.f*h,nrs oj l-rii:,<n<omwt<n sink aprr the tinnpUuon ofthe Wmlrss Transa, lion m,t \ ia-r lb, ma 1 ki 1 pi n r I rt.Zo.i

LOmiHomlock lo fait j

As ol IVcemnei U, 2fil3. Verizon had .ipj/ioemuiely 2>i. hillror. bares ol common s'.ncl oiilsianding Ven/n is,ei! I

;-.pp:oMmately I 27 billion shaic-s o! \en/i.n i<.m::in Mek 111 .onnection w;ih th. \v i;r|_eis I rans-u ::■>:] 1 l.e issuan .:! tnese ^:

In addition m.mv Vndafone shaiehnldcis aie already shaic-holdc-is nf Ven/on and iho.sc sh.ueholdcrs may decide mil In hold the additional Vcn/or. shaicthey iccc-ivcd 1:1 ihc Wucless I lansaciion Othei Vodafone -ha re holder such as funds wish geographic limitations on llicii permitted ins i-slmmis. may be n quired to cell the sluies nl Vrnzon couuiinn stock Ihal they leccned in llic Wncless Tiansaction Such sales uf Vui/cn eoiranon stock could ako ha\e lhe effect of depressing the rnaiket puce foi Veii7;>ri" co in: non stock

Our pnncipai properties do not lend themselves to simple description hy character and location Our total investment m plant, properly and equipment was approximately 322 I hilhon at Deccmbci 31 2<J 13 and S2 10 billion at December 31 2012 including the elicct of rctiicmcnis but before Jcduciing accumulaled depreciation Our gross investment in plain property and equipment consisted of the following

Al Decembe

Netwoik equipment

Land, buildings and building equipn

Furniture and othei

2012

2013 80.1 V. 11 it;

Oui piopcnies as a percentage of total properties »ic as foi lot

At December 3 I.

Wireline Wireless Other

61 i'A

.17 TA

Network equipment consists pnmanly ol cable penal, boned underground or undersea) and ihe rei.r.ed support siiurlures of poles and conduit, wireless plant, switching equipment, netwoik software transmission equipment and iclated facilities Land, buildings and building equipment consists of land and land improvements, ccniial olficc buildings or anv other buildings that house netwoil equipment, and buildings that are used foi administrative arid other purposes Wnsi.iiiii.ilh- all the switching ccnteis arc totaled on land and in buildings wc own due lo then uniiai role :n the netwoik and high set-up relocation cosls We a I.mi maintain facilities throughout the United States comprised of administratis c and sales offices, customer caie cenleis, ictail sales locations, garage work renters, switching centers;, cell sites and data cent el's Furniture and other consists ot telephone equipment furniture, data processing equipment, ollice equipment, motor vehicles, plant under consnuction, capnalired non-network computer software costs and leasehold improvements A portion of our property is subject ;u the liens of their respective mongjges secunng funded debt

T*bk «f Canirati

Table »f C*atrai«

On September 15, 2010, the U S Bank National Association (U S Bank), as Litigation Trusiee for the Idearc Inc Litigation Trust (Litigation Trust J, filed suit in US District Coun for the Northern District of Texas against Verizon and certain subsiduncs challenging the November 2006 spin-off of Venron's funner directories business then known as Idearc Inc IJ S Bank which represents a gioup of creditors who filed claims m Idearc's bankruptcy, alleged ihal IdcJie was insolvent at the time of lhe spin-off or became insolvent shortly thercatiet The Litigation Trust soughi over S9 billion in damages following a two-week trul in October 2012 hnnled lo lhe tiuestron of lhe value, ctfldearc Inc on lhe dale oftlie spui-ofl on January 22 7013 the Court issued a decision finding thai the value was at least 5 12 billion As I I? billion exceeds llu value ol ilie dent ami e.i-.h that Mcnc trari*1er:t d to \'rr;i:n or, she r!te or iln -.pin-o:! the (our i*s-.:. d ._; iclai. d t inkr r "s'i.wv Cause itn. ding in. l.nig.ii i.m I m.-.- m stibir.'.t a Iniel ihal evplains why any (or all) ol its icgal claims arc viable in h|-ln ol lhe court s tir.Jinit or: Id. aic's \ alue I:; its June IH 2.01 i deeisiem tlie Court entered judgment :'oi Vcn/on and ii:. subsidiaries -ud mled that 1¹ "< Hank woi,!,| \Ai-nothing' on its claims US Hank nppca'ed ihe deeisiem to the C'S i onti or Appeal' fn: ib.e 1 .r.i- i i:ciiit. where b'lci'mi: t:. si heduJci! in he i .irnplrn-d in (hi: fn.i quaitei nl 201 -

. Ine

slat

201 !

thai

,u I'o

and earned oui m a wav iliai left lairl'mi:; in b inkrupli y Ihe l.tiiiuKor. iiust s_Vek< .LpproMinaiei Disincl Cour loi ihc Western District ol North Carolu fried a summary judgment nun mil lo dismiss tb. uen ci.uMs i tlat:b::. n: t_rjnslsl On Jun. 12 ?C* 1J the (.ourl gn.riVd VellAn. Trust's constructive Iiaiidulenl Han-dci claim A two-week bench LVecmhci I? 2013

Litigation Tr.isl .rcatcd dulir'.g the bar,kri:pi. v nine cce! I ug s of fanIV:uI n Mceklenbeirg County North Ca:oiina. again:,! \ci:,'on and olher n l.itci! . in ol'Venzijn's land line opeMtuins in Maine Ni w Hampshire arid VciiTimil vent oi !cei to us insolvency shortly thereafter and i.

lb.

:.i:l;or, in damage". \\ri/n reuaie e.l I November ?(U I Ai the close ol discon

IjiiiI

s Oilier notified Yen/on C.ililorma file ar.d sasle .st.-.tules ji;un.iril\ aiismg from ill. dispo., ttics We aie cooperating wnh ihii iiivcsiigatio! us ivasi. Wink penalties rel.tnng I.- ihi olh._;itelv iniiirred will be mts:i.il

tary mdgr,'

In tlctobei 20IJ. ihe- v jlilorni.i Auorney (.er.eni pnleulu] violations ol California si.,i_r ha.'aidous battciici and aeiosot ciiti ai certain California fac operations n lating lo the maria;te:ie!ii oi h.i/ai.l v penalties ultm

* I dO 01)0 we do noi e.vpeci thai

The pnncipai market for trading in the common slock of Verizon is the New York Stock Exchange As of December 31,2013, there were 585.931 shareowners of record

High and low slock prices as reported on lhe New York Slock lis change composite tape ol transaction* and dividend daia .ire as follows

i SI J""* i j(, (13

5144 45 (IS

Market I'nce _ Cash llividind

llirh Low Diclar.it

:i;i:

rtli t.ii

2U13 I'ouTth Ouarter 'I tindOiiaitri Sntind Quarter first Quarter

Iii .-.st

S JO M 42 IK

100 million shares,

determined that I
pennits Vi ri/on i i orporale needs 11 this auihon/jiioii

l"n<l Oar

red the i

On rcbiuaty 3. 201 I. lhe Board approved a share buy back program wind Ven/on e ommon sioek Icmiinatnig no latei than ihc close of business on I'chni.ny ?!i 201J Ihe Hi,3rd a additional shaies weic to be puichased undei lhe pievionsly a utile: it/cd hiiyback program lhe piogra repurchase shares over time, wnh the amount and liming ol repurchases depending on market conditions an Company mac also enlt.i into Rule I0h5-1 plans from lime |.> lime in Itie ilitaiit icpurcliases of its shares undi

Rule lOb.1-1 plan pennits the Company io repurchase :.hares ai limes when it might oilier wise be prevented from doing so provided the plan is adopted when lhe Company is nol aware of maicnal r.on-jiuhlic information

D.nnig the loin 111 quartet ol 201 t Ven/on did nol repurchase uiiy sli.nes of Venzon ccuninon slock Al Deceiubei .v I 2(11 c (In number of shares Ihal could be purchased by or on behalf of Ven/on under oui share buyhark program was \>b "i

:i page 9 of Ihc 20(3 Vei

Annual Report io Sit are owners, win

lc the section rntilii'i! Stock f'crl'on nuaied hole in by tetciitrn e

Infoiirtation iei|iiired by ihis r.cm is included in the 2013 Veiizon Annual Repuri to Shateowneis tinder li.c' heading Seli'itcil r-'inarie'ial I >ala on page °. wIiicll is incorporated licirni by leleienre

l.ti.:n:i.iiit.i'. requned by tins Hem is included in the ?(j:'= Ver./on Annual Jp..it : Sh .n own. rs mid.': ih< he iJnig ' Mai:.ig.'iiiei:i s Pisrussioii and Analysis of 1 inancia; Criiiuron ami iirsulis oi i Ipeunotis mt page. III ihi.nigh ;> jihnl: is inioi|»o:nted herein by icier nice

Int'omialiiiii tequueil by this lie ill is meludcct in the 20] 3 Vet 17.0:1 Annual Re-pun tn SliJiiowiieis undei lhe lieadinj' Market Risk on page .'M. wiiu-ii n mcnipor.iicd heiem hy reference-

lritonnation ;,,pi:nd by tins item is included in Ihe 201 < Vcn,-^n Arin.i il Hi pert to M-jicswini- n ; age- :hroii.::l. 7, v.lmr. is 1111 oipnra'.eo here 111 L>> rclerence

Our chief executive officer .ind chief fin.irn.ul uldeer have evaluated the elite livelier', nf the registrant's disclusutc controls and proceduics (as defined tn Rules I 3a-15(c) and 15d-l 5(e) of the Secunlies Exchange Acl of 1°3J), as of ihe end of ihe period covered hy this Annual Repon, that ensure ihal information relating 10 ihe registrant which is icquired 10 he disclosed in ihis icpoil is recorded, processed, summarized and icporicd within icc|uned time periods Based on this ev aluaiion. oui chief executive uificei and chid financial oltitci have concluded that ihc registrant's disclosinc cnntinl* and piciccduics were effective as nt December U.:0n

In the ordinary course of business, wc ic-vtew our system nl into in a I control ov el liiiancial reporting and malcc changes to uur systems and processes intended in ensure an effective internal control environment Vie are continuing an initiative to implement new financial systems thai wilt continue in phases over the next several quarters We are also continuing an mutative to standardize and centralize transact iun-piuccssiiii> activities within cun ac counting processes, which wc expect !o continue ov er the next several yer.rs These initiatives will incorporate certain changes in pcisor-.nc! as well In connection with these initiatives and the resulting changes in our tin uncial systems and transaction-processing iitiv itie.s ihc Company continues to enhance the design and documental ion of our internal control processes lo ensure Ihat controls over our linancial reporting remain eilcettv c

Uxccpi as noted above there were, no changes' in the Company's internal loritml over financial repon ing dunng (lie loiitth quarter ol" 201 3 thai have materially slice led, or are reasonably likely to maienally alleci, our internal control over linancial icponing

Management's leport on internal control over linancial reporting and the alienation report of Venzon's independent registered puhhc accounting linn are included in the 201 3 Ven/on Annua] Report to Share-owners on pages 3d and 37 and ate incorporated herein by icterence

Set lorih below is intonnaiiori with respect to out

Name

Lowell C McAdam Roy H Chestnult Roger Ciuninni Daniel S Mead

Anthony J Mclone Randal S Milch W Robert Mudgc Marx C Reed Francis J Sbammo Anthony T Skiadas John G Stratton MamiM Waldcn

Chairman and Chief Executive Olficci 2011

Executiv e Vice President - Strategy, Dev elopment and Planning 2013

Executive. Vice President and Chief Inlormation Ullicer 2010

Executive Vice Ptcsidcnf and President and Chief Executive Officer -

Venzon Wireless 2010

Executive Vice President and Chief Technology Officer 2010

Hxeculiv e Vice Picsidctit - Public Policy and General Counsel 200ft

President - Consumer and Mass Business Markets 201 2

Executive Vice President imd Cruel Administrative OlJiccr 200-1

Executive Vice President and Chi el financial Ollicct 2010

Senior Vice Presidcni and Controller 2013

Execultve Vice President and President - Venzon Enterprise Solutions 2012

Executive Vice President and President - Product and New Business

Innovation 2014

Prior in serving ru an executive officer each of ihc above officers ha* held high-level managerial positions wnh the Company or one of its subsidiaries for at least live years, with the exception ot Mr. Chestnut!, who has been wnh the Company since 2011 Off) ecu arc nol elected for a fixed term of office and may be removed from office al any time at the discretion uf (he Board of Directors

TaUr rCunteon

Roy H Chcsinutt is Executive Vice President - Strategy. Development and Planning for Venzon From the lime he joined the Company in 2011 until he was appointed to his current role in January 2013. Mr Chestnult was Senior Vice President of Corporate Strategy Pnor to joining Venzon, Mr Chcstnuii served as Corporate Vice President of ihc Amcncas at Motorola Networks from June 2010 lo June 2011, and from 20H6 to 200°, Mr Chestnult was Chainnan and Chief Executive Officer of Grande Communications Networks (Grande), a facilities-based provider uf bundled communications seivices Pnor lo joining Grande Mr Chstsinutt held a variety of man age merit positions with Spnnt-Netcletl Ccviyv oration, Nevtcl Communications, ami AirTnUcli Comuimiii a lions

Set forth be-low is information wnh ic<ihc< to Dncclcis cuiicntK m office who aie relino_i: Jrc■.-■ i ihc Unaid of Dneciois iii Apnl If'l-: .ind aie r.m standing loi rc-i kciion Sandi a O Muo.vr

Dr M..SC. "2 is I'resnlc-ii! ol Strategi. Aili i*oix S. n :■. v LLC a c n ailim,; linn Mi. vvjs S.riioi M.'iagine r'.utii.r fib. H<n>n Cons-jlting Croup Inc (HCO) until 200 ! Ai UCf.i Di Moose prov ided strategic pi inning op.-r.mortal c lice nv i-ne>s and ie l.itcci cons'.iKing services to global clienis in u vjr.cly of indiistm s including cor'.sumci and mdiisin.ii jjooci. financial scivi.es and lelecon-.rnur.icauoris. .ivc: a J5-y...ii creei Di M.n.se was a pnncipai Toutidu ot DO ! ina::ci.i; s,-_:v ,_lt-s pr.,clii and a key conirit>iil«r to '.he development of the linn < early managertierii concepts She led ftCG s New ^ oil office Iron I "hi> lo 1 *>S ami was Chan ofthe Ea.l Coast region win. h hi . oiink d !.n appr.i.Minatc l> 2(l^r:V ot HO ■ s overall uuinio :i.,m I 'i'.u l ]'I'm

I!h Mcose's experience al UCC .".i a Sliatcgic advisoi io diverse clients enables liei to adv :se the EJOard and senioi management on key issues nf toipoialc strategy, including wnh ic'speci to global growih consumer goods and '.ci. t omniimii ali.ins issues In addilit'n lo tiei strategic planning expertise Hi Moose- lias been ilie ih.nr or presiding tineeior ; j.-.e-ral publu eo.rip.inies and several chantable inganittations, which has gum hn extensive i-vpcitise in coiporatc gov eiiiarn e I h Moose aUn hiiiigs to the Board substantial tinnucial expertise and insights into the views oi institutional nnesiors winch an important to Verizon as a public * ompany

Di Moose has seised as a Direclni ol Vrn/on since 2000 and was a diteeior of OIL Cuipoiation Irom I'l/S to ?injtl She is Presiding Director, Ohairpfison of ihc Coiporatc Oevemantc and Policy Committee am! a member of the Aitdn C"mi:i.:tse Di Moos,- is also Chairperson orihe Hoard ol Irustee- of Nam is Ailv I «n funds (whir. vh. has scivcd as a mist, i- of the n.nds and then pfedecessois since ]«S2Jand Loomis Sayles funds [where she has served is a tnisicc sinee .'(in if ind a director ol lhe A1;S Corporation {since 2001) In Ilie past five ycais Pi Moose has hcixcM on ll b.uid .,1 Kol.m in.I I fans 'ompanv as its ka.l

Following his work at the National Urban League, Mr Price was Senior Advisor of DLA Piper Kudnick Gray Cary US LLP from 2003 to 2005 and a Non-Resi deal Senior Fellow ofthe Economic Studies Program at The Brookings Institution from 2006 to 200K From 200H lo June 2013,'he served as a visiting professor at lhe Wood row Wilson School at Pnnceton University Pnor to joining the National Urban League, Mr Price held a variety of positions in journalism, law and public interest organizations, including serving on the Editorial Board of The New Ynrk Times

I i

Joseph Niuhaucr

Mr \\i:haiier 7? is Cliainuar: oi AKAMAKK Iloidinits Cnipoi/iion and its snhsidiaty ARAM AK:i Coipomiror: a prole .ta.ma! sl-imccv company Until May 2012 he was also lhe duel r.vecmive ( mice! He ha, served in those roles wnh \R.AMAlU. and it, picdcfssors for moie than ?« vc.ns AKAMAI-K s .■.i>pio\irria:elv i:(Ki .-n,p]ui res _r,_nv i.- l'.....: t:s]-.i:l:r-. tacilnv an.i umfomi senices :ii 22 couuirics and geneiaicd 113!) binum m nveiiuc during Us 101.' :i-al yen Mr rscub.rjsi je'incd ARAM ARK s prede-i cssot. AHA Seniles , l»7V as ]"m.ii!ivi Vice I'rc-vidcut ol I'iriaiie C .un: IX v . feipim nt. Ct.-ef I'niJ-i. i .o liMic.i .--u.1 a dneeior lb- w: s clc.r.d I'r. s,,|_t-n! .,: : o_f:; Cl,:.: i.vc unv, ( lib., i m i : aii fl, .:::,. ■ .n :"C ;

During his long unute as Clunmaii nid Clnel t.xecuttvc Officet of AK.AMAKK, M: N'ciibauei gaitieil business .,nd inariageinciii expern-nre Irarhng a laige. complex or_;* mi.-.ation w;t!. inre:riIion;:l i.]-ei.ilioiis .md h.ige liivef'-c viorklmie 1 his c>.pcrn:ne e Civ es !nm a ihorouph undersiandini; ol many .niportar:; isstic:. facini¹ Vcn/on Mi Neubjuer bnngs ro ihe Hoard, along with olher skills a lis¹. ciualillc*t-.oe.s, trlMiSixe exp^il-.w ill eiv-.^'iiile linai-.ee stiite ey and dc-s e-lopttie ill tits '>iojd \ gisoind in !iu>jn!jliiy

arid business e u^io'iiei S. w inch is Oil i. a I to Veil/oil's - uc e Css

Mi NcHbaiiei has s-,scd .is a Director of Ven/mi si::, e .md is (.'Itanjicrse'ri oj iln ii.unar. H i soon es <'.i.rrr:.r-_l - Ikn.ibi.j

itn. l;o: ol Ma.y s. Inc (since l"V:i

Hugh It Vr.i,

i.-r. I'tif 72. i, Nnii.Ke.si.lent Sero. r fellow at Tb.- Hiookings lr,sii;-n.)ri. an mi;e;-irl.-.u r. M _Jlfh ar! police i:.s;i;,nr Mr Price w.is t':es:,l, nt and ' inel I ven:iivi- Cnfnei o! ihi- Natirmai tittian League i'rom \"'.'-- uniil 2111'.- I'tnirn: .! a. nn.- V.i I'nee :s-sirucii':eii ns board o: directors developed ::i w n-.^s]n ;.ir ihe i i-.irt.c ar.d es'.-idnlic.; n. icte.nch ,.id p.'inv .enter

! i

r«)>lr ol <~aaumi

Mr Pi ill- bungs to the Boaid. among other skills and qualifications a wide range of cxpciicncc in leadership positions itt hc-th lhe ' pnvatc and non-profit sectors As a result of his experience al lhe National Urban Lea gut. and The It rooking! Insiiiiiiion. Mr Price is able 10 advise ihc Board and senior management on econumic, government and public in I err si issues lbs extensive management and leadership experience enables him to pros ide insights on corporate governance matters He also has expertise in strategic planning, operations management and husiness services, which are critical issues for Ven/on

Mr Pme has served as J Diic-ctor of Verizon since 19"7 and was n Director of NYNUX Ooiporation liom 19V5 to 1997 He is a member of ihc Corporate Governance and Policy Committee Mr Price is al*n a director of Meil.ife Inc (since |u°9) and Metropolitan Life Insuiancr Company (since 199-1)

(Alter uifomiatiou requned hy this item is incorporated hv reference to the biogiaphies ofthe Dnectors standing for ic-election on pages 1 1-16 ol Exhibit 99 the section cmnlcd Section ld(a) Beneficial Ownership Reporting Compliance" on page 5V ot Exhibit 99 ihc Section entitled Business Oiitduci and El lues' on page 2 ot Exhibit 99 and the mloiinatinn relating lo tin Audit Co m mil tec on page 5 ul Exhibit 99 1 heir h*ve been no material changes to diarcliOldci nominating pioredures

Infonnation will) respcel lo cxeculuc coi_rlpi-nsa:i.m is irieoipoiated by tcfcrciicc to the sections entitled Compensation Discussion and Analysis" and ' Compensation Tables on pages j l->7 of Exhibit 99 The Coirtpcrisjtior: Coinmitice Report is incorporated by reference in page 11 of nxhihil 99 '["here were no compensation cnmmillec interlocks or insider iransaclinns required lo he disclosed pursuant io Hem--07(e)(4) nl Regulation S-K under lhe Securities Exchange Aci ol 1 93-1

Inlonujtion with respect to security ownership is mcorpntaicd by rclerence to the section cntiiled Security Owneiship ui Certain Henefici.d Owners and Management" on pages 57-59 ol Exhibit 'in

The following table piovidcs inlormation as nl December 3 1, 201 t joi |i) all equity compcnsatinii plans pieviously appicved by the Company's shareholders, and (n).ill equity compensation plans nut pieviously approved hy Ihc Company's shareholder Since May 9 2009 the Company has only issued awards undei ihc 2009 Vcrif.on Cnmmuiiie ations luc I.ong-Tcim Inceiilive Plan (2009 L 1 IP) which provides loi awaids of si,,_i:k option*. ie<iiicled stock, resiiicle.s stock cunts, pcilonnance stock units and olher equilv-based hypothetical stock units to err-.plov ccs of Vet iron and its subsidiaiics No new avi-jidi aie permitted lo be- issued undei any other equity compensation plan fn accordance with Sf.C rules ihe table does not include outstanding awaids thai are pax able solely in cash by the terms ofthe aw^rd. and such awards do nol reduce ihc number of shares remaining for issuance under the200<» LT1P

hnrt u'^irc ■ nan

Flint a rfunnM llil|l>4«in|i «■)■(* itip«iiM iitart" apn nnnir ! noau pner ! slui <nd»di»(

l>l» <*ir«m wimib » n_ttih |»| wjrrjim » ri_tr.fs |b) (linw |i)| If)

Equity compcnsalion plans approved

by security lioldeis 17.I33.V26 <" 1 3-1.35 ^,:' 99,Uh2,4Hl Equity compensation plans nol

approved by seiuniy holdeis 248,75ft'*¹ Total I7J52.682 $ 34.35 99,0«I,4*3

(1) This amounl includes 9X2,881 shares of common stock subject to outstanding slock options, 16.120,285 shares of common

mock subjccl in outstanding rcsmcted stock units and performance stock units, and 30,7oO shares subjccl to outstanding

deferred stock units, in each case including, for awards other lhan stock options, dividend equivalents accrued on such

awaids Through December 31. 2013 This does not include pcrlonnancc stock units, deferred stock units and deterred share

equiv alcuts payable solely in cash Nunc of the outstanding stock options include tandem div idend equivalent nghls

(2) This nuiiibci leflects the weighted average exercise pnec of outstanding stock options Venzon'i outstanding reslnctcd stock

units, performance slock units and deferred slock units do nol have exercise pnees associated with the settlement of these

awards

(3) This number reflects the number of shares of common stock that remained available for future issuance under the 2009 LTIP

(4) 'this number re Meets shares subject io defened stc>ck units ciedned to ihc Vcn/on Income Detciial Plan, winch weie awaided in 2002 un.lri the Vcn/on Communications' Bro.itl-Based Ineenlivc Plan No new awards arc pcniullcd in be issued under . this plan

Tahlr rCoalnn

Inlormation with respect in transactions with related persons is incorporated hy reference to the section entitled 'Related Person Transaction Policy" on pages 2-3 ofExhibit 99 Liformaliun with respect io Director independence, is incorporated by reference lo the section entitled "Independence" on page j of lixhibil 99

Infonnation with icspn t to pnncipai accountant fees and services is incorporated by relcieuce to the sec tion entitled Ratification ol Appointment ol Independent Registncd Puhiic Ai counting firm ' on pa:;e 1 7 ot I.'vrobi: <i>>

(a) Men iimenis- filed a-.- part of this report

1-■

11 ) Report ol Management on lr.li i:ial Coiilinl CKc r 1 niaiic lal Repoiiiag

(2) Report of Independent Registered Public Accounting 1 urn on liuenial Coniiol (h ci rni.iiiei.il Reporting

(s) Report ol In.fc pendent Registered Pnhlic Accounting I'trm on I'niaf.i lal Statements

financial Statements c ovcred by Rcpoii oj l;idc-pcndenl KegisKr. ii Public A; ■ ourMiri! Firm Consolidated ^laleineiils ol hu<*iii_VConsolidated Statements of Coiiijtichensivc Income-Consolidated balance Sheets Consolidated Statements ot Cash flows Consolidated Statements of Changes m Equity Notes to Consolidated Financial Statements

* Incorporated heiein by icfe'iencc to the appropriate porttens ot the icgisii.ui: s -\jiii-...! 1 Kiport to Share own en, iii; the fisciil yeai ended Decenbei *] 101 * (See Part II I

(^1 Financial Siatemen; Schedule l.s| ilxhibits

2-1

TabkrafCanirati Exhibit

Number Description

3a(i) Restated Certificate of Incorporation of Venzon Communications Inc (Verizon) (filed as Exhibit 3a to Form 10-K for the

year ended December 31, 2O05 and incorporated herein by reference) 3a(it) Certificate of Amendment ol Restated Certificate of Incorporation of Verizon, effective Fehniary 4 2014

lb Uylaws of Venzon as amended, effective as ul December 3 2009 (tiled as Exhibit 3b to Form 8-K dated December 7. 20K9 and incorporated herein by icfeiciice)

Jn Indenture bclween Veil-on bo'.li individually .md as sucecssnr in mierc-si i.i Vcn/mi O.obal Fundni,; ("nip iiini IS [t.:iik National Association as success, trustee to Wachovia Hank. Natrona! Association Joinicilv known as- First Union National Hank as Iiustee dated as of Dccembei 1. 2000 (.iiicoipcuateci bv leleience io Ven/on Global f itnelnig Coip s Regislialion Siaicineiil cm Fonn S-! Repislialion No 333-6-1792 Inhibit 4 Ij

■lb I nst Supplemental Indentuie between Venzon |...ih individually and as s-.n i e-.srvi in uiiiiesi lo Vei-.t-on Clonal 1 lindiin'

Corp and US Hank Nalron.il Assoc latum .is suc.e-.sor inijlee lo W.ich.<in. Bati'i. Nniuiial Assoc i.-Mon fomterlv ! known as I'nsl Union Naiional Hank as Tiustce. dated as nf May 15 2001 (me.oiporalcd by rcrciciicc io Vcn.'.nn Olob.d \ Funding Corp s Regisiiation Suicmem on Foim S-3. Registiaiton No ]1 ?Ji74 12 Exhtbii a 2)

■le Sc.ond Suppleriieni.il ludeiiUiic between Vciuou. both individually and as mihl«i.i hi imercsi io Vcii/.on Global Funding Corp, and US Hank National Association, as successor lnistoe to Wachovia Hank. National Assoc latiou, lomcily knowTi as Fust Union National Dank, as "Inistee, dated as ol Septembei 2'j. 20U4 iim oip.'iated by refercrice to Form X-K filed on behniary '>, 2tl0rs, l.sbibit -1 1)

■Id Third Suppk-rnental Indenture belwccn Vcn/.on. both nidnidually anil as successor m nitcies; io Vei:/on Cilohal Funding ("orji. and US Hank National Association, as successor inisic-c in W.iehoii^ Bank. National Association, fonnerlv knnwn as First Union National Hank, as Tntslec. dated as ol September 2'¹, 200-1 (mcorpivrjicd hy reference lo Fom-.S-K file-don February 9 mon F.xhilnl 4 2j

Except lot Exhibits 4a - -id above tin oilier nisiniineni which defines the rights oi hidden ol long-term deb; of Ver./on and lis consolidated suhsidunes is filed herewith pursuant io Regulation S-K, Iiem otj)jtii(4)(i:i)( \) I'ui^uarit to tins legulatiou. Venzon hervby .igiees to ruinish a Cujiy ot any such instrument to the Sf (.' upon icquesi

:0a fITL s Charitable Awards Program 1 tiled as Exbibn 1(1-10 lo OTF s form 10-K :oi the >ear ended liecember '1. \^r>^c-: File No i-?lt''> ami incoiporaieel herein by reference) *'

Klb NV\^:I:.\ Diiecmrs' Charnable Awaid Piogrr.rn (filed as F.xhibit ltli to I'onii ld-K" Im the year ended December 31. 'MUM .md ineorporaled herein hy rcbrcni.e)"

Inc 2009 Ven/on I nng-!enr. Incentive Plan. As .-vjneniled and Resiaied (incoiporatcd by tcreienee i>. Appendix D ol ihe Registtain's Pio.sy Statement included in .Schedule 14 A filed on Match IK. 20! } ' '

IDctil Perfonnince Slock On it Agsc i-mcnl 201 1-20; j A cm; CycLi (tiled -s h.xltihn |Cj lo 1 din LO.i.i k.r me pc-io.f ended March ? 1 2011 and in. orporated herein by leleience) *'

idc-lii) Rcstr.i-tcd Sroik Unit Agrceuleil! 201 1-201 i Awaid Cyc le (lilcd as 1 >h:bii 10b to 1 oim 10 (.1 :;.] the pcrio.'.

endcil March * 1. 201 1 and liicoipmated herein by icfe'iencc) *

lUcimi Foim,.t2:H 1 Spe<ial Pitiom'.nnc Sl.ick Unit Agicerneiil (filed aslMnb.t 10 ;._; loin: 1 H-0 ,._t _IU,d ended

S.prerubei .() 2011 anri roce-ipoiated by r. 1. rcncel * * j

lOciiv) Performance Slock Unn Agieemcni 20]?-20!-1 Awaid Cycle (Jiicd as r.>bibii I0a to form !()-0 foi ihe period | ended Maiih 31. 2012 arid im ornoiat. d herein bv refcrern j " '

i i

1 ililr ( fori mil

l.hlr efC.Wmn

: to Appendix C ol the

ii ended Decembei 31. 21)0 4 and incorporated

s amended (tiled as Evhibil !0h ended December 31. I°!>7 and

ir ended Dcecinbei .1 1.2010 and

I0c(v) Restricted Stock Unii Agreement 201 2 ?01 J Award Cycle (filed js Exhihn 10b to form 10-Q for ihe penod ended Match 11, 2012 and incorporated herein hv reference I * *

1Oc{vi) Prrlonuance Stock Unit Agreement 2013-2015 Award Cycle (tiled as IMnhn 10a in Form I n-Q (cn the period ended Man.li 11 2011 and incorporated hetem hj reference) *'

10c( vi "I Resulted Slock Unit Agiceuienl 20)3-2rilS Award Cycle (bled as Exhibit 10b to Fnnn H'l-U foi lhe penod ended Man Ii 31, 201 3 and iiicnipoiated heiein hy r. leicucc) * *

Ifld V'ciiznii Sliorl-Teim Incentive Plan. As Amended and Restated (incorporated by re tot Registrant s Proxy Slats men t included in Schedule I4A filed on Maich 23. 2(IU91 "

Ven/on Income Detc-rTal Plan (tiled us Exhibit KM to form 10-0 i'-i the penod ended June 30. 2002 and incorporated herein hy refcience) * *

HMD Des*npliun of Amcndmeii: to Plan (filed as Exhibit lHodjto Four. 10-K for the year ended Dccc-inbei 11 2H0J and nicoipoialcd hcre'iii by tcfcicncc) * *

mi Excess JVnsion Plan (tiled as Fx hi hi I 10 p tn Form K>-K toi the ti byieferencer*

UlRil Description of Amcnifmeni ro Plan (filed as Exhibit I0p(tj to Fotm 10-K for the year ended Decemhct "1. 2004 and inrorpmated herein by refeience) * *

GTE's Executive Salary Deferral Plan a.s amended (filed as Exhibit 10 10 n. (iTF.'s Finn :0-K lot ihe year ended December 31, ii"vS. File No I -27j 5 and tncoiporateJ herein bj telcrciicel "

Isell Atlantic Scniot Management Long-Term Disability and Stin nur I'loli-cnon Pia to Fmm SE filed on March 27_: ]98d and Exlnhi; JtJbniJ to Fotm 10-K for tlie y, incorporated herein by reference) * *

KiTE Executive Retiree Liie Insurance Plan Hi led as Exhibit l(lq lo Konn 10-K lor Ilie incniponiied herein hy refeience) **

Vcn7on Executive Life Insurance Plan. As Amended and Restated Scpterr.hei 2009 (filed as Exhibit Ids to Form 10-K tor the year ended December 31.2010 and incorporated herein by reference) ""

ii II).Q loi the penod ended June 30 2009 _;i|id incorporated

10k Vinson Executive [X-lenal Plan (filed as Exhibit 10c to I-herein hy reference) **

101 Fotm of Aircraft Time- Shanng Agreement (filed as Exhibit lOv to Fomi 10-K for the year ended December 11 2010 and incorporated herein by reference) **

10m NYNEX Deferred Compensation Plan fur Non-Employee Directors (filed as Exhibit lOgg to NYNFX's Registration Statement No 2 -37350, File Mo 1-3603 and inuoipoiaied herein by refeience) **

I On Amendment in NYNF.X DeTened Compensation Plan lor Non-Finploj ce Direciors (died as Exhibit 10m 5a to NYNEX s Quaitetly Report on form 10-Q for the period ended June ">fl. !99o, tile No 1-KoO.H and incorporated herein hy reference).

lOo Venzon Senior Manager Severance Plan (filed a* Exhibit lOd to Form 10-Q for the penod ended March 31, 2010 and incorporated herein by reference)**

JPMotg.in Chase Bank NA as l K-K filed on Oclnhn 1. 20 P and

I Op U S Wnelesj Agreement, dated September 21. 1999, among Dell Atlantic and Vodafone Ainouch pic, including the forms of Amended and Restated Fid nei ship Agreement and Ihe Investment Agieemeni (filed as Exhibit 10 to lomi tfl-Q for the period ended Sepiembei 30. 1999 and incorporated herein by reference I

iOq Tenn Loan Credit Agreement, dated as of October I 2013. among Ven/o administrative agent, and the lenders paity theieto (filed as Exhibit 10 1 to Foi incuiporated heiein by icfcicncc)

inlet

* tor the fiscal yei ns Fomi 10-K a

December II. 2013 filed heicv the exllibn

12 Computation of R aim of Earnings to Fixed Charges filed herewith

13 Portions ol Verizon's Annual Report to Sliarec Oily tlie information nicorporaied by rclerence

le'luded ii

2 I List of principal subsidiaucs ol Venmn filed heiewnh

23 Consent of Emsi A Young LLP hied here with

3 I I Crmficaiion ot Chief Executive Ollicer pursuant to Section 302 of ihe Sai banes-Ox ley Act ol 2002 filed heicwiili

It 2 Certification of Chief Financial Officer pursuant lo Section 302 of ihe Sarbanes-Oxley Act ol 2002 filed herewith

32 I Certification of Chief Executive Officer pursuant to Section 906 of lhe Saibines-Oxlcy Act of 2002 filed herewith

32 2 Certification of Chief Financial Officer pursuant to Section ^u06 of the Saibane i-O.xley Act nf 2002 filed herewith

99 Selected CorjiniJle (iovenunee and Executive Compensation Information included in the Preliminary Proxy Statement for the Venzon 2014 Annual Meeting ol Shareholders filed with the Secunlies ar.J Exchange Commission onlebiu.iiy2iS.2014

101 INS XBRL Instance Document

101 SCH XBRL Taxonomy Extension Schema Document

101 PRE XBRL Taxonomy Picsciiiation Linkbase Document

101 CAL XBRL Taxonomy Calculation Linkbase Document

r anangcmcni 27

101 LAB XBRL Taxonomy Label Linkbase Document

101 DEF XBRL I'axonomV Extension Definition Linkbase Document

Indicates management contract or compensatory plar

Tahlr >( Caalnti

Schedule II -Valuation and Qualifying Accounts

Vtrizoa Communication) lac. and Subsidiaries

For ill*.- Years Ended December 31, 2013. 2012 and 201 1

Tabk«fC>Dtrali

Pursuant lo the requirement* of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the rep i strain has duly caused this report to be signed on its behalf hy the undersigned thereunto duly auihonzed

Date le-hiiiary 27, JON

has been signed be

Balance at utol Permit

(dollars in miliums)

Etalancr at C h:.i«fd lu

Rsginmn;; of (.'harped to Other Accounts Prdutiinns

Period Kxprnscs Nule laHb) Note (Old) F

IKsciiptjfli

Allowance lor l.iicollcetible Aecounis Kcii-ivahlr

Ymi 201.1 J hj

Year 2t»l2 M YeairiMl fc-;

Valuation Allowanc. loi IXI'encd Fax Assets

Vai :l)lt S 2,04

Year 201? 2.* ?

, includes amounts preeiously wnttcn off which v

Ye-i?tMl SJ¹

(jj Allowance- for Uncollectible- Accounls Receivable primaril dnecily- to this account when icenvered

(b) Valuation Mlsiwiincc fur IVfeneci Tn\ As<ci-\ include s am

irt'bf viiie.itioii-. fi.sn: ntin-i balance sheet accounts

lC) Rc-dnctimis tn valuation allowances relaied to defend! lax a

Vr.R]'/.nN CDMMUN1C AI IONS INC

Rv rV Anthony T Skiadas Anthony T Skiadas Scnioi Vice President and Con

i'utsuaiil io the icqinremenr; of ihc Scei on bchalr ol lln registrant and in Hie car

I'rnii ipal Fscculive dllice

!n Lowell C McAdain Lowell C .Mi Adam "

Principal Financial Otlicet 's' I tam.is I Sli.inimu

Francis J Shainino IVine :pal Accounting Oijir li! Anthonv I Skiadas

Arillioiiy T Skradas

nes I-lxc haiige Act ol |v).j4. this rcpo I ties mid nn the dales indicated

Chainnan and Chief E.xeeuliveOniiei

i c Vice Pieside-ni kijI Officer

Scnioi Vice Pre Conliollei

February 27.201 1

February 27 2011

Fchniary27

Febnuiy 27 20i4

Fehrvarv 27.2014

Februaiy 27 20)1

Fehniaiy 27 20)4

Fchiuatx 27.2014

Fchruarv 27 2014

libit ml ChIchM

/S7 Slicllyc 1. Arch * nib c a it Shelly l L Archambeau

.'.I Richaid L Carrion

Richaid 1. Caniun

■sJ Mclanicl. He-Icy

Mclanie I. Healey M Frances Keith

M Frances Kccth

Rohert W Lane RoherTw l.ane

Sandra O Munse

Sanilra O Moose i'V Joseph IV; ii batter

Joseph Neuhauer

■'s' IV'nakl T S'icoIjisci Donald T Nicolaisci

■V ("lair.rice Oris Jr

Claience Ois Ji Hugh B fine

Hugh H 1'nce Rodney II Slat.

Rodney 1": Slater If.! Kailiryn A TcMja

Kalhiyn A Te«ija /s' Gregory D Wassor

CERTIFICATE OF AMENDMENT

OF _ -

RESTATED CERTIFICATE OF INCORPORATION OF

VERIZON COMMUNICATIONS INC

Veri7on Communications Inc (the "Corporation"), a corporation organized on October 7. I *>S3. and existing under and by virtue oi the General Corporation Law oi the Slate of Delaware. HEREBY DOES CERTIFY

FIRST That at a meeting ofthe Board of Director: ofthe Corporation held on September 2. 2011. resolutions wen: duly adopted approving a proposed amendment to the Restated Certificate of Incorporation 'the 'Certificate Amendment") ofthe Corporation and recommending that lhe proposed Certificate Amendment be approved by the stockholders of the Corporation Tlie Certificate Amendment is attached hereto a.s Exhibit A

SECOND That ihoieatlei. pursuant resolution ofthe Corporation':. Board of Dncciots a special meeting of ihe stockholders was held on January 2H. 20 N upon notice and in accordance with lhe provisions of Sect ion 222 of the General Corporation Law cl ihc State of Delaware, at which meeting a nujiuiiy ot the outstanding stock entitled lo vote thereon was voted ui (avoi nt the Certificate Amendment as proposed by lhe Corporal ion's Board ol Directors

THIRD That the Certificate Amendment was duly adopted in accordance v, ilh the applicable provisions of Section 242 ol lhe General Corporation Law of lhe. Stale of Delaware

IN WITNESS WHEREOF, lhe Corporation has caused this l cm fictile to be signed hy William 1 Horton. Jr, its Senior Vice Pre .sr. lent, Deputy General Counsel and Corporate Secretary-, this 3rd day ol February. 2014

VEKI/.ON COMMUNICATIONS INC

By -il William L Hon on Jr

William 1. Honon, Jr

Senior Vice Piesident, Deputy

Gi.netal Counsel and CoiporaU

Years Ended December 3 I,

CHARTER AMENDMENT

Article 4 A ofthe Restated Certificate o fine omo rat ion is hereby amended and restated in its entirety to read in fill) as follows 4 Can n at Stock

A Auihonicd Shares The total number ol shares of all classes of stuck which the Corporation shall have the aulhonty In issue is 6,500,000.000 shares, ofwluch 6 250.000,000 shares are Common Slock, S 10 par value per share, and 250,000.01)0 shares arc Series Preferred Stock S 10 par value persharc

Computation »f Ratio «f Earnings to Fixed Charges Verizon Communications Inc. and Subsidiaries

(dollars in millions) 2010 2009

$ 29.277 S 9.8!)7 $ 10.483 S 12.684 S 13.520

Earnings:

480

2.Ji27

Income before (provision) benefit for income taxes Equity in earnings of unconsolidated businesses Div idends from unconsolidated businesses Inlcre s! expense ">

S 32.870 5 13.544 J 14311 S Ic.l SS

I'onror: of rent expense reptesenling interest Amortization of capitalized inteiesl Earnings, as adjusted

Fixed Charges

Intri,'si expense "■

Portion of lent expense lepieseutnig mteiest

i to fixed eliargf)

We elassily intcie.st expense recognized oil uncertain tax positions as income tax expense and therefore such interest expense i< nor included in ihe Ratio of Famuli's to Fixed Chaises

The graph compares the cumulative total returns of Venzt Stock Index over a lis cj car period It assumes SI 00 was each respective .spin-off)being reinvested

i the SAP 500 Telecommunications Services bide*, and ihe SAP 5uf) vested on December 11. 2008 with dividends (including ihc value of "

Results of Operations

Operating revenues S 120,550

Open line; income 31,968

Nei income ullnbuiahlc to Veilion 11,497

1'er common shaic - banc 4 01

Per common share - diluted 4.00

Cash dividends declared per common share 2 090

Net income attributable In noncontrolling interests 12,050

115 hj<;

13 160

2 030 9.1". K 2

S 1IO.K75 I2.KK0

2i;10

i 106.565 14,645 2.549

I «25 7.6GH

it amimnls) 2009

J 107.K0H I5.97K -1.H91

I 8 70

6.707

274,098 3,»JJ (19,658 27,682 5h,580 3)1,836

Financial Position

fotal assets

Debt maturing within one year Long-term debi F.mpluyce benefit obligations Non co nt mil nig tnuiests Fcjuny attnbuiahlc in Ven/on * Significant evenls aflccting oui hi*--"' Management's Discussion and Anidysi!

eal canungf trends o! Financial Condili

225.222 4.369 4761H 34J46 52.376 33,157

2HI,4(i| 4 g49 50 303 32.957 19.93 B 15,970

2011 through 2013 aie described and Results of Operations ' section

220.1)05 7.542 ■15.252 2« 164 4*. 343 3S.569

I 22I907 7.205 Si.OM 32.622 ■12,761 4 1.382

2010 and 2009 daia includes severance, pension and benefit chaiges. i othei items 2010 daia also includes Medicare Fail I) Subsidy charges

Comparison ol Five-Year Total Return Among Vcrunn. SAP 500 Telci iunmunicaiioiis Scrv ices Index and SAP 500 Stocl Index

At Decemher 3 I.

Data Points in Dollars

S&P 500 Telecom Ser\ ices

Verizon Communications Inc (Verizon or the Company) is a holding company that, acting through its subsidiaries is one of tbe world's leading pros iders of communications, information and entertainment products and sen ices to consumers, businesses and governmental agencies with a presence in over 150 countries around the world Our offenngs, designed to meet customers' demand for .fpecd, mobility, secunty and control, include voice, data and video services on our wireless and wireline networks We has e Iwo reportable segments Wireless and Wurluic Our wireless business, operating as Vernon Wireless, provides voice and data services and equipment sales across the United Siaies using one ol ihe most extensive and rclnhlc wireless nctwoiks Oui wireline business- provides consiimei business and government i ustonuis with i oinmunnations products and ceixiccs in.hiding broadband data and e jjeo sen ice s network access voice. Ion;; disianc c and c-ltici ci-mnninii .uioiis pmdu.K .mil ciivuc. ami aI-,0 owns and operates one of the most cvpanslve end-In end global Inn incl Piolo.i.; tll'i llilwoik- W. h.,\c a highly skilled eissiise and dedicated woikLnce of appioximately 1 76 K d 0 employee:, as of De-ccmbei *l 2d I 3

In r.-ceni yevr' Veii/.m has cmb irked i_;po:i a .sirategic !::.n-l'erm mon a- a.le .an ,;s m iecl r:olo;:y Ii.-.k- , banged ^,.ⁱ:e e. a; > ili.it itur iu-lonieis iiiieracl in then persou.il and pio.'r.sMonal lives nut that bu-u:e_:.-.es i.penile T>- nieel the i'laiicmg needs .;: oi.i customer, an.t address the changing leelinol.igic.il landscape, we are incusing ou: ellorts aiojiui higher margin and rowing area-, of our business wirclcs? daia. wireline data and Strategic sen ices, including cloud computim; sen ices

Our strategy iccuncS significant capital invest merits primarily to ae quire wiiclcss spc. num. put tlie speeimtr. into _:;eix u e invest in lhe fiber optic network thai supports i>ui wuelcss and wireline busine^es maintain oui winks-, and wireline neiwoil.s anil di i elop jnd maintaiu Siguitii am advarncd database capacity

In oui Wireless business, in 2d 1 3 cmjiaied lo 20 I J. revenue growth ol Ci S"i sv.,s dm en by o-r.iic. tun. growHi and the deir.ar:,! tor sinanplioncs tartlets and nttier Interne: devics Daring 2013 we experienced a <;(>*, me;, .ist in retail postpaid cmnei tu ns compared to 201 2. with smanphones r epic sent ing H)'-'. of ni:r retail postpaid plione base ai I tectmr-ci '. I JOi 5 cnmpaicd to '■W. at Ilecembei «I 20 i 2 Also dunng 2013. postpaid smaitphone activaiions repiesenteo hr."i.| phones activate: coiup.,r<:d to 77% in 2012

We have subsl.uii rally c ompleled lhe deployment of our fourth-genual ion (-tfi) l.oiig-'leitn h'v ohiiion l'l. i F) network t'/ur 4(.'> Ll I: neiwork is available to 97% o! lhe US pojiiilatiou in more than M)0 maikeis covering .ipprovimiic ly ">n^;. nuliion peoph including tho->e in areas served by our I. TF in Rural Amenea partners Uur -C, 1 TF netwoik pros ides highci data ilirougl.pui p. tiormance Im data scix ices at fnvve: com compared io those provided via third gc iie.-iitiiit; ijt'ij net v. oiks b, IV< c inhet 20 I r.-J% ol.mi total data irariic. w.im arnc.i »n "ur -Mil I L" netwoik

' »n FchiUaiy 13. 2lJ]4. miinjeiei d M.nc Fve ,\i;.,i,[- ' ,,!ails wfiieh icpl.i-.cd oar -share F.v c r -. ■ I: I ll g ■ pl.ui>. and pivide in...e

ot-.d smragc and a sm^c data .Oio Cii^iomci- wnh Ven.on 1 dge ■ tees on reiinc l.'v, r- thing plans iclai] postpaid accounts corupai

201 }

ed :ln

* alue io oui ciis'omcis These plans. w)>_;. h aie av ailable 1 both in w and existing ,isip.,; eu-tomcis b.itiiri- elmcs'.₁e iiiihm.led i o:ce iv.mutcs unlimited domestic ar-d if.tct rational text, v ideo ano picture messaging cl llu: tan be shared ^rnong up lo [0 di-m >'s innnecrcd to Tin- Yen/on Wm ii s, r:i-tw,.|i piovidis a device payinenl plan option, also will receive dis;ounled uic'f.tMv .n cess Veembei 31 2013 Share Elser>lIn::ir jccurits repieseiiied approximately 4o*" ol on -pprmimately 2 Wu as ol Decemhei -I. 21)12 Ven.ron Wi.-eless olfers ,h.ned djia pl.ms plans lo- Small H-.iMness ami ihe Nanon**i.Je liusmcss Data j'ackagrs an.: J'i.m-. In -\ur Fdge tlcvne pay mi-lit pl.-n i.pt;u which now ill.,us . usiomeis u: rrade in then pln-r.e Im a n. w p!.-i;i; .lici ^ niini:ii.iin »! tli;> flays suncet is ;enair. ccu.ditions

Or. Si pi. mber ? 2n I ¹ Vcn/n e-nte:n ii n.'o a ^n.l^. purc!i.r-e agiei in. ::i (ihc S'oi k Pun l:.r-< Aj.ieerrn :it i v i-l-. V.i.i.iione (ii :p P.:

iW-daii-tie) and \ odaionc ■! I.imiied iSe !'i;. puiMiaat io which Vni/on ajrrec.l lj a.-i_;.:::c W.dtU'.ne - uid::.M -i>% ink-:. m

Cellc.i P.!H::ers!up d'b/a VenU'ri Win!es> ('he i'ait::ersl:tp and sin fi interest, rhe Vodafone Inteiesti h>r aggn gate c.msidc:jtion cl

appiovim.nely * ; ^;0 luiiiou t.iri Fchru.:i> 2 I 201 J puiscant to the terms and subnet to the conditions -c t l,.t:ii in tin- Sinci.

Pmcha-r Af ii-emrnr Verizon ac(|inrrd (die Wueles> I ransaction) Seller all ol the isMied and outstanding capital sto. k (rhe

Trall-ferud Miaics) of Vodafmie Amends Finance 1 Inc a -uhsi .11 ary of Selh r (VII liie I vvlneii iiulireedy tinou-h cdt.i.n

sub<i diaries (ingeiher with Vfl Inc ihe Puirhase'c: l.:iniie>:J owned rhe Vodaione Interest 1 he consideration paid w-,is pit mar. K

operating and capital efficiencies as well as maximize profitability. As more applications are developed lor this high-speed service, wc expect that FiOS will become a hub for managing multiple home services that will eventually be part ofthe digital gnd, including not just entertainment and communications, but alto machine-4o-machine communications, such as home monitoring, health monilunng, energy management and Utilities management

Mso positively impacting Wireline's revenues dunng 2013 was 4 6% increase in Strategic services revenues, which represented 57% of total Global Hntcrpnsc revenues during 201¹ However, tola! Global Enterprise ami Global Wholesale revenues declined due in declines in Core customer premise equipment revenues and traditional voice revenues The decline in Core customer premise cuuipmcr.i revenues is a result of our focus on improving our margins by continuing to de-cmpfiasizc sales of equipment that are not part of an overall enterprise solutions bundle To compensate for the sluinking market for traditional voice serv ice. we couiiriue to build oui Wueiirie segment around data, video and advanced business servicesaieas where demand lor reliable high-speed connect ions is growing

W_L- an. investing in innovative technology like wireless iictwiuks. higli-spccJ fiber and .loud services to position nuistlvcs at the centei oTiIil- growth nerul.-i of itio mime In addition in the Works* Transaction since the beginning ot 2012 these investments hav e included acquisitions of wire]ess licenses ot S4 9 billion _Wc al.snjiave insisted SI 4 billion in acquisitions ot investments and businesses, which we expect will pemm us to offei enhanced machine-to-machine, video and cloud-hased products and

Ity insenitii' in out own capabilities, wc arc also investing in the markets wc "crvc by providing our communities wnh an efficient, reliable infra struct me tor competing in the information economy We are committed to pulling our cusiomeis tirst and being a responsible mernbci of our communities Guided by this commitment and by out cote values of integrity, ic-.pecl, pciioiTTiaiK e excellence and accountability, we hedeve we are well-positioned to produce a long-tenn return for oui sfiaicmviicrx create meaningful wotk foi ourselves and provide something of lasting value for society

Operating Re\t nue "■ ' . v ■■r. : 'i: r;\.

.Wc expect to experience service revenue growth in oui Wiiclcss segment in 2014 pnmanly as a result of continued growih in postpaid connections dnven hy increased sales of sinartphonei. tahlets and other Internet devices ttr"e\peci tfut retail postpaid^ average revenue per account (ARPAJ will continue to increase as connection* migrate from basic phones 10 smanphones and from our 3G network to our 4G l.TF. network, and a.s the average number of connections per account increases, which we expect to he dnven bv out More Everything plans ihal allow for the shanug of data among up to 11) devices Wc expect ihat oui future service-revenue growth will he substantially derived from an increase in the usage of inriovaiii c wireless smanphones. tablets and other Internet devices in addition to out pncing stricture that w-ill encourage customers to continue adding data-enabled devices onto existing accounts We expect ihal continued emphasis on mcieasmg smanphonc penetration, including continuing to ungrate customers finm basic phones in sinanphones and from 3G devices to 4G l.TF devices, will positively impact our revenue

the

In the sections tha; follow, wc provide information about the important aspects of our operations and investments, both consolidated and segment levels, and discuss our results of operations financial position and souitfs and uses ot cash In addition we highlight key trends and uncertainties in the cxienl practicable

Tiend-.

Wc expect ihal competition will continue in mtcnsily with traditional, non-traditional and emerging service providers seeking increase^ market share Wc believe that our networks differentiate us from our competitors enabling us in provide enhanced couiuiui'.icalioiis experiences to oui customcts Wc believe oui focus on the fundamentals of tunning a good business, including operating excellence and financial discipline gives us (he .lbiJify (tt plan and manage through changing cro/nirnrc c.m.:. irons We will continue lo invest for growth, winch wc believe is the key lo dealing value for our shareowucts

riJ Opci;>iiii;> Tie,

d maintain the lovaliy of high-quality icl.nl postpaid custnnicis omen new ways ot using wireless services in then daily lives Wc 'w sinartphoncs Infi met devices such as l.iblets anrl oui .suite iin lughci value retail postpaid connections, conttibute to

. segnwrrt

l expect lo continue lo allracl data services and bringing our c on growih mil (oiMinue i believe these devi

expect lli,ii (utme c nnr.ee Iron growih mil t nrluiuc us wi. introdtic ol -1 CJ I-IF. devices We believe these devices will attract and

lets Wc

v ersus other wireless c dik services. nficrir.E i

continued increases in ihc penetration of data services and keep our device line-up competitive ex pec i fijiuie r.iowth opportunities vvjll be dependent on expanding the penetration of our ncti wireless dev ices foi both consumer mid husiness customer; and incieasuig the inimhei «t ways ihal oui cus-inmei\ i an ciiiinec; w.th our ncl Work and sen nei

e disconnected both piinuuy and cr Infer net pr.it.n o| I Voir'i arid tank iot vonv . customers continue 10 switch lo allcrnaie

Service tind equipment pricing play an lmpurtant role in the wireless competitive landscape As thr demand for wiiclcss scrvu cs continues to grow, wireless -.en ice providers arc oll'eiing service plans thai include unlimited voice minutes and text messages and a specific amount of data access tu vaiying megahyte or gigabyte sizes oi, in sonic cases, unlimited daia usage Wireless service provider are also offering pnee plans that decouple service pricing Irom equipment pricing and blur ihe traditional boundary between prepaid and ponpaid plans In addiljnn, sonx wireless pmvidcrt arc offering a ticdn id new cusiomeis io reimburse early termination fees paid to their former wireless service provider, subject io certain limitations We seek to compete' in this area by offering our customers services and equipment that they will regard as the best available value for the price as well as service plans thai meet their wireless service needs

In oui Wireline segment, we have experienced continuing access line losses a: secondary I mis jihJ (lutclied ro .ilJeiiiaf.ve teciiriolugief suefi as wireless, i/uce and dat* services We expect to continue io experience access line losses technologies

Despite this challenging environment, we expect that we will continue to grow key aspects of our Wireline segment by providing network reliability, offcnug innovaliv r product bundles that include broadband Internet access, digital television and local and Jong distance voice services, offering move robust JP product* a/id service, and accelerating our cloud compuirng an J mjchine-tn-machine strategics We will also continue to focus on cost efficiencies to attempt to offset adverse impacts from unfavorable economic conditions and competitive pressures

Operating Colli ond Espei We anticipate on: overall i

.cntiiine., to migrate to mn

We expect FiOS broadband and video penetration to positively impact our Mass Markets revenue and subscriber base We also expect Strategic sen ices revenues to continue to grow as we denve additional cmcrpnsc revenues from cloud, secunty and other solutiont-based services and customers continue to migrate their services to Pnvate IP and other strategic networking services, although we have experienced decelerating revenue growth within our Strategic scrv ices business Wc believe the trend in these growth areas as well as our offerings in telematics and video streaming will help offset the continuing decline in revenues in our Wncline segment related tu retail voice connection losses as a result of wireless substitution as well as the continued decline in our legacy wholesale and enterpnse markets

i c less operating costs will increase a result ofthe expected uicicajc in the < ;hcr equipment and sales commissi.-j- costs hi addition we expect comer.' co -ase llowei.i. we c vpect lo aihicve certain coil eiliciencies in 2014 and t dwci cost -Ci l.'l'l. iiciwork and js v.\ . outinuc lo siie.uilline oui husincS* pro*

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

Corporate, eliminations and other includes unallocated corporate expenses such as certain pension and olher employee benefit related costs, intcr^egmcnr 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 ihat arc not allocated in assessing segment pcrfot ounce due io llicu non-op cat to iral nature Although such transactions arc excluded from the business segment results, lhr.y .ire included in rcpoiicd consolidated earnings Gains and losses that are nol indiv ldually significant arc included in all segnieiit ic"-ulis as ihcsc items are included in ihc chief operating decision maker s as?cssi:.ciii ol segment peifoimancc Wc belies e thai ihn presentation assists nseis cit our financial statements tn bettei understanding out results of opi rations and trends tiom penod to

impic

g productivity and increasing ptolitabilit;

...liit.il.-d Revenue

1 ears Cnde-.l Dcceinher Wueless

Service ic-venuc

.'■I r

itiks and s er'.hari.

lcludiug oui II' -rid da:

i drive operating etliciencics flu ievef signifiraiiilv i- a icsuli of

C:_ru.,ll;x_ri,uliiuns

i: 201-1 .ap.ial program includes capiral to iund

tt. I IF. and l-i(i-ipe.l1 loi o

ihe tuning, oi the Conipt

c-.pii.ilcvpc

no: .iii-i capital program n'.elu cspar.-ion ol our core networks networks juJ olhei expe'ilifitu: within these broad calegoi

with tibd opti, cahle wlndi v

rinreri.il weather events We are replacing copper wne with tibd opti. cable wlndi veil! not altei oin eapii.il progi.i:r. hu shnujd i c- ...j ll in loee.r mainlen^ncc costs in the luM.c t.--pn.il expenditures wet. Sl(> i< billion :ri 201¹ and ilr._> billion in J <J I J iespectiv,-h We believe ihal vie have .ugnificint ilis. ieiion ovci lhe amount .md tiniing ul" oui cjptt.il expenditure on j ( e'liipaiiy .wide basis as We ate nut sub tec I io any agie.nnrn thai would leqtinc significant capital exr-ciidiluics on a designate d s, h. dale ot upon the uc i tinence ol designatee! ev cuts We expc et f apital cvpendiluic s in 2014 to he in the range ot approx lni.iicls 1 16 i billion to M7 11 hilhon and we also expect our capital c-xpc'ictiinies as a peiceniagc of icvcniK lo decline in 2t'N Irom 21: 13 levels

oppiirinnrlrc-s irnf rrr

f /■';■. CV'".'r;."M

tV^:c create c ,₍|c- for our ahjicowners by invesiing the e-.rsh fl.i«s gcnerale-d hi our hu

tuppnn (or; i mued piiiiiiable grnwih, thereby mricasing custoriiei saticlaction and usage of our products and seiv ices In additi nc have 'iseci oui cash Mows t.- maintain and mc-w our ciiv idend pavou to sha.-eowners Ven/on s He.ard ol Dirccoi: ■ornpai'.ys .juartcilv div idem] by 2 ■"-■.^ dining 201} making tins the s.vcnlh c.-nsccutnc year ,u winch w, |,. Jiv i.lend Altci the c losing ol the Wireless Transact ion oui t'tovtsiun loi income taxi s ^ ex|)ec!eel to irn ic.isc dtn '.Miu.hip of Vcn/on Wildes- We also evpcel oui . jOi save- paid to men a.c due 10 oui I DfrT-i ownersbip o! \ ,-i :nd to a mm h lessct ikgiee due to botnis depreciatiiMl nol being extended beyond IJ^ceirtbei 31 2HIA(|.li:ii:all :sp.-iise- is expected In iiicic.isc as a iciiil; o; the debt is,m d to finance- ihe Wireless Traiis-u tion As a resiili ol il.i :.vprct ("jet; J iows from t ljier.ilrot:v to be negaiivelv ini|:act-d in 2ill4 ['artrails oilset!ir:g ihese nrgativ e irnpais : i;n Opciairn!'.; wit) be tin disconiiiiuiiliun ( cash diSinbuticris fiom Vcn/on Wiiclcss to Veidaforic wltnh S.av

-ppoi 1

cif is to us.' oui cash to .'real, loiig-tc nn i alio lor oui shan holders W. icill eontmu. to lo.->. : 'ill help ii-ii' eiow :i_:e biisiiie:- We expect ro n-f oui cash lo reduce oi.j del-t levels, pav divide aj-f-mp:ii.le bi:y back shares o| .-a: outstanding ci.muion slock i-er t. is|i I iow-.s !':oi:i Fiii.uicii: mrr. licenses [see Cash Flows itoin Investing Activ me; I Dri:-,i> "OH, eee pcirchased ; SD 1111! ■:ik authorization I here weie no repurchases of. .mniuii stock dunng 21) i? 01 ?i>\ i

69,033 S t>'.7']

11.090 12.lv'

8 3V. S J.57C (I 21 I.I3H t.H 5714

I ejl.lt

Mass Mail els Glnhal I r.lerpiisc Global Wl:olesalc Othet Tnt.il

S 59.157 S 5,300

10 "9-7 (I 45)

17.32* 16 702

14,703 15.29"

6,714 7,240

478 519

12 1) (9 2) (28 I)

7 (3 9) (7.3)

(11.3) (1 4) 5.1 5

7il 15-1 5,155

1731) (211) ' t'X)2)

37 62h

22 (596)

39.223

7jio

71 (526)

iali<i

SO (bl)

R2 1557)

.KM )9* 3v I (16

S 110,510 S M5.K46 S 110.K7S S 4,704

clr.-rr

Cnnsulidatid Resi

can in _t'.lu I

11 Vmeicss .,

2013 Com pa red to 2012

well a

1 l.c increase m . ousolnlated revenues dunng 2.01 1 compared to ?01 2 was primarily due to Inghei ie higher Mass Markets revenues dnven by FiOS services and increased Strategic se:v ices revenues withm Glohai iinletpiise at out vV'i:elnir segmcrii rartialiy oflsetting these incscascs were lower Global F_nierpr.se Cm.- and I'dobal Wholesale teienues a our

W,/Jc st .-ei e-ii'n j r.:cic'."i.i J5 ? billion or O X*,i dunng 2013 ccunpand r.* 2DJ2 due- 1.1 groutfi _tt\ sen rec- (e v. ₍:_Uc Scrv r.c revenue irn icascd cliurng 20H rompared lo 7012 primarily driven by higher retail pcsipaid service rev emir which ineieased l.irgt .y ^s _i ti-stil; of .:n increase in iet.nl po:.1panl ei'nnc-ctiori.s as well a-, the continued tin tease 111 penett.itio:: ol -.iiL.otjvl.one^ tablets and other Intern 1 device - thnnigh our Share 1 v cry lb ing plans Retail puHpa'c! i orir.eclion net auditions decrca-e.l dunng 20i3 compared to 2012 pnmanly due to an uieieasc in our ictail postpaid connection chum laic partialis olbct hy a:i itic:ease in u'tail postpaid conuectron gross additions Retail postpaid corner.lions per ai i ouni increased as ol De-cemhci 11. 2n1⁵ compared 10 t>.-c ember 31,2012 |uimanly riur lo the ineieased penetration of tablets and other Iniernet device^

Wneline s revenues decicased SO 6 billion, or I 4%, dunng 2011 eomp.ued to 2012 ptiinaiily driseu by declines 111 i.dobal l.nierpnse Coic and Global Wholesale partially offset by higher Mass Maikets revenues driven by FiOS services and increased Strategic scrv ics n Venues within Gion.il l.rileq'rise

MaiLet. iivcnue- ror n-a-rd $0 t< bill-on. 01 3 "/% durmg "01 3 c ompaicd to 2012 due m ihe Mjr..iiin of I it IS scrv 1. cs t Voice Intc-iue-i ami Video) us well as changes in out pnemg strategies, partially llset by tb.e conl.nued decline nl local cxcharige

Global Ciiicrpiise^icvc-uiics dcctcascd SO d billion, o: 3 9*1. during 201.1 compared in 2012 pnmaiily din: to j decline in Coic ciieUmwt pie mi it cci.uvpmeni revenues and lower voice scrvu.es and data uciwuik mg. revenues Tins dec i east wis partially ollVct hy growth in Strategic serv ices revenues, pnmanly due lo an increase in advanced serv ices, such as contact ccnici solutions. II¹communications, and our cloud and data center offerings as well as revenue from a iclcmaiies services business that wc acquued in lhe third quarter of 2012

Global .Wholesale revenues decreased SO 5 billiou.^T oi - 7 3%. duimg 2013 compared.lo 2012'pinnaiily due to a decline in trad num a I voice icvc'iucs as a result of decreased minules'uf use (MOIJs) and a decline'm'domestic wholesale connections, partially offset hy continuing demand for high-speed digilal data services from fibei-lo-the'-teil customers upgrading their core data circuits to F.ihcmel facilities as well as [Zihemct migrations Com nthei core customer*

Olher revenues decreased dunng 2013 compared io 2012 primarily due in reduced v olumes oui side of our network footprint

2tt)2 Compared to 2011

The increase in consolidated revenues during 201 2 compared to 2011 was pnmanly due tn higher revenues al Wireless, as well as higher Mass Markets revenues driven hy FiOS services and increased Strategic services revenues within Glohal Kntcrpnse ai our Wireline segment Partially offsetling these mirrases were lower Global Wholesale and Glohal Enterprise Cote revenues at our Wireline segment

Wirekss revenues im teased dunng 2012 compared to 2011 due to growih in both scrv He arid equipment and olher revenue Scrvicc revenue increased during 2012 compared to 2011 prunanly dnven by highci letail postpaid Service re> enue, vvhieh increased largely as a result of an inciease in retail postpaid connections of 5 1 million in 2012. as well as the continued incrca.se* in penetration of smartplumes Retail postpaid i omicclions per account n*c leased dannf! 2012 compared lo 2011 prunanly due to the increased use of tahlcls and other Internet devices In 2012. the iiicieasc in retail postpaid connection net additions was pnmanly due to an inc tease its retail postpaid and prepaid connection gross additions and imp i as cmccivs in qui retail connections chum rate Higher ictail postpaid connection gross additions dunng 20)2 primarily reflect Ihc launch of oui Share Everything plans coupled with new device introductions during the second half of 2012

Equipment and olher revenue increased during 2012 compared to 2011 pnmanly due to an increase in device upgrade fees, icgulatniy fees and equipment sates

Wireline"* revenues dee leased dunng 2012 compared 10 201 1 prinwr.lv driven by declines in Global Wholesale. Global Enterprise Core and Olher revenues, partially ottse: hy higher revenues in Mass Markets dnven by HiOS services and higher revenues from Strategic services

Mass Maikeis revenues increased during 2012 compared to 201 I due in lhe expansion of 1^:iOS services as well as changes in uur pricing strategy drinptcd ttt 201 2, pa.mu.ily oilset by the continued decline nf local exctiiufc revenues

Global Enterprise revenues decreased dunng 2012 compared to 2011 pumarily due to lower local services and traditional cucuit-ha.sed revenues a decline in customer premise equipment revenues and the unfavorable impact ol foreign currency translation This decrease was partially offset by higher Strategic services revenues, pnmanly due to growth in advanced services, such as managed network solutions, contact center solutions. II' communications and our cloud and data center offerings

Global Wholesale icvcnuei decira.sed dunng 2012 compared lo 201 i pnnwrily due lo n decline in traditional voice icvcnues as a result of decreased MOU* and a decline in domestic wholesale connections, partially offset by continuing demand for high-speed digital data services Irom fibcr-to-4he-cell customers upgrading their core data circuits to Ethernet facilities as well as Eihcmci migrations from other core customers

Other revenues decreased dunng 2012 compared to 7011 pnmanlx due lo reduced v o lumen outside of our network footprint

| On toll dated Operating Expanse*

nd contributions :e an allocate:

Yean Ended fJeccmber31,

Cos< of services and sales Selling, general and administrative expense Depreciation and amortization expense Consolidated Opeianng Expenses

(dollars in millions) Incr e ase/(Decrease)

2013 vi. 2012

5 4*^)17 S 46.275 S 45.875 J (IJI8) (3 0)% S 400 0 9%

27,089 39,951 35.624 (11,862) (32 J) 4.327 12 1

U.fOt Ifi,4fi0 16,J9t. 14* 0 9 |3(Q (0 2)

S 88,582 S.I02 6S.0 S -.7 995 % (14,104) (13 7) S 1 (.91 4 x

Inlatcd upe:a;mg expenses dccicascil dunng 201 3 piiitif.nlv due to n...n-opciatioii.il i ledits recemlcl in '.M'iIj m'.ai eliaigi i i''curded in 20J2 (see ' Oiln-: Ilcii:s ) C.-iisolidated ope rating expenses i:i. leased during .'ll I.' ei iron.operational chaiges (see ' O1I11 l;eins'^,| _d. we;I a- un ieas. d eipcialiiig expense* ai Wuelcss

j(Ji.» Compared in 2<H2

s ducitly jttiibut.ihle to ces network access and n

("os: of serenes _Jnd Sales includes ihe follow mi; manuals .md Pippins, runlc-nl cosls. contracted s provisioning costs computer systems support costs n. support oui outsoun ing contracts .1 : ihe I'mvcisjl Service fund Aggregate customer can costs wl;:di ir.ciu.i. hilling bet ween Co<i of services and sales and Sc.ling, general and adiniriiStiaiive expense

cqtiipmcn. eles.- sertme

osts and ihc l higher eon

associated with

Cost of seiviees and sales decreased dunng 201- comparer] to 2012 pnmanly dm: to decreased data loauiinj a decline in cost of daia services and a decrease in network conn ■.\cJ| as a decica-e in costs ic'raled to 1 ustomei pic!riis> 'quipiri.-iii a decline in acces- 1 insurance iccoveries al otu Wiidiue seg rue nl t'ailiallv offsetting these decreases wet< erti-.tiouei] FiOS subsciiher growth and lendoi rale snen-asi-s at nut Wireline srgrm.n: seivikcs at our Wireless segment

lanes and wages nd benefit-,. advrinsing, and <:ijfs 101:1111

attributable

ustom.-r h:ll

t:. .all ec-nicr

L MV.I.e Also

i Utilities f.

:s and Sale.

.SW/nrj,' i lenn ui and 4dmir.iMiar.vf hxprme Selling genera] and adimnisirative expense includes orod-.i'i. bad deb; charges, taxes othei than mcomr la and i/;!o:ir-.a:ion lediiiology eu¹ is ics'iiljiniv !c. s [in-included aie a poilion of the aggregate ciiston:er caic cc

Selling, General and Administrative Expense

Selling, general and administrative expense increased dunng 2012 compared lo 2011 pnmanly due to higher non-operational charges (see "Other Items") as well as higher sales commission expense and costs associated with regulatory fees at our Wireless segment.

Depreciation and Amortization Etpense

Dcpi ecu iron and amortization expense decreased during 2012 compared to 2011 pnmanly due 10 a decrease in depreciable assets at out Wneline segment pail rally offset by an increase in amortization expense related to non -network software

Nnn-opt rational (Ci edits) Cbirpes

Mini opsiallonal iciedils) chaiges included :n operating expenses (se c 'Othei Ileitis") were a-; Inflows

(dollais in millions-)

Years I.udr.1 i.Vefrubei *1 ' 201? 21)i? 2011

(6,232) 7,1 K,,

11 in e geneiai jiul adminisiutiv e expc use

Si v 11 am e, Tension and Benefit (Credits) Chai ges

Sc'liinr gem-inl and iidininisirainr expense

Lmj-atiiin Settlements

Silling gencial and adrninisiuliv-e expense' Olher Costs

t list ol services and sales

*»elhng general and administrative expense

S (6.510) S 7,ft-l(, S 5.954

I ota) uiiii-opi-i aliu|> (cr edits) c liar j;es included in opcr aling expenses Sec tnlie: Items" fot a desciipimn of othei non-open.ntin.il items

a.l mm 1st rat li

Selling Jf:

■ expense drc leased dunng 201 1 t run mployee costs at oui W,,el,i,e_:cgr;,c, va.; partiallv or:sct bv high. 1 saicsco:

- 2iil2 ,.11 ell a., lln r

offset by adc. line 2U12 Compared ti

vjles increased iluiing 2012 coiupaird to 20! I pr.ina.llv due to higlir and increased data roami-;'. p.iiti.i'ly r-fKel by a i:Mrj(e in cost r it a de. nv.se in the fo-t id l.mr- distance a: otu Wueless tegmen: \l-o

ring highe: cos's rel.il.d 10 1 iOS installation as well a>- lin.hc'r r.-p.n

Years Ended [leceinbet 3 1

related io the of the n mini.

f f>_l,_!ul,,ftilr,i OfjcrnliHx Ittt omc tftii FPITDA

Consolidated earnings before interest, i.wc.% dcpiccmrou and nmniii/ation expenses (Consolidated FBI I OA) and Con;nlidated Adjusted EHITDA. which air presented below, arc nun-GAAp measures .ind do not purport to be alternatives lo operating income as a measure ot operating perfoimaiiee Management believes that these measures are useful to invcstots and oihei users ol our financial infomiaiion in evaluating operating profitability un a mure vanable cosi basis as they exclude lhe depreciation and amortization expense iclatcd primarily lo capital expenditures and acquisitions thai occuned in prior seats as well as in evaluating operating pcrloimancc in relation to our competitors Consolidated liBlTDA is calculated hy adding bast interest laxes, dcpiccraiinn and amortization expL-nsc. equity in earnings of unconsolidated businesses and other income and (expense).

Consolidated Adjusted EBITDA is calculated by excluding the elleci of non-operational items Irom the calculation of Consolidated 1:11] I DA Management believes that this measure provides additional relevant and useful lritonnstion in investors and other users of our fmanc ul data in evaluating the efiec Hveness of our operations and uiidcilymg business irends in a manner lha: is consistent with management i evaluation ol bus'ines-: peitoiniarue See ' Other Items" tor additional details regarding these ntin-npcraiioiial items

Operating expenses include pension and bene fit leltiicd eicdtls utid.'Oi (barges based on actuarial assumptions, including projected discount rates and an estimated tcium on plan assets These estimates arc updated in the loiinh quaitci to re licet actual return on plan asscls and updated actuarial assumptions The adjustment has been iccogni/ed in the income statement dunng the loiinh quarter or upon j lerne.Kuiemeii! event pursuant In oui accounting poliex foi the recognition ut actuarial ganis'lossrs

(dollats i 2012

ll is management s intent lo piovide r.nn-OAAP financial infonnation to enhance the understanding of Ven/on "s GAAP linancial infonnation. and it should be considered by (he icadei in addition to but not instead of the financial statements picpaied in accordance with GAAP Each non-G\AP financial measure u presented aloug with lhe cotie.-ponding GAAP measure So as not lo imply that more emphasis should be placed on the non-GAAP measure l he non-GAAP linancial information picscnted may be deieitmnctd oi calculated riiflerenilv by othei companies

$ 31.96*] J. 1 Mod S I2.KM)

16.606 10 460 IQ.l'Jo

4K,".74 29(>20 ?4,<7i.

(6,510) 7,S4ti 5.954

Consolidated t >pei ating Income

■\c!el Depreciation and anioiti/.aiion expense Consolidated Fill I DA

Add (Less) Non-operating (credits) charges included it Consolidated Adjusted EBITDA

rnllui

Ycais Ended December 3 I

operating expense

FOthrt Consolidated Results

uihJuleJ Busniei\

Equity in eanimgs ol unconsolidated businesses decreased S1S2 million, or 56 2%"iii'20I3 "Vempjied "to 2012 primanlvduc to " lower earnings finm operations at Vodafone Omniicl N V (Vodafone Omnitel) The decrease dunng 201 3 vva-. partially offset by an immaterial gam recorded by Venzon Wireless upon obtaining control of previously unconsolidated wireless partnerships, which were pieviously accounted for under the equity method and aie now consolidated

Equity in earnings of unconsolidated businesses decieascil S120 million, ot 27 0% in 2012 compared to 201 I pnmanly due to low ei earnings finm operations al Vodalonc Oninilel and. tn a lesse-i extent tlie devaluation ofthe Euro against the U S dollat

subsidiary of Verizon sold its enlne owtietship interest in Vodafone

As pint of the consideration ofthe Wireless Transaction, a Omnitel to a subsidiary of Vodafone on February' 21. 2014

Oihei Income and iRtprnsel. Set

Additional inlormation relating to Oilier income and (expense), net i*

2013

J 57 J (,* (23(1) (1.073) (K2)

(dollats in millions.) lncrease/(I)crrrase)

2012 2011 201.3vs.20l2

S 7 12 3% S (Uj

843 |78.6) (991)

I (166) S (1.0Ih) SiM) S850 (83 7) S fl 002)

md (expense), net decreased dunng 20)3 eomparcd to 2012 pnmanly due to tecs of VI I billic-u inclined in 2012 aily redemption of debt, partially offset by $0 2 billion cf fees imruncd dunng lhe fourth quartet of 2013 as a result ui ol a bridge ciedit agreement upon the effectiveness uf a teim loan agreement (site 'Other Items ')

nd (expense), ncl increased during 201 2 compared lo 201 I pnmanly dnv cn by lug he: fees of SI I billion related lo j.tiun of debt isee Othei Items ')

The changes in Consolidated Operating Income Consolidated EBITDA and Con soli rial ed Adjusted EHI'l'PA in the table above were primarily a ic'-iilt ot the (actors described in coniieciion '.vnh operating rev enucs and operating expenses

Years Ended Decembri

Total interest costs on deht halluces Less Capitalized interest costs Tula I

Average debt mil si sliding Frledn e interesi rate

J 3.421 754

S6S.959

5.2%

S 2577 406

$ 2.571 S 2K27

$52,949 555,629

I dollars in millions) lncicase/(I>ciTcasf)

2013 vi 2012

149% i (292) (8 9)%

«⁷ (36J (8 1)

3 7 S (256) (9 1)

fotat interest costs on debt balances increased during 2013 compared to 201 2 pnmanly due to the issuance of $49 0 billion of fixed and floating rate notes io finance the Wireless Transaction (see 'Acquisitions and Divestitures") resulting in an increase in average debt as well as an incremental increase in interest expense of SO 7 billion, partially offset by a tower effective tuterest rate (sec "Consolidated Financial Condition") Capitalized interest costs were higher in 2013 pnmanly due to increases in wireless licenses that arc currently underdevelopment

Total interest cosli on debt balances decreased dunng 2012 compared to 2011 primarily due to a $2.7 billion decrease m average debt (see 'Consolidated Financial Condilion") and a lower effective interest rate Capitalized interest costs were lower in 2012 pnmanly due to our ongoing deployment ofthe 4G LTE network

Pros titan (Benefit) for Int.

Yean Ended December 31,

Provision (Benefit) for income Uses Effective income tax rate

(dollats in millionsl lnerease/(Decre»se)

2012 vs 2011

S 5,730 S (660) $ 285 $ 6390 cm $ (94S) 19.6 % (6 7)% 2 7%

nm - nol meaningful

ne belore rhe provisio rate lot all years pre-less partnership wiihu

l ra-

in ti

wlndi lesiilted m . loiitonijollirig niter.

lading the . : ihe pn v,.

Vooalutic resulted u

The efli'ctivc income '.,». rale is i alcitlatcd hy dividing the provision tor inc nine taxes by irui idus Our ellcclivc income lax rale is sigrntn a ri 11 \ lower than ihc s'r.tuloiv iedcral imcimei.i ihe inclusion ol income .■nnb.liable ro Vodai.iiic s iro_:n mnrolhni: interest tn tin \.'ii/iu W:r bclnre lhe provision iiu income taxes In 2(il3 and 20J ' we ircoided a lax p:ovisiein on :m nine bclore the provision bu i taxes and when we included the income attributable :o Vodalonc s noncontrolling interesi in the YYnyoti W iidexs paniui oui income belore the proi ision tor income taxes :r resulted ui our eliecttve menu-., lav rate being I * 7 ruiecm igc |ioi;:r tluni'.g 201 1 and 7 ^l> juiie cutiigc points lower dunng 201 I In 2(11 2. we iccuidcd J ijx hi iicfn on income be tore ihc pro* i-

elteet

i the Ven/on Wnelcss p,uineisi,;p in on: tncoit.e be!: lie beint¹ iUO ¹ pereeiilagr points higher dining 201 2

Wc have two reportable segments, Wireless and Wireline, which we operate and manage as it rai eg tc 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 wnh the chief operating decision maker's assessment of segment performance.

Segment earnings belore inicrest. taxes, depreciation and amortization (Segment £13 IT DA), which is presented below, is a non-CiAAT measure and does nol purport lo be an alternative lo operating income as a measure of operating performance Management believes that Ihis measure is useful to investors and other users of our financial inlormation in evaluating operating profitability on a moic variable cost basis as it excludes the depreciation and amortization expenses related pnmanly to capital expenditures and .icuuisiiroiis that occurred in prior years as well as in evaluating operating pcifomiancc m i dial ion to our competitors Se-gmcnl ri!!TlJ \ is i aleulatcd by adding back dcpieciation and amortisation expense to segment operating income

Wireless Segmer-l FHI1DA

cm tlDIIDMiy Wu

e margin al:o piesentcd below, is calculated by dividing Wireless Se> m.s Wiiclcss Segment EI1ITIJA se:v ice inaigni uiifi/cs Se.rv ice re venues raiher than total hide equipment icvcriucs in ordci lo icllcci the impact o! providing seix ice 10 the wu s Win-Jine- F.lsIUVA margin i-. calculated by dividing Wireline EBITDA by total Vurdi "inuimr. about our segments in Note I 7 to the consolidated financial si

Ven/on complclcd the acquisition ot Vodafone"s -15% mditect ownership mieresl tu Veil/nil Wnelesi on Fclirn iry 21, 2111J ' >ui pros I'.nm loi ineorne taxes .md effective income tax rate siih«cc.i:ciii to the closing will re fleet the change in Vcn/o:i c oisiicr.iiip inti'ie-kl in Vertfon Wnelr.-.s Our provision lor income taxes and ctiective im omc tax rate will uicicas. suh,r,nicn: in th-. e |.'sni_:: due to the llic i lisi.m ol the plov ision tin nie omc lax e S picV iou> |y jtn i bi.rab k lo Vdd1oue > I'Mi, ish-p inK n ;t

lid

pro. ision lor incuine credits ireoidcd dui-.u as well a; c.iily debt redeinptio

I he eilectiv e income rax rate f< the deciej-c in lhe piovt.-.on f

taxes as a icSlill of Ingliei -ever

be ellcetl

md benclit ch.ni

loi 2tH3 was 19 <»% compared ti, (C> 7)% tor 2D 12 The incre.i! s pinrianlv due lo higher income belore income taxes as a ic: ompaied lo lower income befnri.- income taxes as a rcsub ol si n costs recorded dm mg 2012

r 2t!| 2 was (h "JV. compared to 2 7% foi 2D I 1 I he r.egam e rfieciive income lav rate for 20 i 2 i income laxes during 2012 ccmipaied to 201 I was primarily due lo Kjwci ir.eunte bclc.-ie mc occ pension, and benefit chaises as well a-, eailv debi rede nipt ion costs ice ended during 20! 2

Iricrrasc'lDrcrcjsf)

2013 vs 2012

outi'illin

Itblitatllc

- F.n.led Dseembci 31. llu nine altr iliut.llilc In

< mm, ouiroilmi' mt, _IL*t* duiinj: 2D I i comp.m d to .'H I 2 anil 2U I. V\ iieless segment hich had a 1 ^ r. itonconiiol'.iiig p.ir.rieislnp inti

were due to hjghe'i ca:::m;;s in our Vod.,f.-r.c .isof I),-, ember ^:. 1 "*l| J

Wc evp.cl Net in. nine aitiibiilable to noin onlri.llir'.i! nileiesls fi decline sutislarilially in 2(11- as a nsull nf lhe Wncle--I ransaction [see Acquisitions .-.nd I >iv c'ltitiirc* I 1 he noncontioMmp inre'CSts that icmained after the CcMriplctini: ofthe Wireless Iran-a. iron prim irilv rel.ii, to wireless partnerships

__J

Our Wiiclcss segment is primarily comprised of Cellco Partnership doing husiness .is Verizon Wireless Cellco Partneiship is a joint veritwe formed in April 2000 by 'lie combination of lhe US wireless operations' and interests cf Venzon and Vodafone Veri/uu Wireless provides wiiclcss communications services aross one ofthe must extensive wiiclcss networks in liie l.^:inted States As ot December .11. 20)3, Ven/on owned a controlling 55% interest in Verizon Wireless arid Vodafone owned the remaining 4x% On Fi.bi\i.ir> 21 2014. lhe Wireless Transaction was completed and Vcn/on acquired 100*. ownership of Ven/on Wireless

Wc provide these services and equipment .sales to consumer, business and government customer* in ihc United States on a postpaid and piepaid ba^is Postpaid connections represent nidiv idu.il lines of service for sshich a customer is hilled in advance a inonthlv access charge in return foi a monthly network service allowance and usage heyond the allowance is hilled monthly in ancars Our prepaid sen ice enables iiidiv iduals to obtain wireless services without a long-term contract or credit verification by pa\ ing foi all *cr> ices in advance

All iiminu.il icsiilis include! in the tables helves reflet the consolidated results of Ven/on Wireless Operating Revenues and Sclrtli'd Optra lint Statistics

.-fr< ounM ,ind Cmuiet lions ~ - ■~" " ."".''.i-.c.:'. ; ' "-'- - ■ *

Retail (non-wholesale) postpaid accouots represent retail customers under cunimci with Venzon Wiiclcss that are dueetlv seived and managed by Venzon Wireless and use its branded sen ices Accounts ine ludc Share Everything plans and corporate accounts as well as legacy single connection plans and family plans A single account may receive monthly wireless services for a variety of connected devices Retail connections represent our retail customer device connections Chum is the rale ai which service to coniic-clions is tciinmalcd

liel.nl connections undei an account may include smanphones. basic phones tablets and other Internet devices, as well as Home Phone Connect and Home Fusion Wc expect to continue to experience iclai! connection growih based on the sticngth of our product offerings and network service quality

2013 S 66^34

As).(133 11 ,°*>U 1 81,023

J 15 J.H 35,083 2 76

Years Fnded December 3 I. Ket.nl service Other service

Equipment and other

I otu I Operating Revenues

Connections ( 000) ¹¹¹

Retail connections

Kctail postpaid connections

Net additions in period ('0001

Retail connections

Retail postpaid connections

Chum Kate

Retail connections

Retail postpaid connections

Account Statistics

Retail postpaid ARPA

Retail postpaid accounts ('OflOl

Retail postpaid connect ions per account¹¹¹

As ofend of penod

Excluding acquisitions and adjustments

S 61,44(1 S 5(,,6(.0 2.293 2.497

5.917 5.024

102,799 °K.?30 96,752 92,530

4,472 4,118

I.27M 0 97 V.

S 144 04 S 134 SI

35,057 34,?ol

2 o4 2 53

(dollars ui millions, except ARPA)

Inrrease7(bfcrcasr)

2013~s 2012 2012 vTJoTT

S 4.7K0 (204)

S 5.'I 4"

J 4,894 ■406 5JU0

04S)

S 5,155

4,5<i>> 4.2 22

6I1C1 5.I4K

(1,445) (24 4) 1.293 (906) (IK 0) 772

2013 Compared to 2012

The increase in Wireless" total operating revenues of $5 2 billion, or 6 8%, dunng 2013 compaicd to 2012 was pnmanly the result of growth in service revenue

Retail postpaid connection net additions decreased dunng 2013 compared to 2012 pnmanly due to an increase in our retail postpaid connection churn rate, partially offset by an increase in retail postpaid connection gross additions

Retail Postpaid Connection* per Account

Retail postpaid connections pet account is calculated by dividing ihc total numbci of retail postpaid connections by the number of retail postpaid accounts as ofthe end ofthe penod Retail postpaid connections pet account increased 4 5% as of December 31 2013 compared to December 31, 2012 pninaril) due to the increased penetration of tablets and other Internet devices

.^i. 1, .-AVi.

Sen-ire revenue i:icica;ec S'- " billion, or >■}". during 201 ^! compared 1? 2012 ptimar.ly diner, bv higher rci.nl postpaid -ci. ice

i'-veriiie win. li mcr.-as-.i higrlv as a icsull ol an :n. n-ase j;, ,rt.ul j.n.rpaid ne. t.»iis .is .cell as liie e onrmu.-.l 1,1. i.--,r 11,

pcnetijiion e-J smaitphoiies. lablels and othu Inlcinci devices thiotigh oui Miarc Fveiytr.mg plan-. Fin [.cristiati.-ii ; ■imariphones was dnvt.n by tbe acliv ati'in ot sinariphotw- b\ new eustorncie .is well .is esistnnt cusion.crs mijjratirie torn-, hai.n

The 111cnasi- in lciail postpaid Alil¹ A (the' Jv eiage revenue pe: 1 omit fioin rei.nl postpaid aco-niii-) dining .¹!il ¹ ec u r-.n.-il 10 2012 was pmiui 11\ tine.]] h; inciea'-c.s tu s:iianphone penctrainin and t. tail postpaid connecti.>:i< per .i.\.'o:r As o; Doecmbei *l 2.i 13 we experienced a 4 ^Vlc nirre.tic 111 re'.nl po;ip.>td < emticriiorts pei accourit eeir.p.iied to 2<U2 wn;i smanphones icpii .< ninig "?')";■ nl on: flail postpaid phone has.- as } Iv.iiiibrj 11 2»1 1 compared to Mi'" a\ .-1 |l. uiithi : 1 I 2012 liie uiCicased peneiraliui. in iei.nl postpaid connections pei account n pnrna:i;y due lo increases in Internet data d. -. ices which ie].resented 10 T\ ,.f oui lelail p-j.-tpaiel connection base as ol December '= I 2nl3 . ornpaied to n a- ci i leci-mbc 1 31. 7n;2 primarily due to ... tiVa!ini;s i:I tablets and oihei iiilcirict devices AdiSilioiially during 2013 pn-tpjul s[Tirlpi:onc a, livaln ns n presented Sr-'¹. ol phones :n tivaled compared to ~i~"t din:rig l^:'l 1 2

Oil.et serv ice lev enne mi reased dicing 2nf t nirr.p.ued lo 201 2 due to crowih in wholesale connections, panIF. . U rt bv a decrease m revenue lefjied lo third pans teaming

hqmpmer.t ^n.i I lih," /f,-i r,:w

F.ouipmeni arte other revenue decrcriscc! during 2(H * compared to 2012 .is .1 decline 111 icgul non lees w.i: pjiiraiF, ot'lset bv an 2012 Compared to 2111 1

ihe mric.:se in V. ii!c<s t.-tai oj L.tnif.¹ i- v C!: lies eillnlig 2n|; eomptiie.l lo 2U 1 1 was the i.iilt e-tgi.-wth in botl. .■ is 1 and

The increase in retail postpaid ARPA during 2012 compared lo 2011 was pnmanly dnxeti by increases in smanphone penetration and retail postpaid connections per account. Dunng 2012, we expenenced a 4 3% increase in tetail postpaid connections per account compared to 2011, with smanphones representing 5H% of our retail postpaid phone base as of December 31, 2012 compared to 43 5% as of December 31. 2011 The increase in retail postpaid connections per account was pnmanly due to increases in Internet data devices, which represented 9.3% of our retail postpaid connection base as of December 31, 2012 compaicd to S 1% as of December 3). 2011 pnmanly due to strong sales ot tablets and Jetpacks ^IM

Oilier scrv ice rev enue decreased during 2012 compared to 2011 pnmanly as a icsull of J decrease in thud paiiy roaming revenue

Equipment and Other Retcntte

Fqnipmcni.and other revenue increased dunng 21112 compared ir> 201 I primarily due lo increases in device upgrade lees.

■ fegiilaloryTees arfd equipincnL*ale» . ■■ ■ ■ " ■"■

Operating Expenses

(dollars in millions) Inert ase/(l)ecreasr)

Year* Lnded December 3 I. 201.1 2012 201 1 2013 va. 2012 2017. vs 2011

Cost of services and sales $ 23,648 S 24 490 $ 24 OKo $ (842) (3.4)% S 404 I 7%

Selling general and administrative expense 23,17* 21 650 19.579 1,52b 7 0 2.071 10 0

IVprenaiion and amonraaiirm expense H.202 7 960 7 9»2 242 3 0 (?)

Tola! Operating Expenses S 5S,02t» S 54,100 $ 51,027 i 926 1 7 $ 2,471 4 8

Cm/ ol Sen icc.f and Sales

Cost ol services and sales decreased dunng 2011 compared lo 2 U12 primarily due io a decrease in cost cf equipment sales of SO a billion winch was partially due lo a decline m postpaid upgrades decreased data roaming a decline in cosi of data services and a decrease in network connection costs due lu the deployment ol Fthcmct backhaul l2cilitics primarily targeted at sites upgrading in 4G 1.11:, panrally offset by an lncicase in tnsi nfnclwuik set vises

Cost ot sen-ices and sales increased during 2012 compared to 201 I primanlv due to SO 7 billion in higher cost nt equipment sales which was driven by increased sales of higher cost smanphones, increased cost of network, services and increased data roaming, partially oflsel h> a decrease in cost for data .services, a decrease in network connection costs due to the ongoing deployment ol Fthcmei back-haul facilities pnmanly targeted at sites upgrading to 40 LTE and a decrease in the cost of lone distance

_■ ■_ " Segment Operating Income and EK1TDA

--"" - " . T'VI- . " - . ^e ~ (dollars in millions)

]ncrea.se/(l)ecrraie)

Years Ended De. ember 31. 2013 2012 201 1 201.3 vs 2012 2012 vs 2011

Segment Operating Income S 25,997 $ 21,768 SI8.S27 $ 4J29 l* 4V. $3,241 17V/.

Add Depreciation and unionization expense 8.202 7,960 7,962 242 3 0 (2)

Sc gnu nt EBITDA S 34,199 5 29,728 S 26.41(9 S 4,471 15 0 S 3.239 12 2

Scgnienr operating income margin 31 I % 28 7% 26 4V»

Segment Kb I IT) A service margin 49.5% 46 6% 44 8%

The changes in the table abuse dunng the penods presented weicr prunanly a result ofthe factors desenbed in connection »ith operating revenues and operating expenses

Non-requiting in n tin-operation a I items excluded from Wireless' Operating income were a.s follows

(dollars in millions)

Years Ended December 11, 1013 2012 2011

Gain on spectrum license transaction S (278) S - S

Sei eiance. pension and benefit (eiedits) charges (61) 37 76

S (339) S 37 S 7(j

Selling Ijem-tal and tdmitit'Hiitiiv £\prn\e

Selling general and administralive expense increased dunng 2011 compared to 2ul 2 primarily due ic higher sales commission expense in our indirect channel bid nee I sales commission expense increased SI 1 billion dunng 2013 coinpaird to 2012 pn manly as a result of in., leases tn indues I gins* additions and upgrades as well a.s the avs'MgL commission pet unit as the mix of ■.inits continues tu shift lowurd smanphones and more customris activate data services

Selling general and administrative expense ineieased dunng 2012 compared to 201 I pnmanly due to higher sales commission expense in our indirect channel as well as costs associated with regulatory tees Indirect sales commission expense ineieased $1 3 hillion dunng 2012 compared to 2011 pnmanly as a result of increases in the average commission per unit a> the mix ol units continued io shift inward smanphones and more customers activated data sen-ices

Depreciation andAmottuation Evpense

The increase in depreciation and amortization expense dunng 2013 compared to 2012 was pnmanly dnx cn by an increase in nei depreciable assets Depreciation and amortization expense was essentially unchanged dunng 2012 compared lo 2011

Wireline

Our Wireline segment provides voice, data and video communications products and enhanced services including broadband video and data, corporate networking solutions, data center and cloud services, secunty and managed network services and local and long distance voice services Wc provide these products and services to consumers in the United Slates, as well as to c; businesses and government customers both in the United Slates and tu over 150 olher countries around the woild

Operating Revenues and Srlcrled Operating Statistics

(dollars in millions) Increasc/fUerrrasr)

The increase in Masa Markets revenues, dnven by FiOS services, was partially offset by the decline of local exchange revenues pnmanly due to a 5 2% decline in Consumer retail voice connections resulting pnmanly from competition and technology substitution wilh wireless, VoIP, broadband and cable services. Total voice connections include traditional switched access lines in service as well as FiOS digital voice connections There was also a decline in Small business retail voice connections, pnmanly reflecting competition and a shifl to boih IP and high-speed circuits

2012 Compared to 2011

Mass Markets revenues increased dunng 2012 compared lo 2011 pnmanly due to the expansion of FiOS services (Voice. Internet and Video] as well as changes in our pricing strategy adopted in 2012 partially riffs ei hy the continued decline nf local exchangr

Years Fueled IXeciiihc

Mass Markets

Stralegi, services

<-.:obal Lnte:_riise Cd yb.il Wholesale Other

'filial Operating Revenue

Connections ( 0(1!)) "' To: il voice rnnr,ccli.>n>

Total Broadband ennnccti FiOS internet subscribers KiOS Video subscribers

S 14,71" 2 591 17.328 fi,420 0.283

$ n«»4 4 ur-_u

(<-H) (2 fc)

5 "9

368 4 6 ()r>4> H3.1)

(52t>) |7_1)

(61) (M.I)

S 3«J23 J 39 7S0 S 40 (.82 $ (557) (14)

9,01 * 6.1172 5.2fc2

(1,418) il. 31

2211 2 5 6-lff I I H

3) ("■■) li i-Mj

Wnclme's leiermc-s tlecteas.-d JO 6 bii:,on ui 1 4':, llnteipnse Core and Cluhal Wholesale prti!l\ ottse Strategic ien ices revenues wiihm (il.ib.il Friierprisc

lining 2013 com; high, i Consume

r.ly dnven hv deel .en by I'lOS scrvu. ■

Mass M.irkrlv

Mass Markets u p. r.Horns p:;:v,dc hioadhand services (in. li-dme high->p.:cd Internet lit 'S lutein.I and I ,'is Vide ■: :v i, ,-si small business, subs, libels

Mass Mail.crs ie. nun s in. n a ,ed 511 ( b.llu-n or - 7'.,- -iuiing .'III 1 eonuraied n> 2<>; 2 pnm.nilv del. !) the expansion cr Fit IV sen ice: < Voice IniCiTiCI .md \ id) veel I as el. n.gcs in eu: pile" it <: MMifgiCS panrally olis ,t hv lite e nn;iireii dec '.ine oi brc nl

Dunng 201 1 we glew our suh^ciihei base bv 0 (■ milium HOS Interne! subscribets ami b; U < million 1-iUS \ nlco suhsdibeis alnlc al.o coiisriieiitly imptoving pcnclialion rates within our fiOS se:vicc areas *j. <:" Oc.cmbei 31 2<J!3. vn aclnncd penrtr.itinn rtiies ol 39 5% and .^;t 0% '.c: Fit vs Ir.ieiT.ct and riOS Video respectively . ompared to penetration tates o: } > and

We continued to ijmw oui subscriber base ind mipiovcd penetration rates wnlnn oui FiOS service areas dunng 2012 Also contnhuling-to the increase in revenue finm 1'iOS services wcte changes in our pnemg strategy "adorned in 2012 As uf December 31. 2012. vc achieved penetration rates of 37 3% and 33 3% lot FiOS Internet and FiOS Video, respectively compared to penetration rates of 35 5% and 31 5% for FiOS Internet and FiOS Video, respectively, at Decemhci 31, 2011

Mass Markets revenues were negatively impacted hy the decline nl"local exchange revenues pnmanly due io a ("> 1% decline in Consumer retail voice connections resulting pnmanly from competition and technology substitution with wireless. VoIP, bioadband and cable services Total voice connections include traditional switched access lines in sen ice as well as F'<">S digital v oice connections There was also a decline in Small business retail voice connections, pnmanly reflecting challenging economic conditions, fompetitton and a shift io both IP and high-speed ciicuiti

Global EntnpMte

Global F.meipuse offers Strategic sen ices including netwoik pioducts and solutions, advanced communications services and olher cote communications services to medium and large business customers, multinational corporations and state and federal gov eminent rusiiimt rs

201.1 Complied lo 20/2

Global Fntcmnsc revenues decieased SO r» billion, or 3 *>*.■'» dunng 2013 compared "o 2012 jmtnaiily due lo a SO 5 billion, oi 27 1%, decline in Core customer premise equipment revenues as well as lower voice services and data netwoik ing revenues, which consist of traditional < iieuil-bajed scrs ices such as frame relay pi i vale line and Asynchronous Transfer Mode (A ! M) Services These core sfivn.es declined hi 2013 compaied to 2012 as our customer base continued to migrate to next generation IP vers ices The decline in customer premise equipment icvcnucs reflected uur focus on tmptoving margins by continuing io dc-ctuphaii_tc sales uf equipment that are not part of an overall entripnse solutions hundle The decline is also due to lower revenue from public seeioi cu-lon'.crs This decrease was panrally olivet by giowth m Strategic icii ices levenues. which increased SO -I billion, oi 4 o", during 2013 compared to 2012 primarily due to growth in adv anted services, such as contact center solutions, IT communisatmns and uur cloud and daia center offenngs as well as ie venue Irom a telematics serv ices business ihat we acquired in lhe third <;ua:tcr of2012

2<'/2 dmp.iicd lo 2f>l 1 .. . :~ -■

Global Wholesale icveuucs decreased dunng 2012 compared to 2011 pmnaril) due lo a decline in traditional voice revenues as a result of decreased MOlJs and a 5 3% decline in domestic wholesale connections The traditional s nice product reductions are pnmanly due to the enntinued impje t of competitors dcemphasr/ing their local nurkct mitral n cs coupled with the impact of technology substitution Also contributing to ihc decline in voice revenues is :he elimination of low margin international products and lhe continuing contraction of market rates due io competition Paiiiaily offsetting the overall decrease in wholesale revenue was a continuing demand for high-speed digital data sen ices from fiber-to-thc-cell cusiomeis upgrading their core data circuits to Fthemct facilities as well as Ethernet migrations from other core customers As a icsult ofthe customer upgrades, the numbci uf core data ciicuils cxpciienccd a 9 6% decline compared to ihc similar period in 2011 Wc expect Global Wholesale revenue to continue to decline appro xi mat ely 10% per quarter compared to the similar penod in 2011 as we hcltcve thai the continued decline in core products will only he partially offset by growth ui Ethernet and II' services

2(H2 I onipa'ed ro 2011

Global Fnterpi'.se revenues decreased dunng 7012 compared to 2111 I pnmanly due lo tower local sen n rs and liiidition.il cue ml -hased revenues, a decline in customer premise equipment revenues and lhe unfavorable impact uf ftucign euiicnty translation Core services declined compared lo lhe similar period in 2011 as our customer base continued io migrate lo nc\i generation IP services Thr decline in customer premise equipment revenues reflected our focus on improving margins hy continuing to de-cmphasra.e sales of equipment that aie not pan of nr. overall enterprise solutions bundle This decrease was partially oilset by highei Strategic sen ices revenues Strategic scrv tecs ie venues increased pnmanly due to growth in advanced setvices. such as managed network solutions, contact center solutions. IP communications and our cloud and data center ofTenngs

Global Wholesale

Global Wholesale provides communications services including data, voice and local dial lone and bioadband services pnmanly lo local, long distance and oihcr carriers that use our facilities to provide scnices to itien customers

20/3 Compaicd io 20J2

Global Wholesale revenues decreased SO 5 billion, or 7.3%. during 2013 compared to 2012 pnmanly due lo a decline in traditional voice revenues as a rcsull of decreased MOUa and a 5.2% decline in domestic wholesale connections. Die traditional voice product reductions are pnmanly due lo competitors de-cmphasizing their local market initiatives coupled with the effect of technology substitution Also contnbuling to the decline in voice revenues is the continuing contraction of market rates due to competition Partially offsetting the overall decrease in wholesale icvenue was a continuing demand for high-speed digital data services from fiber-to-ibc-cell customers upgrading their core data circuits to Ethernet facilities as well as Ethernet migrations from other core customers As a result of the customer upgrades, Ihc number of core data circuits experienced an 11 3% decline compared lo lhe similar penod in 2012

(dollars in millions) IrKr«ase/(fWtrease)

S (899) (93 7j%

(34) (0 4)

S (933) (9 9)

Other

Other revenues include such services as local exchange and long distance services outside nf our network fnotpnnt and operator services whicb >~ no longer being marketed. The decrease in revenues from olher services dunng 2013 and 2012 was pnmanly due to reduced volume* outside of gut network footpnnt.

Operating Expenses

2013 v

Cost of sciviccs and -ales Selling genera! and adrninisiraiive evp I>et)recraliori and amoriraaiion txperue Total Opt i atifig Expenses

i (485)

<:«*)

(^)

J. (»7il)

(dollars in millions) lnrrfasc/(l>fCrras.-J

s Frided f>u

:i.»2K S 22 -113 8.595 >■ Mi 3 8JI7 S424

j Siilr.',

nl lo 2D 12 primanlv di margins by dc-ernphasi; :s lesuliirig primarily lioi :veiie> These dec leases or rate increases

(I 2) (2 2)

C'<uolS

\'o a of scnicc* and -ales decreased during 2ill'⁵ con: ncrnise equipment which icllecled our tiisiis on improi ivcrall enicipn.se solutions Lunelle a ckcluit in access , .■ Iumcs and lhe net cllett of sionn-related insurance issocrated with continued Fit >S subs, riber growih and v

mtei (lciiu»s

.osl i.f seivite'S and sales ir.treascd during 2ill2 compared lo ?(H I. prunanly due to Inr.hc i nviMr c.'Ms a oiiiuiued 1VS siibscnber growih and veiuloi rale tin nrases and ineieased expenses ielated lo mil cloud and daia c> '. o>i of sen ue* and sales nj, also impacted hy higher costs iclaled lo FiOS insiallaiion as well a < higher icpan an :xpernes caused by smmi-rclatcd ev cuts in 2012 compared to 201 t The mcie.isc* weie partially nfiwi bv a decline iiiinanlv hum manage men I actions to reduce esposuie to unprofitable international wholesale unites and dech cliolc'sale long distance volumes Costs iclatcd to custonici premise equipment also decreased, which ictlcctid mpiovKig margins by de-emphasising sales ul equipment ihal are nol pan uf an ov era'.) en'.eipiisr sol ui ion:, bundle

2013 vs. 201Z

2012 vs 201)

I 373 8,327

J 9V>

K.458

S 313 (»7) $ 216

Segment Operating laconic a ad EBITDA

Ycais Ended December 31,

(1 2)%

S 1.700 $ 8.484 J 9,417

Segment Operating laconic

Add Depreciation and ameitraaliun expense Srgmrnl EBITDA

Si anient updating income margin SigiiuniLEIlTr>\Rraigtn

i in Wireline's Ope tat ing intoinc Segmeiu I.UITDA and Segment F-I31TDA inaigin dunng the peitojs pttieiiled w esult oi ihe faciois cicscnhcd in connection w;tri operating revenues and operating, expenses

. iO I billion ol iii'ineeuiiioi: oi rion-opeiatuina] items were excluded tiom Vc'neline's I Jneiatiug uieonie

] C Jin on Speclrum License Transaction . - .- |

Dunng the third quaner nf2013 ariei receiving ihc required regulatory approvals. Ven/on Wireless' sold 39 lowci 700 MHz H block spectrum licenses lo AT&T in exchange lor a payment of SI 9 billion and ihe translcrhy AT&T to Vcn/on Wireless: of AWS (10 MHz) licenses in cctlain markets in the western Umied Stales Ven/on Wireless also sold certain lower 70O MHz 13 block spectrum licenses lo an investment finn loi a paymem of SO 2 billion \s a resull we received SO 5 billion of AWS licenses at lair value and wc recorded a pre-tax gain of approximately SO 3 billion in Selling, general arid administrative expense on our consolidated statement ol income fer the year ended December 31. 2013

The Consolidated Adjusted FBI IDA non-GAAP measure presented in ihc Consolidated Operating Income and FWTDA discussion (Sec Consolidated IUsuits oi Operations' j excludes the gain on the speclrum license transaction descubed above

|~\Vi"relfss 1 ransaenon Cosh

During 201 3. as a resull ot lhe Wireless "I ransaeuoa. w_f recorded costs ol SO 'i hillion primarily for mieresi expense ot 5ti 7 billion relzied to ihe issuance of ihc new notes as well as SO 2 billion in lees pnmanly in connection with lhe bridge eRdu agreement (sec Consolidated Financial Condition )

Dunng Decembei 2012. wv iceoided debt redemption costs nf SO 3 billion in connection with the early redemption of SO 7 billion ot ihe S2 ti billion ot H 75V. Ven/on Communications Notes due 2U18 SI 0 billion of 4 625% Vcn/on Virginia LLC IX-hcnturcs.' -

Series A due March 2013 and SO 75 billion ol 4-3SS Verizon Communications Notes due February 201 3. as well as SO 3 billion ■

of oihei costs

During Novcmhei 201 I, we recorded debt redemption costs of SO I billion in connection with the early redemption of SI 0 billion of 7 ^75V. Ven/on Communications Notes due September 2012, SO 6 billion of 6 875% Ven/.on Communications Notes due June 201 2. SO 4 billion of 6 125'/. Ven/on Florida Inc Debentures due January 2013. SO 5 billion ol 6 12*% Vcn/on Maryland Inc Debentures due March 2012 uud SI 0 billion of 6 SIS*;. Vcn/on New York Inc Debentures due Apnl 201 2

j Sevrrancr. 1'ension and Benefit (Credits) Charges ]

Dur.ng 2013 we recorded net pie-tax severance, pension and henclits credits ol approximate!; Vfi 2 billion ptimsniv lor oui pension and pnsirtlircrrieni plans in accordance with uur accounting policy in recognize actuarial gains and losses in the year in which they occur The credits were pnmanly dnven by an increase in our discount raic assumption used io determine ilie cuneiii year liabilities fn>m a weighted-average ot -J 2% ai Derember 31, 2012 to a wrig!ned-a> erace of 5 0V. at December i 1, 201 3 IjU 3 billion) lowci lhan assumed uinee" medieal costs and other assumption adjustments ISI 4 billion) and the difference between oui estimated return on assets of 7 *.% a; December 31. 2012 and our actual ictiuti on assets of S fv% ai December .M 2013 ISO 5 bilhonj

During 2012. we iceoided net pre-tax severance, pension and benefits charges of appioximately 17 2 hilhon piiuiailly foi oui pension and postretireim m plans in accordant e with iiur accounting policy to tec ngnize aciiiar.al gams and loss, i in the year in w hieb I bey oci ut lhe charges were pnmanly dm en hv a dec leiise in our discount rale assumption used lo determine the current vear Jrahiliiics liom a werghied-a venue ol 5% at Dect>ir.hrr 31 201 I to a weighted-av erage ol 4 2% at December 1. 2012 115 3 biljmn) and revisions to lhe retirement assumptions (or participants and other assumption adiusimenls. pamalli oilset by ihc tli(Terence between our climated return on assets of 7 5% and our actual return on assets of 10% (SO 7 billion) As pan of this charge we also recorded SI 0 billion related to the annuitization of pension liabilities (see Fmpluvee Bene lit Flan funded Status and Contributions") as well as scv cranee charges of SO 4 billion primarily for appioximately 4 000 management employees

During 20! 1. wc recorded net pre-tax sevrnince. pension and bcnciiis charges- ut approximately Sd 0 billion lot our pension anil postretiremen l plans in accordance with out account its j; policy lo recognize actuarial gains and losse/n in Ihc year in which they occur The charges were pnrnanfy dnven by a decrease in our discount rate assumption Used to eft; te mi ine rhe current year liabilities (rnm 5 75% ul December 31. 2010 to 3% at December 31. 2011 ($5 0 billion), the difference between our estimated return on assets of H% and our actual return ou assets of 5% (SO 9 billion), and revisions to the life expectancy of participants and othet adjustments lo assumptions

The Consolidated Adjusted FIJI'] DA nun-GAAP measure presented m the Cuii^ilidatcd Operating Income arid ILH JI DA discussion (See "Consolidated Results ot Operations j excludes the severance pension and benefit (credits) charges presented above

| Early Debt Redemption and Other Costs j

During November 2012, wc recorded debt redemption costs of SO 8 billion in connection with ihc purchase of SO 9 billion of ihe $1 25 billion of ft 95% Venzon Communication! No let due 2039 in a cash tender offer

I Litigation Settlements

Capital expenditures, including capitalized software, were as follows

(dollars i 2012

nilhons) 2011

In the third quarter of 2012, we settled a number of patent Ii ligation matters, including cases with Ac live Vidro Networks Inc (Active Video) and TiVo Inc (Ti Vo) In connection witli the settlements wilh AcliveVidco and Ti Vo, we recorded a charge of SO 4 billion in the third quarter of2012 and will pay and recognize over the following six yean an additional SO 2 billion

Die Consolidated Adjusted EBITDA non-GAAP measure presented in the Consolidated Operating Income and FJUTDA discussion (See Consolidated Results of Operations") excludes ihe litigation settlement costs presented uhovc

Cash flows I'rovided bv (t\ed In)

Operating .if it vines S 3K.XI K S j I ■tSr,

Inc i

S Sli.43*

St UK'

IrnrsliriL' activities (14,1(3J) (21¹ Jm!?:

Fimm.-.irij: activities 2 MS" (." : ?.>':

is<- (Den e ise) In < ash and Cash Fquiv alvnls

S M57 S 8,973 6,342 6,399 976 872

5 9,425 6,2W 950

Yean. Ended December 31.

S 16,604 S 16.175 S 16.244

Wuelcss Wireline Other

Total as a perc entage of revenue 13 8V. 14 0% 14 7V.

'.' .ijur.i I expend nines im reased at Wireless in 201.1 compared to 201 2 in mdri lo substantially i omplclc ihe build-eiut ol oui 4G 1.11 in t work Capilel expenditures dec lined at Wireline as a icsull of dec leased legacy spending requirements and a decline m .'pending on our hi' iS neiwoik

C.ij-ital txperidrtii. s de. lined slightly at Wneless nl 2012 C0ili)i.iiC(l to 2U1 i due to the detivased investmenl in llic eapac itv of .-a: wireless F\'-IK.i network, pjrlijlly oftscl by llic ineieased build-out ol our 4(i LTI: network Capital expend llu res deel.nctl s! n;ht Iv at Wnelnit dm in l.mi i leeacv spending r. qiurcincnis

W_c u-c th, dividend*

purchase Veil.:.,:: co: nd in the extern lie liiienients T he cash po

peiations lo bind network expansion and rnodenii/.uioii repay external iinar.eir.g. pay ick liom time to time and invexi it; new businesses Oui souires of lunds pnmar.iv Iron; finm external iinar.cnig arrangements, air 'illicieni to nice! .ingoing :<ptTt:i;ng ar.d l"ihe purchase price lot ihe Wireless '!r.tnsacnon was pr:mnly tunded Im the irieiiiretiec uf ihnd-pariv iri.Lhlciincss in. iodine, ihe issuance ul'54'JO billion aggregate j>r:iu ijial amount off.ved and floating i.ne notes and othei indcbiedr.es> (see ' Acquisitions and Divestitures ) We expect that our capital spending requirement-, veil] continue lo be financed primarily ihinugti internal ly gem-rated funds Debt oi equity limine ing may be needed lo fund additional mve-nni ins oi dcvjopnii nt activities o: to maintain an appropriate capita! str.ic!i:ii to ensure our liiiaiitial flexibility On: cash and cash c.p:i\:iIcriti arc pr.manly held domcsiifaliy ir. divcisilird .ic;oarils and aie invested to m.iiril.nn pm-i-ip.ii .md liquid.ly Ac. oidmglv w e do not have -igiiifii aiii exposuie i.i foieigu c unencv llueiualions

The volatility in world debt and equity m.iike:s has net had a significant eflcct on our abiliiv to access externa! tin one 1:11- ' >ur

ai ailalile it Menu: lin.iu. mg anangeiue.nls im hide en.dn js jiljhl, under . re.til t.n ililie.s and oilier bank Imes ol' i redit v. ndor t'.n.iiniiij' .<:iTigeiricnis isst.ance s ot legisteie.d debi oi equity seniiines and pne ale I v-pl,iced capital market sec unties We may

e e.-m.-iie ri i.i I paper issuances In addition, during 201 \ wv er.ieied into a J2 0 billnm ' fi-S-«J:iy rivolving _L red it .igicertieni

lash Flows Provided Hv 0)ieratni; Activt

2H i. 2li! 2 ar.d Tn'. I. we inv , Dutiiij: 2M[ « 2(112 and 201 I

ted SO ti billion. S4 3 billion and SO 2 billion, respectively m acquisitions nl wireless v also invested SO 5 billion. SO 9 billion a:nl S i S billion, respectively in acquisitions ol

onsidcraiKin thai w

Dining ihc fourth qu.niei of 2013. Vctt/cri aec'.uued an industry leadei in content deliveiy neiwoiks fm SO 4 billion We expeel trie acquisition will iricieasc out abiliiv to meet the glowing demand for online digital media couirm Additionally, we acquired a o'ad company (oi cash cniisideiiition that was no! significant In Fchiiiary 2014, Ven/on aceiuired a

.s dediialcdlolhedevelopu

During 201 2 we paid approximately S t 3 hillion to acquire wireless licenses pnmaiily in meet I'atuie LTL capacity needs and ru.ible LTL expansion Additionally. during 2012, wc acqmicd IHiGlIFS Telrinatics. a provider of telematics services, for JO ( billion See Acquisition-, and Dn estiiuies tor additional details

Duririi.' Apnl 2(11 I wc paid approximately SI -1 billion foi the equii) ol Tencmaik, winch viae pailjall> offset bv SO I billion of i ash acquired (see Acquisitions and I )iv esttHires i See Cash Fiows Fieini Financing Activ Hies regarding the debt cvbligations ol I er remark ihat were r: paid diirin;' May 2011 In addition, during 201 ). we acquired v annus vei;c less licenses and markets as well as a pro* ide r nl c loud sol'tw jn technology foi cash consideration that was not siginfiCaiii

rnicui ^;."l i isl:

s in /ill.? -j : prov ided bv opet.iling

f fund, coriimues io be ea.h genenitect fun

:nlli.i

ed t

sed bv ^1

; aetivitits dunii,! ?'.i] ineieased nj s ; .1 billion e(>iri|...re.l t... ?ii]2 |-riinarilv due :i lon'Mblits.Mi, and imp.oie.i Woiking .ajnlal leveh Ihe u.crc.i-e in ml ea-h parti illy ollsei hy iiei disliihiidoiK ol SO : biNion receive d liom \'o.l.itone Omrni. 1 u

.1 u ri n g '.' (.11 2

on A.ldil:.: eill dispose

iiieiaiioi: r-i ajiproi

lor additional

sa:e ot ;(Kl Mil/ lower II block .speclnim lit enses and a* a it suit we iceciveci proceeds o: S2 I o 2u|4 we .innoeiiited agrcemeiits wnh T-Mobile USA Inc (T-Mobile 1 ^;SA) pursuant to which : 7011 MIU A hl.ick spectrum licenses and as a resul; of these agreements we expeel lo receive

2 4 hiih.sn and additional spec Hum See \cqui

.if o-.ii -liO Ml! lonllVCjAnet

V,:.ifoni- iVr.intil ol"5(f t billi.-n an.: Su 4 biilu.ii it,pe,

!ash Kluws (ised In Investing Activi

: pnir.ank inc ludcd pioec i ds lvhteri lo the sales nl h

L«\a>h Flows Prm ided hi ll'srd In) Finani nig Aftiv Hies

ii . lunges in ru n .V21 llbilb.i

:on_ .. ... - - .....

During March 2011:. wc issued SO 5 billion aggregate principal amounl of floating late Notes due 2015 in a pnvalc placement re.iu.nng, in cash ponced*, of approximately SO 5 billion, net uf disLUuMs and issuance costs The proceeds were used for llic iepayr»cnt of couimeicial papci

Dunng Apnl 2013, SI 25 billion uf 5 25V. Venzon Communications Kotos maimed and weic repaid During Mas 201 3, SO 1 billion ol 7 0% Vcn/on New York Inc Debentures maiured and were repaid During June 201 3. SO 5 billion of 4 375% Venzon Communications Notes and SO 1 hillion ol 7 0% Vcnron New York Inc Debentures matured and ucre lepaid In addition, during June 201 3, we redeemed SO 25 billion of 7 15% Venzon Maryland LLC Debentures due May 2023 al a redempiion price ol 100% ol Ihe pnncipai amounl of the debentures

Dunng Sf pi ember 20 M. in connection wilh the Wireless Transaction, wc issued S4 0 1) billion aggregate pnncipai amount of fixed and lb>alrug rate notes resulting in cash proceeds of approximately S4R 7 hilhon. ncl of discounts and issuance cosls The ■ sr-uantcs consisted of Die following S2 25 billion aggregaic principal amount officiating rate Notes due 201 fi that bear interest at a rale equal lo three-monih London Interbank Offeied Rale (LIFlOK) plus 1 53% which rale will be revel quanerly SI 75 billion aggregate pnncipai amount ot floating rats Notes due 301K lfiat hear interest at a rate equal to three-month LIHOK plus i 75% * Inch rale will be reset quaiieily, S-t 25 billion aggregate piiniipa] amounl cf 2 50% Notes due 2(11 It, S-1 75 billion aggregate pnncipai amount ot 3 f>5% Notes due 201R S4 0 billion aggregate pnncipai amount nf 4 50V. Notes due 2020 SI 1 0 billion agi'icc-atr pnncipai amount «f 5 1 5V. Notes due 2021, So 0 billion aggregate principal amount off' 411% Noirs due 2013 and J 11 0 billion aggregate pmieipal amount of 6 55% Notes due 204 3 (collectively. the new notes) The pioeecds ofthe new notes were u.<cd to finance in pan. the Wireless Transaction and to pay related fees and expenses As a resull of ihc issuance ofthe new notes. *f in tuned interest expense related to ihe Wireless Transaction of SO 7 hillion dunng 2013

Dunng Octobci 201 3. SO 3 billion of 4 75% Ven/on New Fn gland Inc Debentures matured and n ere repaid

During November 201 3. SI 25 billion of 7 375% Venzon Wireless Notes and SO 2 billion ofd 5% Ven/nn Wireless Notes manned and weic u-paid I>anng Nov crime 1 2HI3 Ver./on Wireless if ('.craned S3 5 billion isf 5 5f,° Sole, due fct-nraiy 1 2<iil m a redemption puce of 10IV. ofthe principal amount of the notes and SO 3 billion of (■ 711% Vcn/on New s. ork Inc Debentures due Nov ember 2023 at a redemption pnee nf 100% of ihc pnncipai amount of the elebenlutes Anv accrued and unpaid uiieiesi was paid to lhe date of redemption

Dunng IX-ccmbei 201 3. we ledeemed S0.2 billion of 7 OV. Venzon New Ynili Ine IVbemures due December 2033 at a redemption pnee ot 100% of the pnncipai amount of the debentures and S20 million o1 7 0V. Venzon Delaware LLC Debentures due Dcccmhci 2023 at a redemption pnee ol 100% ol (he principal amount ol (he debentures Any accrued and unpaid interest was paid in the dale of redemption

In addition, during 201 3 we utilized S0.2 billion undei fixed rate vendor financing facilities

Dunng February 2014, we issued Cl 75 billion aggregate pnncipai amounl of 2 375% Noies due 2022 f. 1 25 billion aggregate pnncipjl amount of 325% Notes due 2026 and £0 *5 billion aggregate pnncipai amount nf 4 75% Notes due 2034 The issuance of these- Notes resulted in ci*h proceeds of appioximately S5 4 billion, net nf discounts and issuance costs The net proceeds were uscd. in part, to finance the Wirelesi "transaction Any net proceeds not used to finance the Wireless Transaction will be used for general corporate purposes Also, during Febmny 2014, we issued $'l 5 billion aggregate principal amount of 5 °% Bei.nl Notes due 2054 resulting in cash proceeds of approximately SO 5 billion, net uf discounts and issuance costs The proceeds will be used for general corporate purposes

Venzon Notes

During February 2014. in connection with the Wireless Transaction, we issued $5 0 billion aggregate pnncipai amount of floating rate notes The Venzon Notes were issued in twn separate series, with 12 3 billion due February 21 2022 and S2.5 billion due February 21, 2025 The Venzon Notes bear ml crest at a floating rate, which will be reset quarterly, with interest payable quancrly in arrears, beginning May 21, 2014 (see "Acquisitions and Divestiture*"). The eight-year Venzon notes bear interest at a floating rale equal lo three-month LIBOR, plus 1 222%. and Ihe eleven-year Venzon notes bear interest at a floating rate equal to three-month LIBOR, plus 1J72%

Term Loan Agreement " "

Dunng October 2013. wc entered into a term loan agreement with a group uf major financial institutions puisuant to which we drew Sf> ti billion in February 2014 to finance, in pan. the Wireless Transaction and in pay transaction costs Half of any loans under lhe tenn loan agreement have a maturity nf three years and the olher half have a matunty of fiv c years (the 5-Vear Loans) The 5-Vear Loans provide for tbe partial amortization of principal dunng the last iwo years that they are outstanding Loans under the lenn loan agreement bear interest at floating rates The- lenn loan agreement contains certain negative covenants including a negative pledge cov cnant. a merger or similar transaction covenant and an accounting changes covenant, affirmative covenants and events of default that are customary for companies maintaining an investment grade credit rating In addition. Ihe tenn loan agreement requites us lo maintain a leverage ratio (as defined in the lenn loan agreemenl) nol in excess nf 3 50 I 00, until oui cretin ratings reach a certain level

Bridge Credit Agreement

Dunng September 201 3. we entered into a S6I 0 billion bridge credit agreement with a group of major financial institutions llic credit agreement provided us with the ability to borrow up to $61 0 billion to finance, in part, the Wireless Transaction and to pay related transaction costs Following lhe September 2013 issuance uf notes, borrowing availability under the bndgc credit agreement was reduced to SI 2 0 billion Following the effectiveness of the term loan agreement in October 2013. the bndgc credit agreement wu terminated in accordance with its lenns and as such the related fees of SO 2 billion were recognized in Olher income and (expense), net dunni: the fourth qiuncr of 2013

:oi;

D.iini" Jtinuai) 20i2. S ! n billion of 5 X"5% Vcirann New Jersey litf Debentures matured and were repaid During I'chr.iiiry Jul2. tn S btllion ol 5 25% Verizon Wireless Notes matured ami were repaid During Juiy 2012. St) X hillmn of 7 ()% Ven/on Wireless Notes matured and were repaid In addition dunng 2012 we utilized SO 2 biliion under f; .ed rate v cndoi ["injuring facilii.es

On Nov.uibei 2 2U12. we announced the commencement of a tciidei oflci Che Tuidei Offei) lo ituichan l"<>i cash .oiy ami all of the outstanding 51 25 billion aggregate principal anieuin! ot Ji °5% Vcn/on Communications Notes due 20 i" in the 11 ridi i Otici

that inmpiited '-'.ucmhci 9 21112 SO Q billion aggierat. pnncipai amount ol the note-: wj-. pin- lived and Sf: 35 b-ll

tM-.ncipal amoi.nl ol ll.e notes remained outstanding An. accrued and unpaid interesi on the principal p.uchas, d was paid lo ihc dale ol purchase

lAiring November 2012 we issued S-- ? btllion agur. vaie principal amount ol fi.v.d rale noies al v.iryini' mai.intics icsalimg m f.ish proceeds ni appioximately 5-4 47 billion, net ol discounts anil issuance costs The net proceeds were used for general corporate purposes, foi the lender Oiler and to redeem SO 7 hiltiun ut >2 II billion f H 75% Vent-fti Communi. otim-.s Notes due 20IK SI '' biilion of 4 1,25".; Ven/on Vienna LLC Dcbciituics. Scucs A due 201 ' and SC "5 billion of - Veii/cm C.iiritr.u meat inns Notes due 2t'l 3

In addition, during 2012 vanuus ttxecf rate nc-tc* tolaling approximately JO 2 billion were repaid ar.tl any Jccnied and unpaid interesi was paid lo the date nt payment

Sec Other Item--' regarding the early debi redemption costs incurred in eoiuiei lion wnh die jhutmriiiroiied re purchases and :>ill

Dunng 2('l 1 proceeds horn Inng-tenn borrowings lolalcd SIM billion, which was pnminly used io reply onistiriding iiehi. ii dei mhighet inteiest bearing debt maturing in the neai tcmi and tin "the: general i oi per ate purposes

'tjiing 2!'-l 1. S^(l 5 billion ol 5 *''■» Ven/cMV s. niujvuimca'.ic.iv Noisi mature.¹, aivci were repaid and we vr.ili/cd SO : biilmii vindei fixed rate veiidoi Irriancirig facilities

j 'einiig Much 2(i) ! we issued So 25 billton aggiegale pmieipal amount uf fixed and l1o.iling rate notes a: ■. aiving itiJtunl.es resulting ni eash proceeds of approx inialcly S'i 19 billion net of discounts and issu.irit e cosls The net pun eeds weie used tin the lepus rr.rnt of commercial paper and olher general cmpnraie purposes, as well .is to redeem >.' 11 billion aggieg.iie piin.ip.il .imiu.ni

ilir debt ob'.-.galit:i\_:, o; I enema:¹. i!,.e. w it s.u-.Mandijv,-. *i the iti'.ic oi ii\ aniiiiMtioii by Vr.iii-.ir, wi-ie te-pai.'. dui-.n-; '.lie *-ee-rl .man. i of 201 1

During Nov embi r 201 1 we issued S4 h billion aggie gat- prim ipal amount .>( Ilx. d rut., miles a! v.ux me maimiHc- it sull.iif.' m cash proceed-, of upprouinnlei; i ' 5* billion nei nf d|sociiii- and i-sua.-n c .osls D.ning Novembci 2i= 1 1. '.he net j-ii.f wc;

aniounl ol telephone subsidi.irx debt lire remaining net piocceds were u>ed !oi the rcpavinei-.t ot comincreial papei and other 'euir-al co:;i.utili purpos. s See l>lliii Items residing llu .ailv del.l redt-mpiiori costs nieiined in eonnmi;. v'.¹- ll c al:e::ieu:i.>:■:.! icdempiion:.

During December 2011. we repaid SO 9 billion upon matunty for tbe (TO 7 billion of 7 623% Venzon Wireless Notes, and lhe related cross currency swap was settled Dunng May 2011, $4 0 billton Venzon Wireless two-year fixed and floating rate notes matured and were repaid

Special Distributions

In May 201 3, the Board nf Representatives of Venzon Wireless declared a distribution lo its owners, which was paid in the second quarter of 201 3 in pit-portion io their partnership interests on the payment dale in the aggiegale amounl of S7 0 billion A.s a result. Vodafone received a cash payment of S3 15 billion and the remainder of the d isl n but ion w-js received by Veiraon

In November 20)2. the Board oi' Repiescniatives uf Y'cuzoii Wireless declared a di.stnbutton to Ut owneis. which was paid in the f'uti ilh quarter of 2012 in proportion lu their pattuciship mien'sts on the payment date, in the aggregate amount of 5 billion As .i result Wdatonc rctetx ed a cash payment ot 1.1 billion and the remainder ol the distribution was reccivcd by Venzon

In July 201 1, tlie Hoard nl Representatives ol" Vciiznn Wireless declared a distribution to its owneis, winch was paid ui Ihc liisi quarter nf 2012 in proportion to their partnership interests on the payment date in the aggiegale amount of $10 billion As a icsull, Vodafone teccivcd a cash payment of S4 5 billion and ihc remainder of ihc distribution was received hy Vcnznn

Oiliet net

"lhe change in Olher, ncl financing activities dunng 201"* compared to 2012 was primarily dnven by higher disirihulicns lo Vodalone, which owned a 45% noncontrolling intcntst in Venzon Wneless as ot Deceiubct .11 2013 The change in Oihei. net financing activities during 2012 compaicd to 2011 was pnnianly driven by higher distributions to Vodafone and lughci early debt redemption costs (see Other Items ')

DiuJe'itlt

lhe Venzon Doaid ot D.tcstors determines the appropriateness ot the level ot out dividend pavmciii--: on a periodic basis t>y considering such lac tors as long-icrin growth opportunities, internal cash requirements and the expectations of our shateowners During (be third quarter of 2013, ihc Board increased our quarterly duuLnd payment 2 9% io % 53 per share from S 5)5 per share in the same period nl 2012 This is ihc seventh consecutive year that Vernon s [ioard of Directors has approved a quarterly r!i\ idend increase Dunng the third quarter nf 2012. lhe 13oaid increased our quanerly div idend payment 3 fl'. lo S 515 per share iiom S 511 per shaic in the same penod of 201 1 During the third quarter nf 201 1. the Hoard im leased «ui quaiteily dividend pat men: 2 6% io S 50 per share from J 4N75 pci shaic m the same penod of 2010

Dunng 201 i. we paid S5 9 billion in dividends compared to S5 2 billion in 2012 and S5 d billion in 2011 As in pnor periods dividend payments were a significant use of capital iesouit.es While lhe dividends declined per common share mere ase'd in 201 2 compared 10 20 M the total amount uf cash dividend; paid decreased during 2012 compaicd to the pnor ycai as a portion ol the dn idends was satisfied through tbe issuance ol common shares iicnn TrCiisuiy stuck (see ' Common Stock ')

t )n August 1 3. 201 3. we amended out S(s 2 b:llion credit laciliiy wnh a gioup ol major linaneia: instilutions in c.xicnd ihe -ii.iiunly dale to August 12,2017 As of December 3 1. 201 3, the unused borrowing capacity under this credit facility was approvimaiely St< 1 billion The credit laulity does not require us to comply with financial covenants oi maintain specified credit ratings, and ii pennits us io borrow even if our business has mcuncd a matenal adv ene change We use the credit facility in support lhe issuance ul commercial paper, tot the issuance of letters ol credit and tor general corporate purposes

D.l ii ii g October 2013. wc entered into a S2 0 billion 2o-tday revolving credit agreement wtih a gioup of major financial institutions Although effec tive as ol Oclnhft 2013. w_c could nut draw on this tev oh'ing credit agieemenl pnoi to the completion of the Wireless Transaction We may use bonowmgs under Ihc 364-day credit agree men l (or general corporate purposes ITic 364-day revolt ing credit agreement contains certain negative covenanrs. including a negative pledge covenant, a merger or similar transaction covenant and an accounting changes covenant, affirmative covenants and events of default ihal arc customary for companies maintaining an investment grade credit rai ing In addition, this agreement requires us to maintain a leverage ratio las Jt-fmed in Ihe agreement) nol in excess of 3 50 I 00. until oui credil ratings icaeli t certain level

Common S tacit

Common slock has been used from time lo lime to satisfy some of the funding requirements of employee and share owner plans, including 24 6 million common shares issued fioin Treasury stock dunng 2012 related to dividend payments, which had an aggregate value of J1 0 billion On February 1, 2011 the Board of Directors replaced Ihc previously authonzed share buyback program with a new program for the repurchase of up 14 100 million common shares lenntnating no later lhan Ihc close ofbusmcss on February 28,2014 The Board also determined that no additional shares were to be purchased under the pnor program Dunng 2013, we repurchased $02 billion of our common stock under this program. There were no repurchases of common stock dunng 2012or201l

As a result ofthe Wireless Transaction, Venzon issued approximately 1 27 billion shares

Ctctlti Ratings " ¹ ■^!'"^:'^:-" -- " - - ■ = - uti c -

Dunng the third quartet of 201 3. Vcnzon's credit ratings were downgraded by Moody's In vest 01 s Service (Moody's). Standard JL Poor s Ramies Set vices (.Standard A Pom s) and Filch Ratings (Fitch) as a resull of Ven/.uri't announcement ofthe agreement to acquire Vodafonc's 45V. nnnconinilling interest m Vcn/on Wireless for approximately SI 30 hillion including the tncuirencc of ihird-pnny indebtedness 10 fund the cash portion of the purchase price for the Wireless Transaction Moody's downgraded Venzun's long-term debt ratings one notch from A3 lo Baal, while Standard & Poor's lowered its corporate credit rating and senior unsecured debt rating one notch finm \- to Hill)* and Fitch lowered ns long-term issuer default rating and senior unsecured dc bt rating one notch from A to A-

Although Ihc ratings downgrade is not expected to significantly impact our access lo capital, it could incicase both the cost of refinancing debt and the cost of financing any new capital requirements Securities latings assigned by rating organizations arc expressions of opinion and arc not recommendations 10 buy, sell or hold ice unties A sccuntics rating is subject to revision or withdrawal at any time by the assigning rating organization Each rating should be evaluated independently of any other rating

Covenants

Our credit agreements contain covenants ihat arc typical for large, investment grade companies These covenants include requirements to pay interesi and pnncipai in 1 timely fashion, pay taxes, maintain insurance with responsible and reputable insurance companies preserve out cotpoiatc existence, keep uppiopiialc books and records of linancial trant.aclionj. maintain inn propeities provide financial and othei reports to our lendcis limit pledging and disposition or jvfets and meigeis and consolidations and other similar covenanrs Additionally, the lenn loan credit agreement and the .'(■4-day revolving cretin agrei mail require us lo innint.un a leverage r.iliu (as such term is dclined ir. those agreemenisj nol in e'veess ol 3 50 I 00 nniii our eic'dil ratings are equal to 0: Ingliet than \i and A-

We art,! our consolidated s.ihsidi.iiies aie m compliance with all debt covenants

| fin rease | Deere asc) In Cash and Cash Fquivalenls |

Our Cash and cash equivalents at December ■ 1 201 3 mialcd 153 5 billion a S50 4 billion increase compared to Cash ami .ash cqm valeiils at DeecmK: 31 ""012 prim.uily as a result of lhe issuance ol 0 billion aggiegale piuu ipal amount ol liv.d an.!

Uur Cash and cash equivalents ai December 3' 2011: totaled V* 1 billion a £10 3 biilion dicier ₍omp.,red 10 ( ash ar.d e.ish equivalents at Decenibci 31. 201 1 ai a result ol ilie i.vtnis described 111 connection with our (ash flows provided by operating jciiviiics cash flows used in investing act 1 vines and cash flows used in financing acuv jiies

Free Cash Mow

Free cash How is a rum-i iAAP financial measure that management, believes is useful in investors and oihei users ol Ven/on's financial information in cv nitrating 1 ash available to pav debt ami dn iclciids 1 ice cash [low is calculated by subtracting capita! expenditures trntti net c.ish piovidcd by iiper-Uing activities The following table reconciles nc: cash piovnlcei by npciarnig aciiv ntcs to Fiee cash lluw

ol oil.lis ni millionsl

icar.s llnded December " 1. 2111 1 2d 12 2u 11 Net cash pn>vided by npci-.inri;; actrvnies S .tK.HlS 5 - 1 -tSt- S J'l.Tsil Less Capital expenditures (including capitalired sortes_Jlc) It t>04 In, 17.' hi.24-i Free cash flow S 22,214 i 15,'II S 1!.5'-(j

Tire ch.ir.ges in free cash f.ow d.inr.;- 2UH 20 12 ami .'(HI were j le-.uli nl'ihc bnim- descnbed in . or:r:c;:ieri will; ne: o-li pr.se ided by opeial:n_t. acl w 111 c"■: :n:.l capita 1 c eperidiluir-t

[ F.nipluv ee Kent-fit I'lan Funded Status a nd C.untrihutieins | I'rnsion Annuitization

On October 1" .1012 we al-.iiij wnh om siihsidiaiv Wri/.m Investment Maring. merit Cn]-. and hdin. ,.,,y Counsclois l:i, as indepe-mii nt !i !'.n i.ny ot :l.c \\ i-,:<n; Maria|'i merit J'ensioii Plan (ihc I'lan) t nl; tc d inte- a detiiiitive purchase jgnemi ut wirii I he

a single premium gionp aiiir.ntv cuiiiiact horn I'liidentiaj

On Dcccmbct 10,2012, upon issuance ofthe group annuity contract by Prudential, Piu denial irrevocably assumed the obligation to make riilurc ennuiiy payments lo approx 1 mot el y 4 1,000 Venzon management retirees who began receiving pension payments from the Plan prior io January 1, 2010 The amounl of each retiree's annuity payment equals the amounl of such individual's pension benefit In addition, the group annuity contract is intended 10 replicate the same rights 10 future payments, such as survivor benefits, that are currently offered by ihe Plan

We contnbuled approximately S2 6 billion 10 the Plan between Sepiembei 1 2012 and December 31,2012 111 connection with the transaction so that the Plan s funding percentage would nol deciease as a icsull of the transaction

Contractual Obligations

.Emplojcr Contributions ^ ,

We operate numerous qualified and nonqualified pension plans and other postretiremen! henefil plans These plans pnmanly relate to our domestic business units Dunng 2013. cunllibulions lu our qualified pension plans were nut material Duiing 2012 and 2011, wc contubutcd SO 9 billion and SO 4 billion, respectively, io our qualified pension plans, excluding the pension annuitization discussed above Wc also coninbuied SO 1 billion SO 2 billion and SO ) billion lo our nonqualified pension plans in 2013,2012 and 201 1, rcjpeciiv cly

In an i Hon to reduce the nsk ul" our portfolio strategy and heller align assets wnh liabilities, we have adopted a liability driven pension strategy that seeks lo betler mnich cash flows from investment wnh projected benefit payment.* Wc expect ihat the strategy will reduce llu likelihood ihal assets will do Inn. al a lime- when luhihties increase (refined to as liability hedging), with the t'oa] in reduce the risk nf unrfcrfundinp to the plan and its participants- and beneficmnes. however, wc also expect the strategy lo result in lower asset returns Based on this strategy and the funded nams ofthe plans at December Tl, 2013. we expect the minimum required qualified pension plan contribution in 2014 lo be SI 2 billion Nonqualified pension contributions aie cvnniJtcd to be approximately SO 2 billion in 2014

Contributions to our other postretiremen! benefit plans generally relate to payments for bene tits on an as-in anted basis since the olhc' posirclircmenl beuctil plans do nol haic funding requirements similar to the pension plans Vie coninbulttf SI 4 billion SI 5 billion Miid S I 4 billion lu oui mlicr postreurcmcnt bene lit plans in 201 3 2012 and 2011 respectively Contributions in out olhr< postretiremcnl bcnelii plans arc estimated lo be approximately 5l4hillionin20l4

|^ Off Hall ocr She el An angrmrntt and Contractual Obligations

Contractual Obligations and Commercial Commitments

The following table piovide.1 a summary of oui contractual obligations and commercial commitments at December 31. 2013

Additional detail ahoui these items is included in the notes to the consolidated

;s> than 1 year

(dollars in millions)

Pay menu Due Hy Period

More than

1-3 years *-5 years 5 years

S 92.851 S 3.395 S 13,4(i6 S \t\

293 91 92

59,799 52 094

16,301 RC09 2,4 64

93.144 74.93 ft 12,190 33,440 4.404

13.55S 9.4 19 3.723 8.77ft 1.579

l.oug lenn debt ''i Capital lease obligations

Total long-term debt including anient mammies

19.724 2 825

Interest on long-term debt¹¹¹

Operating lease's '■''

S 2IK.116 S 33.106 S 37.057 S 31,537 S llb.416

Piircha.se obligations'¹'

Cither long-term liabilities i"

Total contractual obligations

I.eAiinf! Arrangement!

WV ,-iie the lessor in lev eraged and direct financing lease agreements foi i onimeieial altera ft ami power generating facilities which compii.se the r.-.ajonty ol out leasing portfolio along wilh telecommunication-; equipment, commercial leal estate ptopeny and oilier equipment These leases have remaining lerms of up lo 37 years as ot December 31 201 1 In addition we lease space on ceitatr. ol our cell towers to other wireless carriers Minimum lease payments receivable represent unpaid rentals, less principal and interest on third-patty iioniecour.se debt relating to leveraged lease transactions Since we have no general liability tor this debt, which >s secured by j senior secunty interest m the leased equipment ar.d rentals, the related principal and interest have been nl'lsri against the minimum lease payments tcccivahlc in accordance wnh US GAAP All recourse debt is reflected in our consolidated balance sheets

' Items included in long-term debt with vanable coupon rates arc desenbed in Note K to the consolidated financial statements

See N'imc 7 to the consolidated financial statements

'"Ihe purchase obligations re flee led above are pnmanly commitments to purchase handsels and peripherals, equipment, so Ihi are programming and network services and marketing activities, which will be used or sold in ihe ordinary course of business These amounts do nol represent out entire anticipated purchases in ihc future, but represent only those items that are ihe subject of contractual obligations We also purchase products and services as needed with no firm commitment For this reason, the amounts presented in this table alone do not provide a reliable indicator of out expected future cash outflows oi changes in oui expected cash position (see Note I ti in the consolidated financial stalemc nls)

d qualified pension plan contributions (sec Note 11 to

Othei long-lenn liabilities include estimated post retirement benclit a the consolidated financial statements)

Wc are nol able to make a reliable estimate ol when ihc unrecognized tax benefits balance of S2 1 billion and related interest and penalties will be settled with the irspecliv c taxing anihniilies until issues ni examinations are further developed (see Noie 12 to the consolidated financial statement*)

| Guarantees ]

In connection with thr execution of agreements for the sale of businesses and investments, Verizon ordinarily providers representations and warranties to the purchasers peitaining lo a v anety of nontinancial maltcrs. such as ownership ut the secuntres being sold, as well as financial losses (sec Note 16 to the consolidated financial statements)

We guarantee lhe debentures and fust mortgage bonds of our operating telephone company cubsidianes As of December 31, 2013, $3.1 billion pnncipai amount of these obligations remain outstanding. Each guarantee will r etna in in place for the life ofthe obligation unless terminated pursuant to us terms, which will occur, among other things, if ihe operating telephone company is no longcra wiiolly-owned subsidiary of Venzon

We also guarantee the debt obligations of GTE Corpora lion that were issued and outstanding prior lo July 1. 2003 As of Decembet 31, 2013, SI .7 billion pnncipai amount of these obligations remained outstanding (see Note K to the consolidated financial statements)

.As of December 31, 2013 letters of credit lotaling approximately SO I billion, which were executed in the normal course of business and support several financing arrangements and payment obligations to third parties, were outstanding (see Note 16 to Ihc consolidated financial statements)

rates

V.- fs,(K

We artt exposed to various types of market nsk in the normal course of business, including the impact of interest rale changes, foreign currency exchange rate fluctuations, changes in investment, equity and commodity prices and changes in corporate tax rates We employ nsk management strategics, which may include the use of a vancty of denv aiives including cross currency swaps, foreign currency and prepaid forwards and collars, interest rate swap agreements, commodity swap and forward agreements and interest rate locks Wc do not hold denvuiiv es for trading purposes

It is our general policy to enter into interest rate, foreign currenty aitd othet dcnvative transactions only to the cxtenl necessary to achieve our desired objective* in limiting out exposure lo vanous matket risks Our objectives include maintaining a mix of tixed and v jii.ibit ri-.ic debt io low ei bonowuiu i o.sts eviihin reasonable nsr. paranu teis ami !■> prolei t ag urist t muni's ami t ish flow volatility resulting limn changes in market conditions We do nol licd;-> oui marl.t i risk exposure in a inaunei that would completely eliminate lire etlevt of changes :n iuicre*i lates and foreign exchange* rate-, on oui earnings \\ e do nut exireci thai oi.i r-.tc ii-.torni .liquidity ._;,| _tisr. :li.vi-c wili be materially atlecled by these risk ir.ariag.v incut strategies

1 It-Jtr Risk

Inter

aie evpo.

uiges in in le sesl rates, primarily on n_:ii shon-icrm debi .ind the ponion ol" loii_;:.icnn debt thai cities ili-.ituii As ot Deeeir.bet 31 201 j. appioximately 92 "■; nf the aggregate principal amount <)'. our total debt portfolio consist ei offivvd rate indebtedness including the cfl'cei ofinltrcsi iau swap agreements designated as hedges The mipait of a 100 tu-' point chain's in interest rules jllecliiie our floating rate debt would result mi, liange m annual mti rt si e> pi ri^e im liiil:n« on inteiest rale swap agri emen'-s ihal arc designated as hedges, of appioximately i0 I billion I he inieiesi rates cm oui existing ioiie lenn debt obligations are -.m-dlccied by changes lo tun credit ranng.s

lhe lable tii.it follows siimman/es ihr fai: values ol oui lone-ie-tu debt, including current uiaturiiies. and ir.ieiest rate- siva: dcnw.iivcs as ol' Dei cmbci j 1. 20 I 3 and 2.(11 2 I be table also pmi ide> a sf nsitii ily analysis of the estimated fan v alues n! these fnianci.'I instrumerit:, assuming 10(J-bans-punit upward and downward shifts in the Meld i tirve ' )ui sensitiv iiy analysis does no¹include the (an values I'l'tnu conuncici.il papci and bank loans, il any. because ihey are not significantly allected bv changes i"

arxct ir

At DeeeMthei 3 I. 201-

Long-term deb; and n.l.il-d de-in ainus

At Deceiuber3l¹tli.'

Long-term debt and lelaied ileitvjincs

Cf/ec-lr si,-,i;...

We hai C eruerc!) into ii.-nw.lic niicics: t.,ic swaps lo acinic (ixr.l ::i!'- and pay v.in.ible i-vrec based -n 1.1H<>K. res.il; d-s-j-misd JS t.n: val: Indces and hedge agamji ell.u._f;es

Out ing -012. iriisie:,! rale swap* with a iiuiional v.duc :>!" 5 proceed- ol SO T billinR including acetucd mures; ethn siaierncin of ca-h liows Tl,c Ian due basis rcduiiron of L-neiesi - xptnse over tin n ni.iir.ine hv inteiest rale v-a-apt -.villi a ruvli.-.n.il i abac -if S I 25 hilli matenal I njnrii¹ ilie thud ijiiaitcr of 21' I 3 we enter Dc-cciilU" 31 2013 and 20] .'. the tan v ^I-jc ol'lhcsc n

hlllio

Fai: Value a .100 hasispc

I an Vab.:e asseimiiig ■ I HO basis p-nni shift

hllllO!

As a i

ill

liable rate den'. We pi inc c io Interest expense li;

e Si Trie

r. is included in mini r:f. operating > ilie uncivilv un; dehi iuMiu:iienis wr-t the underlying debt obligations Dunn inirfif .im) tire imparl to oui coiis-lidaieri lin.uuial sii-irnicnt; w o inreic.r ran- swaps with a mrai nuriorial i alue ol SI S l:i!i:t .rate -w ajis w js nor malt nil I Al Pcccnihci 3 1 '111? the l-.-ial :.o

| Foreign Currency Translation

The functional currency for our foreign operations is pnmanly the local currency. Tbe translation of income statement and balance sheet amounts of our foreign operations into U S dollars is recorded as cumulative translation adjustments, which arc included in Acc umulated olher comprehensive income in our consolidated balance sheets Gains and ]ns»cs on foreign currency transactions are recorded in the consolidated statements of income in Other income and (expense), net Al December 31, 2013, our pnmary translation exposure was to tire fin tub Pound Sterling, the Euro, ihc Australian Dollar and the Japanese Yen

Iri^rC'iii

:: Wireless previously rnrerr i-ildtitO. IVuud Stcilirig.tr;

into cross i inn nc.v swjps designated as cash flow hedges to exchange approximately S1 d uio -di nominated debt into C S dollars and lo fix oui Inline inicie st and pnncipai payments ihe impact of loieigr. cuneiicy ti ansae lion gains oi losses A pomoti ol the gains and losses icons.-: v."-:- re'. In -sified ti-- (llbei income .inet te^pen^e ). nei tu e>tlset the icUtc-i pit-ia\ f-wcigii ).e i;r;.ic: ly debt oitligations I he fan value of."the outstanding swaps was not material at "12 Dennii; 2011 and 2012 the gains- with iespe i t to these swaps wcie not rnaterrai

ltd cross cuititiicy swap* dcsig.naicd as cash flew hedges to exchange approximately \*- 4 ling denominated debt into U S dollars and (0 fix our future interest am! piuu ipai pay ments ie imp.it i of lureign cuneney transaction gains or losses

| f Mlic.il \tcounting Fstiinates

c ciitic al aei ountirig esttin.itvs' used in prt'paiing out financial statements is as follows

the loiinh t,-\

iscs and Goodwill are a sipniticunt eomponeiil of oui consulrdated assets Both our wireless licenses and goodwill indc:iriiie.|ivcd .ruaugiblc assets and, therefore ate nol amoni/cd hul rather aie tested for impainnerH annually in al si milter, urilc^s rheie air events or t hanges in citt umstanccs during an tnteiun penod ihut indicate these assets eeeivcr.ibli We believe niu estiinaies and js.suiuptiuus arc reasonable jnd represent apptopnate inaiketplaee e-iissideiaii-in- as of ihc valuation dale Wc do not believe thai rca.sonahlv likely adverse changes :n our assumptions and e-.tirnaie'S *ould result in an liTipairmeni charge js ol out laiesl impairment testing dale However, if there is a substantial and sustained advene dec line in our operating profitability , vve may have impairment chaigcs m fulurc years Any such impairment > hiiii.e could be matenal to our results of operations and linancial condition

id,,-.', it 11,

lire i.iiiying value of inn wireless l.terises was appioximately S75 7 hillion as nf Deiembet 31, 2011 W_e aggregate oni M.reltss htcriscs :nto one single unn of Jccouiiting as wc utilize oui wireless licenses on an integrated basis as pan ol our n.iii.ineenb -ancles- netwoik I )ur wuchss iicciises provide us with lhe exclusive light to uiihrc teiiani radio lie quells y spcctiuiii to pmvide wireless commonieaiion servnes There are cunenily no legal, regulator), sontractual. competitive, .■t.-ri.-rnn - i eihei ta-ie,:\ :!ia: i:;nn r!ie u-.e:'.il life ol oi.r wireless licenses In ?(H3, eve pcilormed a qualilalive impairment .■:s--i-ssrne:it m lii-term.r-e v belli tr it in.ie lil.elv iha.i nut that ii:e fan value <:( our wneless licenses w-is less lhan the cairy ing .tiiM-.rn As p.-tt i-l i:-.i.- jssc'snieru wc ; o::i .stervd «vv era! qualitatn e factor, including the business cm erf rise value of Wuclos;

tenses was less than lire i tccogin/ed Our annual

run hiding industry ie venue and FH11 DA in.ugin piojve lions) the projected lirraueia! pe liomunce of Wuclcs as well a-; other taetois [tascd on our assessment :n 201 3. we qualit.iliv cly concluded that it was ni-ue likely than not thai the fan value o! our wireless h.-ens*-:, significant I y exceeded then cany mg value and I here tore did not result in an unpaiiineni

h: ."Hi:

r ipiantri.itive impairment test consisted of comparing the estimated la:r ng .iriinuiii .is ol the lest dale ll lire estimated fan value of oui win :«i--unt of the ivueless licenses then an impairment charge would hav r-.t lists rot ?l'H? and 201 I in-trcated that the fan value oitmfujiuK e

[Vccmh--r31 2013

Hern vee esiiiiuled the l.:ii value o: oi:i wireless licenses n-■, di-to.inied cash flow airaly sis to estimate what a iiiiirkctpl.:.' w :r.Jf s invrv.cs a< i'th; v.il.]:iin-n -late As .:■ rec.di we we

led rath flows and assumed icnnui.il -alue and gn-wih ra

in less network techno hie.*, and cstiinaiing future cash Hows Ihc or expected return that a marketplace based un our consideration ofthe cost^-

current and expected future economic conditions ciiiicni and expected availability o infrastructure and related equipment and ihc costs thereof as well a.s oilier relevant factors discount, rate rcpic.xcr.ied.oiir.estimaicofjhc wcic.hic_d-avcragr coil ofcapiial (WACO 'pariiciparit would haic required as ui'lhc valuation dale We developed the discount

of debt and equity of a giuup of guideline companies as of lhe v aluation dale Accordingly, out discount rale incorporated our estimate ot the cxpeiicd return a marketplace participant would have required as ol the valuation dale, including the nsk premium Associated wilh the cuncul and expected economic conditions js ofthe v aluaiion dale Mie terminal value giuwili rare represented our estimate of the marketplace s long-lerm growth rate

i;,'d»iii ^-l _; .'"." . " " ,

Al December .11. ?01 J the balance of our goodwill was appioxirnaicly_$24 u hiliionnf which S1 8 J billion was in our.Vcirclcss .l".scgmcni;and'S6 2"bill_iun "was in^!our Wireline segment - Dcieitnining .whether ;jn impairment ha? occulted: require-.the., dcicimiuaiioii of fan value of each tcspeciivc leporting unit Oui operaimg segments Wuelcss and Wireline are deemed to be our reporting units for purposes of goodwill impairment testing The lair value ol Wireless significantly exceeded us carrying \ alue and ihe fair value uf Wncline exceeded its cany ing value Accordingly, oui annual iinpaiimcnl tests for 2013, 2012 and 201 I did not result in an impairment

The fair value of the reporting unit is calculated using a market approach and a discounted cash How method The market approach iniludcs lhe use ol comparator, multiples to comiborate discounted cash How results The discounted cash flow method i> based nn the present value of two componentsprojected cash llows and a terminal value The leiminal value represents the expected no una 11 zed future cash flows of lhe reporting unit beyond the ca*h flows from ihe discrete projection period The fair value of the ie porting unit is calculated based on the sum ofthe prescul value of lhe cash Hows from the dirt rete penod and ihe present v alue of the tenmnal v alue The esiimaierf cash flows are discounted using a rate thai represents our W.\CC

We maintain benefit plans lo: must of our cinpleyccs. including, foi certain employees pension and olher posiretireme-u benefit plans At December 31. 2013. in the aggregate, pension plan benefit obligations exceeded the fan value of pension plan asscis. which will iesuli in higher future pension plan expense Other postieltremcnt benefit plans have laigei benefit obligations than plan assets, resulting in expense Significant benefit plan assumptions, including the discount rale used, lhe buig-icrm laic of leiutu on plan assets and health care licnd rales aie periodically updated and impact the amount of benefit plan income expense assets anil obligations A .sensitivity analysis ofthe impact of changes in these assumptions on ihc bene lit obligations and expense (income) recorded, as well as on the funded status due to an increase or a decrease in the actual versus expected return on plan assets as ol December 3 1, 2013 and for tlie vear then ended pertaining to Verizon's pension and postretiremen! benefit plan- is pmvided in ihe lahle below

Percentage puint change

Increase(decrease)at December 31, 20Lit-

(do||

re;

n plar

(1.105) 1,224

*0 50 0 50

■■ I 00 -I 00

*0 50 .0 50

4) 00 -1 00

+ 1 00 -I 00

u mill

. discount late

(1.3121 1,486

Rale ot'icliun or pension plan asset: Postretiremen! plans discount rate Rale orrctum on posticiirrmenl plai Health care trend rates

2,539 (2,011 A)

* In dctenmmng its pension and other pnstreurement obligation lhe Company used a weighted-average discount rate of 5 0% Tbe rate was selected to approximate the composite interest rates available on n selection of high-quality bonds available in ihc ni.iiVci at Decembei 31. 2013 The bonds selected had mammies ihat coincided with the time periods dunng which bcncfiis pay incuts ate expected io occur, were non-callable and available in sufficient quantities to ensure marketability (at leasi tO 3 billion pai outstanding) Our current and deferred income taxes, and associated valuation allowances are impacted by events and transactions ansing in ihe normal course of business as well as is connection with the adoption of new accounting standards, changes in tax laws arid tales, acquisitions and dispositions of businesses and non-recumng items As a global commercial enlerpnse, our income lax late and (he classification of income taxes can be affected by many factors, including estimates ofthe timing and realization of deferred income lax asscis and the liming and amount of income tax payments. We account for tax benefits taken or expected to be liken in oui lax returns in accordance with ihc accounting standard relating lo the uncertainty in income taxes, which requites the use of a two-f tep approach for recognizing and mcasunng lax bcncfiis taken or expected to be taken in a tax return Wc review and adjust our liabilit) for unrecognized tax bcncfiis based on our best judgment given the faets, c i re u instances, and information available at each reporting date 'lo the extent that the final outcome of these tax positions is different lhan the amounts recurded such differences may impact income lax expense and actual tax payments We recognize any interest and penalties accrued related to unrccogni/.cd lax benefits in income lax expense Actual tax payments may matenal I y differ from estimated liabilities as a result uf changes in tax laws as well as unanticipated transactions impacting related i

Out Plant, property and equipment balance represents a significant component of our consolidated assets. Wc record plant, property and equipment at enst We depreciate plant, properly and equipment on a straight-line basis over the estimated useful life of the assets We expect that a one-year increase id estimated useful lives of our plant, property and equi prevent would result in a decrease to our 2013 depreciation expense of SI ft billion and Ihat a one-year decrease would resull in an increase of approximately $2 I billion in our2013 depreciation expense.

| Recent Accounting Standards * ^ [

g standard update relating to the presentation of an unrecognized tax benefit when a net operating loss loss, or a lax credit curry forward exists was issued The standard update provides thai a liahilny related icfil should be offset against same jnnsdietion deferred lax assels for a net operating loss carry forward, a redit eatryfnrwaid if such settlement is required oi expected in the event lire uncertain lax position rs i this standard update doting lhe first quartcti of 2014 Wc ate cuiieiitlv evaluating the consolidated d lo tins standard npdalc

Wireless

Wu i It ss Ti autai lion

1 Jn Vpiember 2 Ji■ 1 3 Veii/mi erected inlo a stock purchase agreemenl (the Slock I*ureli3sc Agreement) with Vodafone and Vndainnr ■'■ Limited : Seller* piu-aiam t" whie h Ven/un agreed lo acquire Vodafone's mdirctl 4 5"'. inieresi in CelKo Par: net slop d'b a Ven/on neleis (the Partnership and 5uch imerest, the Vodafone Interesi) fur aggregate consideration en' approximately S13i: hill.on

Un Fchiuatv 21 2014 pursuant to the liim.- and ;ub₍eel lo the conditions set fortii in the Slock Purchase Agieenienl. Ven/on acqtiue i! (the Wirth ss I r ansae^-1 mill liom Seller all of'.be issued and outstanding capital stock (lhe Transferred Shares) of Vodafone ■\iiiein as I ir.ar.it '. Ine a subsidiary nf Seller (VI"I Int > which indirectly through terrain subsidiaries (together with VI'I hit . llic Purchased 1-:■■ cue-J owned the Vodafone interest In consideration tor the Translencd Shares, upon completion ol lhe Wiiclcss I ta.i-aciion Veri/nr. 111 p.ml apprnximjielv SSI* R-) billion in cash (u) issued approximately lt»0 J S billion of Ven/un s common siock. pai v.iliic SO !l! per share itlie Stock Consideration), (in) issued senior unsecured Verizon neies in an aggregate pnncipai amount H it i illioii itr.t Viii.'nr, Nolesi (ivi sold Vinson's induct l;y owned 23 1% interest m Vodafone Omrulcti NV 'Omnitel. and sin h mtucst the l.Hruntel In I crest I valued at S billion and <vj provided oilier consideration of approximately i? 5 billion As a remit ol the tireless Iran-action. Ven/on issued approximately I 27 billion shares The total cash paid to \orl.itor.c .md the- other cos's of the Wireless 'I rai;>.ictuiii including limine mg legal and bank lees, were financed through theme iiiTem e o* thud r.mv ruleiuednc.s (see " Cfiusolidated Financial Condition ')

I:i ai cor dance wilh III. a. e i .uutuij: standard on consolidation a change in a p.uenl's ownership interest while the parent retains a i tiriirelhiig iir.auc nil mere st in ns subsidiary is accounted for as an equity transaction and ic measurement of assets anil liabilities i :' pret !■ :;o;v e u-iiu.il.'d ami . .msolid.i'cd subsidiaries it nol permuted As a it'-ull we will act ounl for the Wireless I ran-action

WiiJiss -\r,s liitiLrcrie.c between thi Ian v jjuc of the consideration paid and the amount bv which the noncontrolling uiicresl is

i in I ebn: .r, 2 ! ?(!J4 \'e!i:or: md \ od.il.'iie also imph tunned the -nle of the Omnitel Interest [tire Ouuntel Transaction! bv a suh-idi.tn ol \.:\.-"i: to .= subsidiary ':! Vodafone in c«vnrict linn with the Wuelcss Transaction pursuant to a separate share ou:i li.i-i ai. tee merit We will iimuiiA a gain on ihc disposal of tin Oiimilel nileicsi in the fust quartei ul 2014

Ine Vci:?i-ii Notes were issued pmsuant lo Ven/on s existing indenture Ihe Verizon Notes were issued in two separate series wnh 52 5 billion dut FeSnrarv 21 .'02 2 and 5.2 5 billion due February 21 2D."'i The Verizon Noies bear interest at a tlo.ituig rale, which u:!: h. reset ct'uiie.iv witii nil. n -i pavablc qirar.eily in ancais. beginning May 21. 2<il4 The cight-vcai Ven/on notes be.-.r iiiisrc-.t .u a t'.oa'-.i g rate eiiu.i: !.: rl.ree-i 'oruh 1 WU'tR plus I 22;ⁱ.'« and the elcv.n-vc.ir Ver:7oii notes bear mure:.: al a ii.:;:ir;i|! ra:c equ.il to ihr.-e-ir.onih i lltilR, plus 1 j72'.e lire indenture ihal governs ihc Vcri/nri No'.es contains certain negative cot en.-.uis ii\. luiline regal:i e plectr eriani and a merger or tnnilai iianvaeiinn cov eniir.l aflitin.iliv e covenants and ev rnis o: del.mil '.-it .ne ei::icr:i.irv j ■ - r companies m.n/it.-nnim. an invesiir.cf.i grade credit rating \n even; of default iui cither se:ies ol il:- \'t i,¹. i \ tc- ut. \ .-e-nil r: .. i I.ration <! the eu;in priiie .pal ani. un: ol ai! debt t unties ol"ihal sciics Uegu.r.ing iwe. v. ,ns

jt'lL-l lliC '

" » ." u >,'⁽?^slng_of ihe Wireless Ti an sat-Hon. Verizon may redeem ail or any portion ol the outstanding Ven/on Notes held by Vodafone oi ;iny nf its affiliates fur a redemption pnee of 100% of lhe principal amount plus accrued and unpaid interest The Venzon Notes may only be transferred by Vodafone to ihird panics in specified amounts dunng specified penods. commencing Januaij 1,2017 The Ven/on Notes held by third panics will not be redeemable Verizon has agreed to file a registration statement wnh respect to Ihe Venzon Notes al least ihree months prior tu the Verizon Notes bee oming transferable

l)ilier t'uinitleiaUini

Included in the othet consideration paid lo Vodafone is the induct! assumption nf long-term obligations wnh respect to 5 143% Class IJ and Class F cumulative prefened stock issued by one of lhe Purchased F.ntiues Hoth ibe Class D (K25.000 shares outstanding) and Class F shares (825 000 shares outstanding) aie mandatorily redeemable in April 2020 at Si.000 per shaic plus any actiued and unpaid dividends Dividends act rue ai 5 143".'« per annum and will be Healed as interest expense Boih the Class D and Class F shares will ho classified as liability instrument.*; arid will be recorded al fair value as determined at the closing of the Wireless Transaction

Spectrum I.irciise 1 r ansae linn*

.Since 20 1 2 wc have entered into several strategic spectrum transactions including

Dunng ihc third quartet nf 2012. arte: receiving the required regulatory approvals Vcn/on Wireless completed the following previously announced transactions in which we acquired wireless spectrum thai will be used to deploy additional 40 I.TF. capacity

Venzon Wireless aequued AWS spec Hum in separate transactions with SpectrumCo and Cox TM1 Wireless, LLC foi winch it paid an aggregate of 13 9 billion al ihe time of ihc closings Verizon Wueless has also recorded a liability of SO 4 btl'ion related to a three-) car service obligation to SpecirumCo's members pursuant to cnmmcicial agreements executed concuncntly with the SpeelmmCo transaction

Ven/on Wueless t omplriod license pun base and exchange transact ions with Leap Wireless, Savary Island Wireless, which is majority owned by- Leap Wireless, and a subsidiary of T-Mubiie USA As a result of these transactions. Veil/on Wiielcs* received an aggregate S2 1 billion of AWS and PCS licenses at fair v alue arid net cash proceeds of >() 2 billion transfened certain AWS licenses 10 T-Mohile USA and a 700 megahertz (MM?) lower A block license to Leap Wueless. and recorded an immatciral gam

- Dunng the f"n\t quarter of 2013 we completed licen.se exchange transactions with T-Mohile License LLC and Cnckct Lnen.se Company, LLC. a subsidiary of Leap Wireless, lo exchange certain Advanced Wireless Services (AWS) licenses These non-cash exchanges include a number of uitia-market swaps thai wc expect will enable Venzon Wueless to make more efficient use ofthe AWS band As a result of these exchanges, we received an aggregate (0 5 billion of AWS licenses at tan i alue and teen ided an immaterial gain

Dunng the thud quarter of 201 3 altet receiving the required regulatory approvals, Verizon Wireless sold 39 lower 700 MHz B block spectrum licenses to AT&T in exchange for a payment of SI 9 billion and the transfer by AT&T to Venzon Wireless of AWS (10 MHz) licenses in certain markets in the western United States Venzon Wireless also sold certain lower 7(10 MHz U block .specinun licenses to an investment firm for a payment of SO 2 billion As a result, we received SO 5 billion of AWS licenses al fair value and we recorded a pre-tax gam ofapp nix mutely $0 3 billion in Selling, general and administrative expense on out consolidated statement of income for lhe year ended December 31.2013

During the Inuiih quarter ol 2013 wc entered into license exchange agreements with T-Mobtle USA to exchange certain AWS and PCS license- These non-cash exchanges, which are subject to approval by the FCC and other customary closing conditions, are expected tn close in the firsi half of 2014 The exchange includes a number of swaps that we expect will result in more efficient use ofthe AWS and PCS bands As a tesull of these agreements, $0.9 billion of Wireless licenses a reclassified as held for sale and included in Prepaid expenses and other on our consolidated balance shecf at December 31. 2013 Upon completion ofthe transaction, we expect to record an imrnaTenal gain

Subsequent to the transaction with T-Mc-bile USA in the fourth quarter of 2013, on January 6, 20)4, we announced two agreements wilh T-Mobile USA wilh respect to our remaining 700 MIL A block speclrum licenses. Undei one agreement, we will sell certain of these licenses to T-Mobtle USA in exchange for cash consideration of approximately $2 4 billion, and under the second agreement we will exchange the remainder of these licenses for AWS and PCS speclrum licenses These transactions are subject l<> the approval of ihc FCC as well as other customary closing conditions These transactions are expected lo close in the middle of 2014

Other

On nil;; 201 3. we acquired various othei wireless lneu.se- and markets foi cash consideration thai was not significant Additionally we obtained eontnd of previiiii-lv a r.con soli dated wireless partnerships which were pieviously .-recounted for under ilie cquitv method and aie now consolidated which ro.suheJ in an iinmaienal cam We iceoided SO 2 Fill ion oi goodwill as a nsuit ot these Iran-actions

Wireline

IlldlES Telematics, Inc.

During July 2012, wc acquired KUGHES Telematics for approximately SI2 per share in cash form lota) acquisition pnee of SO 6 hilhon As a resull ofthe transaction, llUGHliS Telematics became a wholly-owned subsidiary of Venzon The consolidated financial statements include the results of FflJGIIES Telematics' operations from the date the acquisition closed Upon closing we recorded approximately SO 6 billion of goodwill, SO 1 billion of other intangibles, and assumed ihe debt obligations of HUGHES Telematics which were approximately SO 1 billion as of the date of acquisition, and which were repaid by Ven/on Had ihis acquisition been completed on January 1 2012 or 201 1, the results of the acquired operations of HUCHFS Telematics would not (rave had a significant u:i]-.,i t mi the i onsolidaied net income attiibutablc to Ven/on Tin' acquisition has accelerated oui abihly

TIn aiquisiinui ot HOOHI *s Telematics was accounted foi as a biisine. combination undei the acqui-ilion method Tlie con ol ihc :n quisinoi; w-.,s allocated lo "h; assets and liabilities acquired based on their lair value v as ol"the close nl the acquisition, with the ex. c5s amo-i.-i he nig recorded as goodwill

let femur I. \\ in Id wide. Inc

li'jnng Aj nl .'01 1 we acqaited Terreiii.irk foi 114 per »hare in ca-ti Closing anil other direct acquisition-related cosi.s totaled approx i mast It * 1 j ir.illuni arte r-tn.x 1 be acquisition was completed v ia a lender cjtfei followed by a ' shurt-ltirm rner;;er ctridci i>ela>sj:c law th:eiugh which Itrremaifs became a wholly owned subsidiary of Ven/on The acquisition enhanced Ven.'un's oftVimgs in b'.iMf.e-s ami guvcuuucrii cusiomets globally

<Uiu i

During the |r<uit!i quarter of 2013 Ven/on acquired an industry leader in content delivery nclwoiks for SO 4 billion We expeel the .ici*-jim 1 inn will ittcrea-.e oui ahtiitv to meei llic growing demand Jbr online digital media content Upon closing we reeordeJ 50 ^: billiiin ol goodwill Additionally we acquired a technology and television cloud company for cash consideration that was nor signifie^nt 1 he consolidated tlnjiiei.il statements include the results of the operations of each nf these acquisitions fmm the

dale c.nh ae.jui-ilion tlo-c-d

i >i. Jamtar-, 21 3(114. Vui.ton announced an agio riicut lei acquire a business dedicated to (he dci clupment ol cloud television protla.-i- am! tfiv lie - lo: cash roii-idcianon thai was not .significant The iraiis.it Hon which was completed in February 2" 14. is e vpet led to ai i ekr.ue the av jilah-.hty ot nexi-generation v id to services

PKejjulatmv and Compt'tiii*e Tirads | KeglOjl'ii v and Compi-nti v t- l.aiidtt'ajir

Veri^nn opeiatcs in a rci'iil.i'cd and highly competitive m.uieei Current and potential iornperiiors include oihei voice and data s; iv a i prov idcis -ii. N as olht: wut less companies traditional tt lephone t omptimes, cable companies. Internet scrv it c pioe ids rs sntrw.ire ,o-| app a.nui prv ider. and other non-Nad ition a 1 c ompaiues Many of these etuupanre:". have a strong market presence. hi.n-.-l re. i-.gr.i-.i--n. a.-d e^-Nr-j¹ cusionu r -e.'aiinrship-,. all ol which contribute to mien-ah ing compelilioii and ir.as allrci our kjtiire icitn.ir e:"-'th snnic ■■( oui .i.rnpel, ton also are subject io fewoi regulatory cnnsti.ntii.s lli.in V'e_M/on Foi many -emce; i>;;ticd in Vcri.-ou ihe i 0 ' is our pruiiaiy icgulatui lire Fl'C b i- jun-tin lion over interstate iclecoiiirnunn at ions .-eix ices and oihei matters imdti the CuMnimiLalmri:. \el ot 1934. as amended (Coinmunicjlit.ns Acl oi Ac:} Other Verizon seism- are

i l

1 i

FCC Regulation

Hniiulbaii.-i ■ .- _ ■ ■"" . ■■ -

Veri/un often many different broadband and Internet access seiviicj The FCC lias adupic-d a "series of orders thai impose lesser regulatory requirements on hroadband sen ices lhan apply in older voice and slower daia services For example cenain facility unbundling requirement) that apply to narrowband facilities of traditional telephone companies do not apply to broadband facilities In addition, the FCC concluded ihal bulls wncline and wireless broadband Internet access services qualify as largely deregulated lufounaiion seivices Oui bioadhatid lniemci access services aie subject lo various attempts lo impose so-called nei work neutrality ' niles. some oj which were allinncd and others vacjtcd on .ippeal in early 21114 Ven/on has been and remains committed to ihe Open Interne l which pins ides consumers wnh compel Hive choices and unhlocled access to lawful wrhstlrts ar.d content when, where and how' they want 11ns will not change in lighl of the court's decision Our commitment applies to bioadband lniemci access services provided ovci both out wneline and wireless networks and can be found on oui website al htlp //responsibility v cn?on com'bmadhand -commit me ni

FiirVo

Vcn/on oilers a inulti-cli.iiirirl video sen ice ihat is regulated like traditional cable service I he FCC has a hod) of rules lhai apply to cable operator*, and these rules also gcrieially apply to Vcn/on In addition, the Act generally requires companies to obtain a local cable* franchise and lhe FCC has adopted rules lhai interpret and implement this requirement In areas wlicte Venzon olTeis its facilities-based multichannel video services, Venzon has typically been required to obtain a franchise from local authorities

Wneline l-V>i,-«-

Venzon olfeis mmy different wireline voice sen ices, including traditional telephone service and other services that rely on newer technologic- such as Vol]' For regulatory purpose--,, legacy telephone sen ices ure generally considered to be "common carrier" services Common earner scniccs are subject to heightened rcgulaiory oversight with respect to rates terms and conditions, and otlrei aspects of ihc sen ices Ihc FCC bus nol decided ihc regulatory classification ol VoIP hut has said VoIP service providers must comply with certain rules, such as V1 I rapahiliiies and law enforcement assistance requirements

The Fi.tl regulates several a-pecK ol Ven/on Wireless' operations Generally, the FCC has jurisdiction over lhe construction, operation acquisition, and transfer ol wireless comniunic all oils systems And all wireless sen ices require use of radio frequency spectrum the assignment and distribution of which is subject lo FCC oversight Venzon Wireless anticipates that it will need additional sped mm in meet future demand li can tiicei spee tnun needs by purchasing licenses or leasing speclrum from others, or hy participating in a competitive bidding pine ess for new spectrum fiom lhe FCC Uolb piocesses aie subjccl lo certain reviews, approe .lis. and pote niial conditions

Today. Ven/on Wireless holds I CC spectnini licenses thai allow it to provide a wide range uf mobile and lixed communications services including both voice and data services FCC spectrum licenses typically have a tetm of 10 years at which time they are subject lo renewal While the FCC has routinely renewed all of Verizon Wireless' licenses challenges could be raised in the future ll a wireless license were rev oked or nol renewed. Venzon Wireless would not be permitted to piovide sen ices on lire spec lium Some of out licenses tcquiic* us te; euniply wnh so.called "open access" FCC regulations winch generally require licensees of pail ii it la: «pev I rum to a! low- customc is lo u-e dev iccc and applicinioiis' of lire u choice, subject lo certain technical I inula (ions Ihc FCC has also imposed certain spceitie mandates on wueless earners including construction and geographic coverage requirements, technical opcraiuu: siaiulaids, provision nl enhanced 911 services, roaming obligations, and requirements tor wireless lower and anienna lacilincs

The Comuuuiicaiioiis Act imposes restrictions on foreign ownership of U S wireless systems The FCC has approved the foreign ownciship in Ven/on thai has resulted uoiii lhe Wireless Transaction In addition. Venzon Wireless Verizon and Vodafone entered into tin agreement wnh the fcdeial government ihat imposes national security and lawcnforcemcnt-iclaicd obligations on the ways in which Ven/on Win.less sieirx.s infonnation and otherwise conducts its business

Imeicmnci Com/re ■idirimr and iVcr or* At i im

The FCC regulates some ol the rales ihal earners pay each other lor the exchange voice natlic (particularly traditional wireline traffic) over different networks and other aspects of interconnection for some voice sen ices In many instances. Venzon makes payments lo other prov iders and in tuni \ enron receiv es some payments from other earners In 2011, the FCC issued a broad reform order changing, among other things the framework fur many of the per-minutc rates that earners charge each other for the exchange, of voice iraflic The new rules gradually reduce many of these rales io zero This order is subject io pending re'eousnJciation petitions and appeals Tire FCC ufso regulates some eif the rates and ten ni nficl conditions tu certain wireline 'special access and oilier sen ices and network facilities Verizon is both a seller and a buyct of these sen¹ ices For example, on the w ire!ine side Venzon sells wholesale cucuils to other v nice and data sen ice providers On the w ireless side. Verizon purchases special access and other services lo transport traffic to and from cell towers In addition, as required by the Acl. Venzon unbundles certain wireline network elements and makes these facilities and services available to other network providers.

Unixcnal Service

The Communications Act charges the FCC with cnjuiing that certain groups and areas have access to communications sen ices, including rural and othet high-cost areas, low income subsenbers, schools and libranes. rural health-care organizations, and deaf and hard-of-h can rig individuals The FCC established different subsidy and discount programs to achieve these goals To pay for these programs, the FCC requires contributions from providers such as Venzon based on reported revenues for certain services Venzon also receiv es some payments from some of these programs but is a net payer into them

State Regulation and La-cal Regulation

Wireline Serwces

State public utility commissinns regulate Venzon'i telephone- operations with respect to certain idecommuntcations intrastate matters Venzon operates as an "incumbent local exchange carrier" in 14 states These incumbent operations arc subject to vanous levels ot pricing flexibility and other state oversight and requirements Venzon also has other wireline operations that arc more lightly regulated In addition, as a video sen'ices operator in many states. Venzon has been required to ohiain a cable franchise from local government entities, or in some cases a srale-witlc franchise, and in comply with certain one-time and ongoing obligations as a resull

H ueleis Ser\ict.t

The Communications Acl generally preempts regulation by state and local governments of the entry of, or the rates charged hy, wireless camera The Act does not prohibit states from regulating tbe other "terms and conditions" of wireless service. For example, some stales attempt to regulate wireless customer billing matters and impose reporting requirements. Several Stales also have laws or regulations thai address safety issues (c g , use of wireless handsels while driving) and taxation matters. In add M ion, w i re less lower and antenna facilities arc often subject lo stale and local zoning and land use regulation, and sccunng approvals for new oi modi lied facilities is often a lenglhy and expensive process

| environmental Matters |

Doting rtrO.e undc: a government -appioved plan remediation commenced al ihe site of a fnimct Sylvama facility in llicksville. \'i w Yoik that jnocess.il inn Lai Iiiel it-ds in the ] f*S0-. and 19CIK Remediation heyord on-final expectations pioved to be necessary and a rcisscssriie M nl ihe anr ic tp.i'ed iciiir-eliation costs was conducted A rcassi.sSinc rrt of softs related to remediation . ll.nts .M cr. era! oilier lornicr tat rtitic- wa- also undertaken In Sepiembei 2"05, the Army Corps of Lugnrecrs [ACF1 .ncepted the Hicksi ilie ,iie into ihe Formerly Unli/.en Sites Remedial Aclmn I'lugiam This may resull in the Ai"F. performing some oi all of the reined 1anon cllor. !ci ihe I hcr.<vill:' nie with a cnnc-.pnnding decrease in costs to Ven/nn To lhe extent that the AO: assumes responsibility i'.n r rmeJi.il vcu:v. ai the I be k*v illr sde an adjust men I lo a reserv e prev lotisly established foi the remediation may be made ■\d|iis;r ie nl - I ' tin reserve n:ay al.-e- be made based neon actual mild Hums discovered dunni; (lie remediation ai this oi any otlu i site rcqliuiug remediation

In ihis report we have made forward-looking statements These sialcmenls are based.on our estimate* and assumptions and are subject lo nsks and uncertainties Forward -looking statements include lhe in format nm concerning uur possible ui assumed lulure iciul's of operations Forwaid-loukin j statements also include those preceded oi followed by the words "aniicipales." believes ' 'estimates." "hopes " or similar expressions For (hose statements, we t laim the protection of tlie safe harbor for forward-luuking statements contained in the Piivatc See unties Litigation Hcfonn Acl of J 995 Ihe following important factors, along with those discussed elsewhere in this report and in other tilings with the Securities and Fxcbange Commission [SI:t_ 1, could all'ccl liilurc results and could cause ihose results to dillcr materially from those expressed in lhe fniwaid-liiokiiig stale incuts ihc ability lo realize the expected benefits uf the Wireless Transaction in lhe timeframe expected or at all, an adverse change in the ratings afforded our debt scentiiies hy nationally accredited ratings nigj.iii7.a:ion.s or adverse conditions in the credit in.iri.eis jlTcclinf. the coil including interest rates, anil/or av ailahihly of further financing, significantly ine i eased levels uf indebtedness as a result of ihe Wireless Transaction, changes in tax laws or treaties, or in their interjiiet.ition. adveise conditions in the C S and iritetiialior.al economies material adverse changes in labor mailers, including labor negotiations and any resulting financial and/or operational itiaienal changes in technology or technology substitution, disruption of our key suppliers provisioning of ptoducis or services. than jit's in ihe regulatory env nnnmeni in which we operate, im ludtng any increase in resinctions on our ability to operate c>ur neiwciks, preaches ot network or infonnation technology security, natural disasters terrorist attacks or jicts nl war or significant litigation and any resulting financial unpad not covered hy insolence, lhe effects.U toinpi tnton in the inaiki.is in which wc- operate. changes in jccounting assumptions that regulatory agencies, including the S1:C may require or lhai resull from changes in the accounting rules oi then application, which could result in an unpad on earnings significant increases in benefit plan costs or lower investment returns on plan assets, and the inability to implement oui business strategies	We. the management of Ven/on ComiTinn real ions Inc are responsible for establishing and maintaining adequate internal control over linancial reporting of tire company Management has evaluated internal control over financial reporting of the company using ihe cnlena for elfcciive internal control established in Internal Conliol-lnlegrated Framework issued by the Committee nf Sponsoring Otganizaiions of Ihe Tread way Commission in 1992 Management has assessed lhe effectiveness of lhe company's internal control over financial reporting ns of Dec ember 31. 2013 Based on '.his assessment we believe that ihc internal control over financial reporting of the company is effective as of December 31, 201 3 In conned ion wnh this assessment, there were no material weaknesses in the company's internal control over financial reporting identified by management lire company '., linancial statements included in this Annual Kcpon have been nudncd hy Fmsl tt Young LLP, independent registered puhlie accounting firm F.msi & Young LLP has also provided an attestation report on lhe company's internal control over financial reporting /s/ Lowell C Me Adam Lowell C McAtlam Cli.sinn.tn and Chitf Fxct uliv e Officer ■'si Francis J Shammo Francis J Shammo Lxcruiive- Vice President and ChiefFinancr.il Officer ■V Anthony 1 "skiadas Auihtinv 1" Skiadas Senior Vice Presidenl and Contiollci

To The Board »f Directors and Sharr«wner* of Veriztai Communications Inc.: Wc have audited Venzon Communications Inc and subsidianei' (Venzon) internal control over financial reporting as of December 31, 2013, based.on cnlena established in Internal Control-Integrated Framework issued hy the Committee of Sponsonng Organizations ofthe Tread way Commission in 1992 (1992 framework) (the COSO cnlena) Venzon's management is responsible for maintaining effective internal control over financial reporting, and for its assessment ofthe effectiveness of internal eontiol nv ei financial reporting included in ibe accompanying Report of Management on Internal Control Ov er Financial Reporting Our responsibility is lo express an opinion on ihe company's internal control over financial reporting based on uur audit We conducted our audit nt .leeni.lance wnh th.- standards ul'lhe Public Company Accounting Ovcisigl,: Birani iV-nii.d m.h.-sj in.is! siae.danls require that we p!n and pi liorm the audit lo obtain reasonable assumim about whether clh i in e internal . onirol oi. i iir.aiici.il report mg was maintained in all inaieiial respects Our audtt included obtaining an undeistaiiditig of internal coiii-ul over financial reporting assessing the nsk thai a niateii.il weakness: exists, testing and evaluating the desreu and opcraimi: ■ lire!iv 111ess of internal control based on rlie assesvrd nsk. and peif.nining such nthei piot'i-dnn- as wv considered nei cssary m A couipariy s internal control over fmaiicral reporting is a pnxess designed to provide reasonable assurance icgarding tire ri IralniiH of financial reporting .md lhe preparation ot fin.irii i.il statenie nls for exlc iti.il purposes in aeeoid.ince wilh generally accepted accounting pnnciples A company's internal control ovei linancial icpoiting includes those policies and pincedures thai ! 1 1 pertain lo ihc- maintenance ol records that, in reasonable detail accurately and laiilv rellee! the transactions and dispo.sinoiis ol tiie as^e's et the company. (2) provide reasonable assurance ih.n transactions aie recorded as necessary io permit preparat.on ed financial sutiriHiitv in ac ui.laricc w.ih general Iv ii.'ccpli il ai e.'Unting pnnciples and that leidjils and expenditure* i;! the eo:ii;rany ate being made only m ace ind.-.iu c with duilioii.-annii- ol management and directors ot the company ami (3) prov n:c ii j-onaMc assurance legaiduig pievciiHDii or timely detection of ttiraullinri7cd at qmsirion. use, or disposition oi the eompanv's assets thai could have a marena! etlccl on lhe Piianci.il slatetnents Because' 01 ;l- iiiheienl Inuslatmns. internal ctinirel ov ?i lui.incral reporting may not pieveni c>i dcle'-'t miss;jiciiicrir- Also projections o( any evaluation "1 ellei tivenesi m luline periods are subject lu the risk lira) contiols may bei omr inadequate becaust'*! changes in conditions or iha: the degree of compliance w ith ihe policies oi procedures may deteriorate In oui opinion. Vcn/on maintained in all material ic-specis, rileciive internal control ovei linancial reporting as o! December -1 20 i lused un lhe COSO eineira We alsu have autiitcd in an eidnti witli lhe standards of rht hihlit e'oinp.iuv Atcotiriirng Ovt r.ught IsoJid (Umrctl Stalest the .unsolicited balance sliecii o! V\ n/ou as oi IKciinhc: 31 2013 and 2012 and tht related consohdaie ■! stall ments ol income comptcheii-ivc- inconit cash iiows and changes in equity foi each ol the thiec years in the period ended Dcumhti 31. 2013 ol ven/on and out :c\| OH daii .1 February 27 ?IJ 1 - expressed an tin.j-.i.i!; tied opinio!: thereon 's' Fin-'- A" Voun_;- 1.1.1 F.rn<l A Voun;; LLC '■.vie York New York	To The Board of Di rec tun and Sharrownrrs of Verizon Cammnnlcationt Inc.: Wc have audited the accompanying consolidated balance sheets of Venzon Communications Inc and subsidiaries (Venzon) at of December 3 1,2013 and 2012, and Ihe related consolidated statements of income, comprehensive income, cash flows and changes in equity for each ofthe three years in the period ended December 31. 2013 These financial statements are the responsibility of Venzon s management Our responsibility is to express an opinion on these financial statements based on ouraudns We conducted our audits m accordance wilh ihe standards of the Public Company Accounting Oversight Hoard (United Slates) I'hovc standaids icqinie ihal ivc plan and peifnrm ihe audit to obtain reasonable assurance about whethei the (manual statements mic net ul maii'iial misstati r:ie nl An .Unfit un lude- examining, on a lesl basis, ev idencf supporting the amounts and disclosure's in tin riri.it.i i.i'' .!;,Kiiicr-.l- -\:i .".niu also, imtiides asicstiug tbe ni coiiniing principles »<i il and significant estimates made by :n.:'i.:gcu t ni j. evell a- ei alu1 iii_;: the m nail l-.riar-.clal siatcnicnl presentation We believe ihat oui auiius provide a reasonable In our opm.on. ihe rmanczal jieir.cn is ic-fened to ahov c present fairly, in a!! material respects, tire consolidated financial pnr.it inn i.t Ven/ni: ai :.Vi.einnei 31 JD! ^: and 2tt 12 and the t onsolidaled results ol its operation- and lis cash Hows lor each of lhe thiee ye. is in the pel.oii einlcti IJcceml e i "«1 ?1¹I3 ii. tonkiiiiUv with I.¹ i generally Jeccpled atcnunHng principles We al-u have actdiled in atc.nd.mci with tin- standards ol the Public Company Accounting Oversight Board (United Slatesi \.en/on s imenial tomml nu: linanc'ial reporting as ul Decrmht't 31, 20)3. based on criteria established in Internal Contivl-lnlt-i;i j'rei 1 lamei. or- issued b, t!:e (?ominiriee nf Spousonng OTgani/alions ol lhe Tread way Commission (l°92 lijincwuik) and in report dai. ii bcl.iu.:y .-" 1 -t e\pressed ail iinqu.ilitied opinion thereon .'s- Fnisi \ Young LLP J Kmst£ \uuiii: LLP > New Yoik New York \| reitnian .'7 L'n\|4 j

Years Ended Dccemhct 31, Operating Kexciiuti

Opr.

ating Kipensr*

Cost of services .md saks (exclusive-of items slid Selling general and administrative expense Depreciation and amortization expense Total Operanng £ipontes

Operating Iricnmr

Fquity in earning-, ot unconsolidated businesses Olher income ;md (.expense). nei

Incmiie Ire lore (Provision) Bern lil Fm Income Taxes

(Puji-lsiph) LVtre/ii ii>; unY-mr Use.* Net In io me

44,887 27.089 16,606

(dollar*, ni millions except per share a 21)11 2012

46.275 3 9.5 SI lf>.4d(l

),H«7 Mil)

066) (2.667)

29.277 (5,73U>

Yean. Ended December 31.

Net Income

Other Comprehensive Income-, net nf taxes

foreign currency translation adjustments Unrealized gain (loss) on cash How hedges Unrealized gain (loss) on marketable set un lies Defined benefit pension and po si retirement plans Other comprehensive- incciiiic ^rtftbriiabje tn Vcrtjvrt

Other comprehensive income (lossj attributable to noncontrolling inierests Total Comprrhrnsixc Income

Compiehensive income attributable lo nonconiiolling inteicsts Comprehensive in tonic alliibuiable to Vcn/on Total CuiiiprehcnMxe Income

Sec Noies to Consolidated Financial Si

2011

(dollar* n 2012

7.71S 2.(i24

S 23.547 S 10,557 J I0.19H

1.841

li 23.655 S ll.Sn J 10.41')

12.035 11,620

Net income attributable to nuneonlrolling interests Net income a.rti ibuuble to Verizon Net Income

12,050 11,497

Basic Karnings Per Cnninmn Sbarr

Net income attributable lo Venzon

Weighted-ai eiage shaic- outstanding (in million.-.)

Diluted darnings Per Common Share

Net income asiriliulable io Verizon

Weighted average sh.ues nul standing (in million-]

4 01

2.866

4 00 2.874

See'

isolidaicd rinancial Staiements

s.ifSf.45andSf>4I

At December 31,

Assets

Cuncni assets:

Cash and cash equivalents Short-term investments Accounts iccetsablc, net nf allowa; Inventories

Prepaid expense-; and othei Ioi.il cuncni ris>ci>-

I'lant. proprr.v and equipment

[.ess accumulated depreciation

Total a'-SclS

Liabilities and Kquitx Ciiiirul liabilities

Debt maturing within one year An niini.s payable ant! ai tiuei) Ji.jbiJi:

OUre

(dollars in millions, except per share amounts) 201.1 2012

12,439 1,010

3,-10 b

3.093 470 i:.57ii

1 075 4.021

2 2 U,ltd 5 131,9119

8S,9S6

3.432 75.747

: 4,1.3 4

5,800 4,535

Jl JH2 C 405

274,098

3,°33 1 6,453 6,664

Years Ended December 31,

Cash Flows from Opera ti tig Activities Nei Income

Adjustments to reconcile ncl income to net cash provided by operating a Depreciation and amortization expense Employee retirement benefits FX'I erred income laxes Ftov isicn for urcollectible accounts

Fqiiity in earnings,.(unconsolidated hus,,ressrs net otdiM.I. n.b ■

Changes in current -:s and Labilities net olt Meets liom

.icquitiiion/di-.position ot hu.sirics; es

At counts ret civablc

aiflit.lt.-)

Cash Flows Irom Investing Activ ittes Capital expenditure* (including . apiliili Acquisiiious ol inv e.sunenls and biisine:

(dollars in millions) 2012 2011

Ifi.49n 7,426 (221)

16,4 6(1 K,19(i C.-2)

S 23.S47 S 10,557 $ 10,198

16,606

(5.052) 5,785 tl93 <I02)

(Hi .244] (1.7')7j t32lj

lit. ITS) l** I 3) (4 29*1

(843) 5ti (14 3)

(Iri.MM)

t4<*J|

(580) 2,111 61 671

Long-ienn debt Ijnployee benefit obligations IV !. ned income Uses Orln i liiibilitn. s

rqiiny

Serres peered-ir.ckiS Iii foniiuuu .l-.ck (j 10 r-.n v. both periods,'

Reinvested e.-iniugs t -\cco Acciiiniilaii.-ii oibei tompn Common _s;ock in iie.i-urs

27,bK> 2B,b39 5,653

2.'5H 13.'611

Cash Mows Iriim Financing Activities

1'ioceeds liom long-ienn hunowiiic.s

Repayments ol lorig-tcnn borrowing:, and capital lease ubligatio Decicas'c in shoit-letm nbligations t xcltiduii¹ torient matiinlies

Puichase oi. o:nrnoo stock lot tic.is.iry

.Siu-t lal c!:cirihinini; to noiicoiiliolliiie inlere-t

1 nil ri

nice! bv (use J mj lin.u

Net c.t»h p. tineas, (deciean (iinasri and ,ash cquit. Cash an<| ,-ash equivalent- hcpnnm- of p.

I' ash and cash equivalents end of period

■li.lftti (8.1*3)

(142) (5.93b) H5

(I5M

26.45(1 50.4 35 3.11° 3

I .Hoi) I F05)

.wnti-.lnp plans and

See Noies to Cnusolu1.il

Description of Business and Summary of Sir,nifre ant Accounting Policies

Examples of significant estimates include the allowatic equipment, the recnveiahility of intangible assets and i instruments unrecognized tax benefits valuation allowant. assumption*, contingencies and allocation of putetiase piiet

Vcjn Ended December3

Co mm en Stork

Ralaocc at beginning ul year

Halance at end ofyear

Contributed Capital Balance ut beginning of year Othei

llalafiee at end of )ear

Kiin**vicd Farnings (Accumulated Defiiit)

Isabnce at beginning of yen

Nei income aiinbuiable to Vcn/on

On irjends dec tared (52 03 5.2 0 t SI <)?.*.) per

sh arc-Balance at end ofyear

Accumulated Olher Comprehensive Income Balance at beginning o! year altrrhiilahle In Ven/on

foreign cuneney translation adjustments Unrealized gains (losses] on call: Row hedges Unrealized gains (io^sesp on rnaiki.iyhlc sccunti, Defined benefit pension and postictncinen; p.an t >:her comprehensive income Balant e al end of year ailnhuiablc lo Vcn?on

Treasurv .Stock Balance at beginning otycar Share-.' purchased Employee plans (Noie 15) Shareirwnerplans(Note IS) Balance at end ol year

Deferred Compensation-CSOPs and Olher

Balance at beginning ol year Restricted stock equity grant ■Vir.onizatioii Is.ilance at end ofyear

Nonce niralling Interests Balance at beginning ofyear Ncl income attributable to noncontrolling interests

Olher comprehensive income 'loss) . Total comprehensive income Distnbutions and other Balance at end ofyear

Total Equity

(dollars in millions except pet share amounts, and shaic* m thousands)

2013 2012 2011

Amount Shares

37.9!»0

297 2 9f.7r.IO S

0.734) 11,497

37.922 tH

■UoS 2.404

1.04 9 il i*)

(109,041) (4,071) (3,500) (153) 6,835 240

(tiS) 93b

(133,594| (5.002) (140.587) (5,267)

I 1.434 13,119

tl 05,610) (3,161) (109,041) (4.071) (133.594)

12,050

48.343 7.794

9.682 10

Description of Business

s services acioss one of the most extensive wireless nei winks in the United (4C0 Long-Term Evolution (LTE) technology and third-generation

Venzon Communications Inc (Verizon or (he Company) is a holding company. which acting ihrnugh its subsidianes is one of Ihe world's leading piuvideis of cnnunuiiicatiuris, in foi man on and enieriainnicii! products and semres to consumers, businesses and gos emmenial agcucic-s wnh a presence in over I 50 counines around Ihe world Wc have two reportable segments, Wireless and Wncline For further infonnation concerning our business segmcnis sec Note 13

The Wuclr_ss segment provide* witelc: .Stales (US) and has the l.iigcst fourth-(30) nctwoiks of any U S wueless service pros

ITie Wireline segmcril provides voice, data and video communications products and enhanced services including bioadband video and data corporate nctwuikiug solutions, data ccmct und clutid sets tscs secunty and managed network services and local and lung distance voice services Vt e provide these products and -crs ice-, tu i onsiuners rn the I'm led States as well as tu earners businesses and government cu si omen boih in ihc United States and in oc er I 50 o'.hct i outlines around the world

Consolidation

The method ol accounting applied to investment!, whcthci consolidated, equity or cost, ins o Ives an e* aluaitun of all significant lenns ofthe investments that explicitly gram or suggest evidence ol" eontiol nt inllucm e nt ei the operations uf ihc invesree The consolidated financial siaicment.s include our controlled raibsnfrines l or controlled ■ubsidianes ihal aie not wholly -owned, the noire nrilrulling interests arc un hided in Net income and Total equity In vestments in businesses which wc Jo nut control but have the ability to exercise significant influence over operating and financial policies, aie accounted lot using the equity method Invt'strni n:-; in wliicb we do nt>1 have lhe abilitv to exercise sigrujicatil influence o\er operaling and financial polit ics ate accounted for under the cosi method Fquitv and t'osi method invesimeuis art included in Investments in unconsolidated bu.sint'sst s in our consolidated balance shecis Certain of our cost method investments ire classified as at ailable.for-sale sec untie s and adjusted to fan value pursuant to the accounting siandard related io dehi and equity securities All significant inieicompany accounts iind iiaiisaciion-s has c been eliminated

Basis of Presentation

We hate reclassified certain prior year amounts io conlimn to ihe rurrcni yeat piesenuiton Use of Estimates

We prepare our financial statements using U S generally accepted accounting pnnciples (GAAP), ivbich require management io make estimates and assumptions that affeci reported amounts and disclosures Actual icsults could difTct from those estimates

: for doubtful accounts the lecoverability of plant property and ihci long-lived asscis. unbilled levcnucs fan values of financial ; on la.x asscis, accrued expenses, pension and postictiiement benefit i in connection with business combination*

Revenue Recognition

Multiple Delnetable Arrangements

In both our Wireless and Wireline segments, we olfcr products and services to our customers through bundled arrangements. These arrangements involve multiple deliverables which may include products, services, or a combination of products and services

See Notes tn Consolidated financial Statements

H'irelen

Our Wireless segment cams revenue pnmanly by providing access to and usage of its netwoik In general, access revenue is billed one month in advance and recognized when earned Usage revenue is generally billed in arrears and recognized when service is rendered Equipment sales revenue associated with the sale of wireless handsels and accessnncs is recognized when the products are delivered lo and accepted hy lhe customer, as ihis is considered to be a separate earnings process from providing wireless scivice* For agreements involving rhe resale of thud-party services in which wc are considered the primary obligor tn the arrangements, we record Ihe rev ciiue gross al the lime ofthe sale Foi equipment sales, we

generally subsidize the cost of wireless devices The amount of this subsidy is generally contingent on the arrangement and terms selected by the cuslomer In multiple deliverable arrangements which involve the sale of equipment and a service contract, the equipment revenue ta recognized up to the amounl collected when the wireless device is told

H'uWifir

Our Wireline segment earns revenue based upon usage of Us network and facilities and contract fees In general, fixed monthly fees for voice, video, daia and eenain other services are billed one month in advance and recognized when earned Revenue fiom services lhai aie not fixed in amounl and ate based on usage is generally billed in arrears and rrcngiuicd when service ts rendered

We sell each of ihe scrv ices offered in bundled arrangements U c voice video and daia) as well as sepaintclv. ihercWe each product oi service has t Man da lone selling pr.i c For these jii.inijeu:-; nts revenue i- allocked to each de.'ivei.ible using a relative selling pine method On,lei tins meiliod aiiang. in, u: ce.m.,dcia:n-ii is alo.jrcd to t.i.h icpaiate deln ciaMe ha;cd on our standalone >c!ling pirec lu: ca. h pioduci oi -trvnc "I In-., s, rsiic- include I u >S *civms iridisnlu.iMy or in bundle, and Nigh Speed Internet

When wc bundle equipment w:lh mainten^rne am! rr.minnimg servn.es we recognize equipment reeenue when ihc equipment is mil ailed in acemdaner with cniiti.ictn.il specilicjinms and reads to; thr »tistoine: s use T he maintenance and m.iniloiiiig ierv ices are H'c'ogni/ed monthly over the lenr. of the contract .o wc pro vni c lire sen n-e*

liist.illalioi; relaleei lei s along wnh ihe assm i<iii d cosls up to but n.-i e vet eduig ihesc ices, aie dele ned and amort 171 d uvei the c'siimatcd tnsrr.mei relationship penod

Feu eat h uf utu Segments wc report IJ.xes imposed by government ji authoiitics on il vciiin -pitidusing nan .actions between US and our cusiomeis on n net basi.s

Maintenance and Repairs

We ehargc the cost of maintenance arid repairs including tbe cosi ot itplaimg minor items not tot.siituiing substantial bcuennciils principally to Cost of set vices and sale* a- these .-o-1s are inclined

Advertising Costs

t'os's foi advertising products and ser. it e> as vs11 as olher juom -tional and -pon M-rsfnp i osts aie e hailed to Selling, general uiitl adininisiiaiive expense in the periods in which they are incurred (see Note I *)

FairuiiUS Pri Ciiniriinii Share

Ilasic earnings pn eonunori share are based on lhe iveighled-jv euge number oi s'.-ire- .■iitsiaiidrug during the penod Where appropriate diluted earnings pel cniiinitin share mt bade tin dibit n e s Me ci of -han -. i- .liable tunic i i-iu -.n>ck -ha-.td i m;i|ii n ition

Ihcie were a Ici1.il ol approximately li million \> million and (■ uuliioti stotk opiiom ami resin.ted Hutk units outitauditig

n spectiv. Is flir standing opiums t,, puic-|ia--c shan ■- il:i ;iot include J re. ihe e ;:iripiil.i:n-ri ol ,!i,e.ied t .iii-.mfs p₍ r t or:i:noii

share because : do >o would hate been ai.ti-.i.luiiv c tor ;h, pr-md cere i.ot ,,.-r,,bcam mi ihc yeaix mded December 3 1. 201 .l and 2012. respec in elv. arid included appjox mately !«.' millim: we: ,;h:t .Uiv ecure -hates i,., ifre y ea:s rrnkd [je.emhei 3 I. 2i!l I

As of Dccem'trei 31 2D I ^;, we were autheri/ed in issue up to J 2^J bilhf n and 2 >l> rmii.on shares of common truck and Sencs Fiefenet! Stock, n'sjiee lively Dn J^nnaiy 2N. 2014 al a spciial riiccimg of on: ^ha:, hoblns we re. civ cd s|;an l-.ol.lc, aj.j.rot al 1 ineiease our anlfion/ei: sliurcs oj eomm. ri slock by 2 billion -hates i<_: .m .n-yregate .■: >■ 2:- b.:h|i .ii:if.<-:i7. d sh.m s ol cim.mon sn>ck On February -1 2014 iLis aiilh. ii/.itniii became clice tit e

Cash and Cash F.quiv jfvntv

We co lei all lngl.lv liquid ine I'stmcuK with a inalurily ol" '.'<' dav > oi le when pu I e ll.,- i! 10 be Ca-h cqun jleuls I'^-h

eipnv ih-riisare st iter! al . ojt which appro* .rn.,i« s quo 1. d marLd value and .mbi;!. a:uoi:.-u- hi let in m.m. V mar', r iiir.ds

Marketable Securities

Wu have investments m maikciahlr see-unties' winch _Uic considered ' available-for-sale' under Ihe pi u vinous.of llu" accouuliiig standard Idi certain debt and equity .secunlies. and ar? included in ihe accompanying consolidated tub nee sheets in Short-term invcslmcnts. Investments in unconsolidated business*-, or Other assets Wc continually evaluate our investments in marketable securities lor impairment due to declines in maiket value considered 10 he other-thai)-temporary That evaluation includes, in addition lo persistent, dcclimnsj slock pni.es. general economic and company-specific (.valuations lu the event of a deienninaiion that a decline in market value is other-thari-temporary a charge 10 earnings is recorded (or (he loss and a new cost basis in the investment n established

Inv etilorirs

Inventory ronsisls of wireless and wireline equipment held f>r sale, which is earned al the lower of cosi (determined principally on

cither an average cost or first-in first-out basis)oi market " ^, -'-■³~"^r

Plant and Depreciation

Wc ivcord plain, piopcity and equipment ai cost Piani, property and equipment of wireline and wueless operations are gencially depreciated on a straight-I inc basts

Leasehold impiovements ate amortized over the shoitei of the estimated life of the improvement or the remaining tenn of the related lease, calculated from the tunc the asset was placed in sen ice

When the depreciable assets of our wncline and wireless opeiatioiis arc retired oi otherwise disposed ol the related cost and accumulated depreciation arc deducted from the plant accounts and any gains oi losses on disposition aie reiOgni/cd in income

We capitalize and depreciate nciwork softwaic purchased or developed along with iclated plant asscis Wc also capitalize inteiest associated with the acquisition oi construction of netwuik-rel.ucd assets Cap it a lived interest is reported as a reduction in interest expense and depreciated as pan uf the cost ol the network -related assets

In connection wnh our ongoing review ol the estimated remaining nvrr.ree useful lives nl plant properly and equipment At our local telephone opeiatioiis. wc el el eim tired that there were nu changes necessary foi average useful lives foi 2013, 2 111 2 and 2011 In connection with our ongoing review of the estimated remaining nv n.,ge useful lives of plant piopeny and equipment a: our wireless opeiatioiis, ive determined ihat changes vveic ncicssaiy to the remaining estimated useful lives as a result of technology upgrades, enhancements, and planned retirements' These changes resulted :n an increase in deprcciaiicu expense ol SO 4 billion in 2011 While the timing and extent of current deployment plans arc subject to ongoing analysis and modification, we believe lhe current estimates ofuseful lives are reasonable

Computer Software- Costs

We capitalize ihc cosi of intcmjl-u.se net work and non-network software that has a useful lite tti excess of one year Subsequent additions modifications or upgrades to internal-use network and non-network software arc capitalized only lo lire extent thai they allow the so fi ware to perform a task it prcv nius]y did not ;>rif;>rin Planning software maintenance and tiaiiiuig costs are expensed in the penod in which they are inclined Also, we r.ipiiiiii/e interest associated with the development ol inleni.il-iise netw-oik and lion-netwoik software Capitalized nun-network intenial-use software costs are amortized using the straight-line method ovei a penod of 3 to 7 years and lie included in Othei intangible assets net in out consolidated balance sheets f oi a discussion of our impairment policy for capitalized software costs, sec 'Goodwill and Other Intangible Asscis" below Also, see S'otc 3 for additional detail ol internal-use non-network soil ware reflected in our consolidated balance sheets

Cnndwill and Other Intangible Assets Goodwill

Goodwill is the excess of the acquisition cost of businesses over the fair value ofthe identifiable net asscis acquired Impairment testing foi goodwill is performed annually in the fourth fiscal quarter oi mure frequently if irnpjinnent indicators are present The Company has the option io perform a qualitative assessment to detennme it ihe tan value of Ihe entity is less than its carrying value However, lhe Cumpany may elect to perform an impairment test even if no indications nl a potential impairment exist The impairment test lor goodwill use> a uvo-stcp apptoach. which is performed at the reporting unit level Wc have determined thai in our case, lhe reporting units are our opetatmg segments since that is the lowest level at which discrete, reliable financial and cash flow information is available Step one compares the fair value ofthe reporting unit (calculated using a maiket approach and/oi a discounted cash flow method) to its carrying value If the carrying x alue exceeds ihc fair value there is a potential impairment and slep two must be performed Step two compares the carrying value ofthe reporting unit's goodwill to its implied fair value (i e . fair value of reporting unit less the fair value ofthe unit's assets and liabilities, including identifiable intangible assets) If the implied fair value of goodwill is less than the carrying amounl of goodwill, an impairment is recognized

Intangible Assets Nol Subject io Amortization

A significant portion of our intangible assets are wireless licenses that provide our wireless operations with the exclusive nght to utilize designated radio frequency spectrum to provide wireless communication services While licenses are issued for only a fixed time, generally ten yean, such licenses are subject to renewal by the Federal Communications Commission (FCC) License renewals have occurred routinely and ai nominal cost Moreover, we have determined that there arc cunently no legal, regulatory, contractual, competitive, economic or other factors that limn the useful life of our wireless licenses As a result, wc treat the wireless licenses as »d indefinite-lived intangible asset We reevaluate the useful life deienninaiion foi wireless licenses each year to determine whether events and circumstances continue to support an indefinite useful life

led a qualitative

In 2013

: perif t

We test oui wireless licenses lor potential nnpai wln-ihc! it i.s more likely than nol that the Ian v; assc ssiih nt ice considetcd several uu.ililaiiw I conditions nnrluding change* in interest rates and

rates), industry and market considerations (including industry revenue and EBITDA (Earn ing I belore interest, taxes, depreciation and amortization) margin projections), the projected financial performance of Wireless, as well as other factors tn 2012 and 2011, our quantitative assessment consisted nf companng the estimated fair value of our wireless licenses tn the aggregated carrying amount as ofthe lest date Using the quantitative assessment, we evaluated our licenses on an aggregate basis using a direct value approach. The direct value approach estimates fair value using a discounted cash (low analysis to estimate what a marketplace participant would be willing lo pay lo purchase the aggregated wireless licenses as of ihe valuation dale If the fair value of the aggregated wireless licenses is less than the aggregated cany ing amounl of the licenses un impairment is rccofturcd

'»■/ hmg-Liud ,1k idelinrte In es (pr

Interest expense incurred while qualifying acliviiics arc performed to teady wireless licenses for then intended use is capitalized as pan of wireless licenses The capitalization penod ends when the development is discontinued m substantially complete and the license is ready for it; intended use

-e"i All

Intangible .-Kicli Suhj.; Oui intangible assets i! amortized over their esti

ated ti.elul

■ills

rouiil ol'llic asset gioup utcd Cash flow* do uoi

ne whether events

,■ mill-alums were present we would test foi neuvi ;i ihe nei undiscourncd cash Hows expected to be gnreiaied tr.irn i XcCcd ihc carrying amount we svould peilonn ihc licit step w-lm mpaliment, il anv We reevaluate the useful liie deienr.inations ior t.

! other intangible assets

it inluimaiion related to the ij■ i■ < omponents arid avnag

iving amounl oi goodwill hy s,cgn ■etui hv es of oui oihei acquired in

atidlubil: Level

jlue of financial and n« ed in sell an awl oi pan

assets and liabilities is defined .is an exit on a liability in an «nlcilv transaction iiclwcci) i; iiieh piicint/cs the inputs used lit the metlio

assets oi liabilities ii a. live markets joi

Quoted puces in active markets lor identic ■i cl 2Ohserv ahle inputs oilier lhan quolid prn es in , -eel ¹ N'r> observable pi i cine in pais in tin maikcl

uaiiiial assets and financial liabilities a:- cia>s:hcd it, it e ahre measure un uts Uur assessment ol itic sign Mica: d mav affect lire v .ilu.nion ot' ihe asscis and liabilities 1

r representing the amount thai would he ukd p.ni if.pant-, fin iluee-tier lueiaichy

level nl :ripui !h.-|[ is sigm:n ant to tin .ilu-: mi asuiem. ills requires ludguielll. I veil In n ihe Ijii value hiertuchy

n pi,

Income Faxes Dm effeciive lax

vided for iernpor iry dii'crcri. xes male id He; ;.iini: ill; nouni thai is mole hksJv tha

■ Wc use a lwo-s.:cp approach im recognizing ind mcasuinig tax Vy'i^K\ikenoi expected to be lakcii ma tax return The tirst step ■"is recognition we, determine whetted n « more likely ilia.ii not that a ux position will be sustained upon examination, including resolution of any related appeals or litigation piocesscs, based on the technical mer.is ol the position In evaluating whether a tax position has met the inoic-likcly-ihan-noi recognition threshold, we presume that the position will be examined by the appropnaic taxing authority ihat has fiill knowledge- ot all relevant information The second step is measurement a tax position that meets Ihe nn") re-likely-than-nol recognition threshold is measured to determine the amount of bene hi to iccogni/c in the financial statements The lax position is measured at ihc largest amounl of benefit that is greater than 50 percent likely of being rcali/cJ upon ultimate settlement Differences between tax pu.-iiions lakcn in a tax return and amounts recognized in the financial statements will generally result in one or more of the fallowing an increase in a habiliiv lor income taxes payable, a reduction of an income lax refund receivable, a reduction in a deferred lax asset, oi at) increase in a de (erred lax liability

The accounting standaid relating in income taxes generated hy leveraged lease transactions requires lhai changes in the projected Inning ol income tax cash flows generated by a leveraged lease transaction be reccrjuircd as a gain or loss in lhe year in which the change otcuii

Significant management judgment is required in evaluating out tax positions and in determining ou: elledn e lax rate

Stock-Based Compensation - ■ -

Wc measure and recognise compensation expense lor all stock-h.iser) compensation aw-aidx made tu employees and directors based on estimated fair values See Nuic 10 foi further details

Foreign Currency Translation

The functional cuneney of oui foreign operations is generally ihe local cuneney For these foreign entities, wc translate income statement amounts ai avenge exchange tuci for the period, and we translate asscis and liabilities at end-of-penod exchange rates Wc record these translation adjustments in Accumulated other comprehensive income a separate component of Fquity in uur consolidated balance sheet- Wc report exchange gams and losses on nileicompany foreign currency transactions of a tong-lcim nature in Accumulated other comprehensive inenmc Other exchange gams and losses arc reported in income

Employee Benefit Dans

Pension and posiieiiieinem health care and liie insurance bene Ills earned during :he year as well as interesi on pioieeted benefit obligations are accrued currently Pnot service costs and credits resulting hum changes in plan henefils arc generally amortized over lire average remaining service penod ot lire employees expected lu receive benefits Expected return on plan assets is determined by applying the return on asscis assumption to lire actual fair value of plan asscis Actuarial gains and losses arc recognized in operating results in the ye.u in which they occur These gains and losses arc measured annually as of December .51 oi upon a re measurement even) Verizon management employees no longci cam pension benefits ui cam service towards lire company retiree medical subsidy [see Note I I)

Wc recognize a pension or a postretiremen! plan's hindcd status as eittier an asset oi liability on the consolidated balance sheets Al-n. wc measure any unrecognized prior -civicc costs and crcdil.t that arise dunng the period as a component ol Accumulated olher comprehcnsn e income, net ol applicable income lax

IVnx alive Instruments

We have entered into denv alive tiansarlions piiiti.uily (o manage our exposure io :1m tiiaticns :rt foreign currency exchange tntes, interest rales equity and commodity prices vVc employ risk management strategies which may include ihe use of a vanety of derivatives including cross cuitrncy swaps foreign cuiirmy and prepaid towards and collars interest tate and tonunodity swap agreements and interest rale locks We do not hold Jem alives foi tiading purposes

Wc measure all denv alives. including den v alive* embedded in other financial instrument-, al fair v ahie and recognize them as cilhci assets or liabilities on our consolidated balance sheets Oui denvaiivc instruments are valued primarily using models based on rcadilv observable market parameters for all substantial terms of our derrvalive contracts and thus are classified as Level 2 Changes in the fair values ofdenvalivc instruments not cjciali fyin>> as hedges oi any inelTecuvc portion of hedges are recognized in earnings in Ilie current penod Changes in ihc lair values of denv ativc instruments used ell'cclively as fair value hedges arc recognized in earnings, alon j with changes in lhe fair value of ihc hedged ticin Changes iu the fair value of the effective portions of cash flow hedges are reported in Other comprehensive income and recognized in earnings when lhe hedged Hem is recognized in earnings

Recently Adopted Accounting Standards

Dunng the fust quartet of 201 3. wc adopted ihe at counting standaid update regarding testing ol intangible asscis I'm impaumcul This standard update allows companies the option to perform a qualitative assessment lu deicimtiic whether it is more likely than not that an indefinite-Iiv ed intangible asset is impaired An entity is riot required to calculate the fair value of an indelimtc-lived intangible asset and perform ihe quantitative impairment test unless the entity determines that it is more likely than nol lhe asset is impaired Tbe adoption of this standard update did not has e an impact on our consolidated financial statements

Dunng the first quarter of 2013, we adopted the accounting standard update regarding reclassifications out of Accumulated other comprehensive income This standard update requires companies to report the effect of significant reclassification! out of Accumulated other comprehensive income on lhe respective line ilems in our consolidated statements of income if the amounl being reclassified is required to be reclassified in us entirely to net income For other amounts that arc not required to be reclassified in their entirety to net income in the same reporting penod. an entity is required to cross-reference io olher required disclosures that provide additional detail about those amounts See Noic 14 for additional details

Duimg the third quarter of 2013. we adopted the accounting standard update regarding Ihc ability to use the Federal Funds Effective Swap Rate as a US benchmark interest rate for hedge accounting putposes Previously the interest rates on direct Trea>uiy obligations of lhe U S government and the London Interbank Oflrred Rate (LIBOR) were considered lo he lhe only benchmark interest rates Ihc adoption of th:s stand.ltd update did n.ii have a significant impact on out consolidated financial -.lateineuts

Recent Accounting Standards

In July 2013, the accounting standard update relating io the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar lax loss, or a tax credit carryforward exists was issued The standard update provides that a liability related to an unrecognized tax benefit should be offset against same jiinsdiction deferred lux assets for a net operating loss carryforward, a similar ux loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. Wc will adopt this sUndaid update dunng the rind quarter of 20] 4 We arc currently evaluating the consolidated balance shcci impact related to this standard update

Acquisitions arid Divevriltucs I Wueless

Wiii U-ss Transaction

On Sepiembei 2 2n I 3. \ eniton c tin red into a stock puiehase agree mem (the Stnt k Fun hi.se \jtrecirie tin with Vodalom (imup 1'lc (Vodafone) nd Vodalene -t Limited iSelici!. p;iisu.-,r-,i lo w-in'., Ven/on ag-ee-t In .icfiun.- Vodalorre mdircn J-*¹:; r.eresi in Cellco Pjr-.iiei<fnpd.^:b/a Wn/cn Wireless (ihe partnership and mi.Ii uncesi the Vo-taioi !- Interest) i.,i ,;trr,-aie cotisideiaiion ol approximately Sf 11) billion

On February 21 2014 pursuant to lhe teiins ami subject to tin conditions set forth in ihe Sioek Pun ban Agreement \\ rtzor. acquired tlbe Wireless transaction) ile-m Seller all of the issued .md -ul-.tanjin;- capita; sly. k (the 1 fail sorted Shales) o! Vodafone Americas Finance I Inc a subsidiary ot Sellci IVFI Inc ) which induce tlv through certain -t/jsidiarrcs Cogc the: w-,ifi VI-1 Inc lhe Itiichased Entities) owned the Vodalone Interest In consideration lor the Tiarndened -shares upon completion nl'ilre Wireless Transaction. Virunn |i) paid approximately Sffi .x° hillion in i ash (n) issued approximately JM) | s billior. of \ en/on's common slock pai value 11) per share I'.lie Stock Consideration), [mf issu-ct senior unsecured Veivon notes in an aggregaic pimcip.il amounl of 0 billion (the Veri/nn Noiesl (n 1 -old Vcn/nn * iriduecrly owned .'i 1' interest in Voif.ii.uie Ommicl N V (Omnitel. and such interest ihc Omnitel liiteiest.l valued at S3 5 brllnui and Iv j p-u-v nfed other consideration of appuMinutcly i?. 5- billion -\s j result oi rhe Wiiclcss I lanta. turn Ven/on issued appioximately I 27 billion -lure; The total easfi paid to Vodafone and the nihil costs ol'i'ic Wireless Tian-aclinn. nre luilnir. huarieing legal and baiir. lees en-rc iinar.L-ed ihumi'h the un urrerice of ihtid-p.iny indebtedness, See Note * lot addittnn.il :r;loim,,i ion

In accordance wnh the accounting standaid on consolidation, a change in a parent - owneisl.ip rnictcst wbiic the parrni retains a continuing linancial inietcst in its subsidiary is accouriied loi as an equiiy tr.insai i:nn ami reiiieasutemeiii ofassel.s and liabilities ol pieviously controlled and consolidated subsidiancs is nol permitted As a result w.- will aecoimi f.^i the Wueless 1 ran.s.icnon by iidint.t-.ng the t anving amount ed tin" none ontioiling i.'ilci¹1 '.o n tin: ihc c r; j.-ige :r: V; i i/oii s ;.veriL :'hip irite ti st in Vcr/on Wireless Any drlkrerice In tween the Ian v alue oi ihc considei.ition paid and ihe ainoiiut I -, which 'in ncrreuni;ollirig interest is adjusted will be recognized in cquiiy amibulabk lo \ i n/ori

On iehr-.imy i 2"U. \'er:/i:n and Vodafone also implerriented the slr ol ihe Omrnici Imeicsl (ine Omrnlel ! r.iii*.ic;i;-n i by a subsidiary oi \en;on to a subsidiary of Vodalone in . nniieciinu wnh ihe Wireless I i.m-.n tior. porsuarn to a srparate share p-.iielu-c- .re re cms-re. We- will ire^gr.ve ga.r. un \V.e .ii-posal fil.r i.inv.nie i im-re-st in the "r.si .-.car-ci .-.f.-fM -t

Die Verizon Notes were issued pursuant io Verizon's existing indenture The \ en/on Noies were issued in two sep-ntiie series wnh S2 5 billion .Ine r-.hni.nv 21 20?? ami S2 5 billion due I. mnary 21 2t>2< ibe W-ri/ou Nuic-bea: inici. si ,,t a lloaiuig rate wtiitfi will be reset quartnty wnh interesi payable ejuai'iily ill -nlcil-- bcj'inrnr.i.' M.'y 21. 2('i- I lie i::-hl-v...r \'eii.-'.ii notes beai mtcrest a: a sin-ting late equal to rlirec -iiioiuh I.IHt.iK plu.- I 222"c and the ele. e n-y eai \_tr.?.-ti notes beai intctcsi at a lloaung laie equal lo ihree monili :.IIJ«"'K. plus 1 3V2M, Ihe irideinure thai gser:is lhe Veri/or: Nies cotii.nris eeriain .-legalise env enjnls. including a regain c pledge cov rnjnl anii a merger or -nnil.ir tfnsc.ii.in co- en.ni: jll'irin.iliv r e ovrri u.is an.I evenls oi detauli thai are nuMmary in: comp lines rit.iir.'ainine an in. esimeu' piade cre.lir rtniiig Alt e: erit M delanli 1::: eiti.ei series ot the Wri.-.-r: Notes may icsull in ae. ele ralin ol the entire pirnctp.i. ani.unl ;.= i: del-! -e^i.rr.n of that mm Hegnunii:: ti-o ■-...is attec 11-: c'-Osin-,: "i "he Wiiclcjij "Irans-i.-.H'M. V.:n/..n r-iae ■.edceiti all e-i .my pooior. r :f-.e ,_:.,nstjr ^m. \er!.-.ir, Notes |.,.;,-! in Vod.tloiie or au> ol its all,hates f_: a u dcrnplton prtcr ot 100'. ol ihe prumr:*: an mini plo. oecrtieo rut unpaid inicre-.i The V'e-n.-or. \nre.- m^y im.lv be lun-Jcncd bv Vodalone lo .Intil panic- in specified amour.cuint!' speciired prno.is. . n-r-icrn ing lar.uaiv :. 2ti| 7 K;_: Wri/iT N 'tes held by lliioi ]-.irtie- will r:.-: in- re.renrtaHc \ en/un h _;! .icr-...-,j - n . r-gr-irart.-ri ■■: it--i:;e;.t will. le.sj-eet t. il.e Vcn.'.ia Notes at '.esi t;-.;ee nn-nihs _| _:roi to ti.e \ eti/.-n N.'lc: tn-. otiiiri:. trait de-nhl-'

Oihvi CoMMtlvitieii

Included rn ihc other conjideralinn paid lo Vodalone is ihc indirect assumption of long-term obligations wilh respect lo ? IO"i Class T) jnd Class K cumulative pre lent J slock IPrefened Sunk) issued by one ol ihc Pmdiased Entities Roth the Class D fR25 000 shares outstanding) and Class f. shares (K25.0f)0 shares outstanding) aie mandjionly redeemable in Apnl 2020 ai Si .000 pel share plus any accrued and unpaid dividends Dividends ac. rue at 5 M 3'i per annum and will be tteaied as inicies! expense Holh llic Class I) and Class IL shaiei will be classified as liability insiniuiciiis and will be recoidcd at fait value as deientiined at lhe closing Ol lhe Wireless Transaction

Pin Foi ma Informal in ii

The unaudited pin forma information presents the combined operating results of Veiiznn and the Vodalone bitcrcst. wnh the resulu prior to ihc Wireless Transaction closing date adjusted lo include lhe pro funna impact of the elimination nf the nislonc.il equity in earnings, net of tax. rclaicd io lhe investment in Omnitel. an adjustment lo iclleet uiicrcsl expense associated wilh the additional indebtedness incuned and expected to be incurred in connection wnh the Wueless 1 ran sac t ion and nutsianding as of the e losing uf the Wueless Transaction, an adjustment tor lhe divide rids on the I'refe ned Sloek. an adjustm. nl foi ihe amortization ot eenain dcbi incurrence costs based on lhe contniitu.il liie ol the underlying indebtedness an Jiljusiincii; to letlcei changes in the provision foi income taxes associated v> ilh ihc additional income attributable lo Vcn/on and lhe bene lit associated with the additional interest expense, the elimination ot the historical net income atuibutable to noiieoiitiolling in uresis representing the nonconuolling mieiest in Vcn/on Wireless, and an a enlistment to reflect the sum ol all other adjustments lo the pm loriua condensed consolidated statements of income on net itieome attnbutablc to v enroll

The unaudited pm forma results are pies.-nled foi illustrative purposes only These pro I'oima results do nol purport to be indicative ofthe results that would have actually been obtained if the Wireless Transaction had occurred as nf January I. 201 2, nor deics the pro forma data intend to he a projection of results that max be obtained in the future*

The following unaudited pio tonna e utisolidaled icsulr- of opei.nions assume thai the Wireless I'raiis.ie Hon ivas minpleied as of January 1.2(112

(dollars m millions!

Yeats ended Dcceuibei .11. 2013 2012

Net income aiinbutable to Ven7on S 17,UP8 S 4.44^l>

Speclrum Cicerisr Trans actio us

Since 2012 we have entered into several strategic speclrum transactions including

Dunng lire thud quartet ol 2012, aliei receiving ihc required regulatory approvals. Ven/on Wireless completed the following previously announced transactions in which wc acquired wireless spectrum ihal will be used to deploy additional 40 LTE capacity

° Venzon Wireless acquired Adv anted Wueless Services (AWS) speclrum in separate tiansaciions with SpecimmCo and Cox TMI Wireless. LLC for which it paid an aggregate of S3 9 billion at Ihc time ofthe closings Venzon Wireless has also recorded a liability ofSO 4 billion related io a three-} car service obligation to SpecimmCo's members pursuant to commercial agreements executed concurrently with the SpectrumCn transaction

Venzon Wueless completed liccii.se purchase and exchange transactions with Leap Wireless Savary Island Wueless which is majority owned by Leap Wireless and a subsidiary of T-Mohile USA lire {T-Mnhile USA) As a result of these tiansaciions. Vcn/on Wireless received an aggiegale S2 t) billion of AWS and Personal Communication Services (PCS) licenses at fair value and net cash proceeds ol SO 2 billion, transferred certain AWS licenses to T-Mobile USA and a 700 megahertz (MHz) lowci A block license to Leap Wireless, and rccoided an immaterial gain

1. Dunng the first quarter of 2013. wc completed license exchange transactions with T-Mobile License LLC and Cnckct License Company, LLC, a subsidiary of Leap Wireless, lo exchange certain AWS licenses These non-cash exchanges include a number of infra-mark el swaps ihat we expect will enable Vcn/on Wireless to make more efficient use ofthe AWS band As a result of these exchanges, wc received an aggregate SO 5 billion of AWS licenses ai fair value and recorded an immaicnal gam
Dunng the third quarter of 2013, after receiving the required regulatory approvals, Verizon Wireless sold 39 lowci 700 MHz B block speclrum licenses tn AT&T Inc (AT&T) in exchange for a payment of SI 9 billion and the transfer by AT&T to Venzon Wireless of AWS (10 MHz) licenses in certain markets in lhe wesicm United Slates Venzon Wireless also sold certain lower 700 MHz B block spectrum licenses to an investment firm for a payment of J0.2 billion As a result, we received SO 5 billion of AWS licenses al fair value and we recorded a pre-tax gain of approximately SO 3 billion in Selling, general and administiati ve expense on our consolidated statement of income for the year ended December 31,2013
Dunng the fourth quarter of 2013. we entered into license exchange agreements wilh T-Mobile USA to exchange certain AWS and PCS licenses These non-cash exchanges, which are subject lo approval by the KCC and other customary closing conditions are expected lo close in the first half of 2014 The exchange includes a number of swaps thai wc expeel will result in more efficient use ofthe AWS and PCS bands As a resull of these agreements, $0 9 billion of Wueless licenses are classified as field (or sale and included in Prepaid expenses and oihei on oui consolidated balance sheet al Decctnb-.r 3 I 2013 I'pun completion of tbe transact inn. wc ex peel lo rec oui an irr.rr.tienal gain

Subsequent lo the lransaction with T-Mobile- US-\ in lhe Iciuith quarter o: :iU3 on Jarmaiy t. 2nM we announced lwo agreements with 'I-Mobile USA wirb iceped to oui remaining 1W Mil/ A block speclrum licenses ! aider one agreement we will sell «crt:i:ii c-i tlies,- iieens.-s lo I-Mobile I ISA in exchange Ivr cash coiisidt r.iiiou of ajipioMinalcly 52 4 billion, and oncer the second agreement we w:I| exchange the remainder of these licenses ior AW> ami PCS pecirutr. licenses These iranvaciinu* are subject to the approval ofthe 1'Cl as we!) .n other customary closing conditions These iiaiisaction.s aie rxpr. -.J to close in ihc middl-- o! 2Ul-i

Olhrr

During 201 \. sir ... quired v annus otiic i ec-ir.-b ss Ii. enses <rid riuikeis lr cash consid. ration ihat was not stgniii, aril Additionally, we obtained control cl previously une on.solidalc d wireless iiartneisliips. which wete previously accounted fvi undei the equity method and aie now,oiis,,[,d,ned which resulted _m an immaterial gain Uc iccotded $0 2 billion of goodwill .is ,i icscit of these

Dunne 2d I 2. we acquired v.vious olher wrrele.s licenses anil mark els lor cash consideration that was not signilreani and iceoided Jit 2 billion ol'goudwill .is a resull of'lhese transactions

Wiii-Iine

HCCIIKSTclcnuiie-s. Inc

Durir." July 201?. we acquired 11L'< '.HI:S If Icm.ilics, Ine 11 II.K i! ICS Telrmattcsj lor appro, uruielv il 2 pei sli.,re in cash loi a tola! acquisition price ol SO n billion As a rcMili oj Die iransaeiion. Ill iOIICS Ieleniaitcs became a wholly-owned subsidiary ol Verizon Ihe consolidated tinatieial stjicmcnts include ihc results of MUOHCS 'Iclcmjiics operations Irom ihc date the

acquisition ,ln,ed Upon clomi> we reciuded appioximately SO << billion ol goodwill SU I billion ol othei iillallglhlrs and assumed ihe debt oblijMiions ol J1130;IKS Iclematiss which weic nuuroviniaiv 1 > >C' I billion as id llic dale o! acquisition and which were- repaid by Ven/on Had this acquisition been completed on Januaiy I. 2:>I2 < i 2UI I the ifs,,hs of tire ai quired operations of HC-iill'S felem.iiics would not have had a MgnitieJitl impact on the consolidated ncl incur;, attributable lo Ven/on The jc quit.il inn his acc clerr.lc.l our In lily lo bring more trlrmaii. s ollei mgs lo mart cl ior ex isl in;, and new i-usinin.-i\

The acquisition o! Hl.'OMIlS 1 cleiiiaiKs was ae.ontiled loi as a business eomhir.-iiton under tin- aiquisiiion mellmd l he cisi <;i lhe .icq.jiMti.-n w-^s allncjicd n. the assets rid liabilities .lupiued base.: or: then It.ir value- s flhe cI.'m of ihc a. r:uisiii.,ri wiih lire fvess amounl being rec ord rd as j oodwill

I rnrmalk Woildwide. Inc

.'lining .\pn; Jill i w. aeqiiiud lern riu.k W ond". i.le hie ( I cm-mark) a glotial prov i.ler ot in formation lech living y infrastni. lure and . loud sctviccs foi S !⁰ per sfuic in eash CIom:i|; .md othei direct acquisiiion-reiaied costs totaled approximately 11 ⁷ milium aftci -ttt.x Die acquisition was completed i ia a iencler otfei followed by a shon-fonii" tnciger undei Delaware law through which leirematk became a wholly-owned subsidiary of Ven/on lite a.quisiimn enhanced Ven/on s offerings to business and gnvcr-.mer-.I f.is:on,ns ^h.h.illy

The lonsohdaled [main :al s-.alen.enls include lire re'sulls of lelieiri.uk s opeiatioiis [nun the dale ihe aei|U]silin closed HJ tins

JCquis:i:on hetn consummated oti January I. 2(11 1 the rrsnlls o!"Icneinatk \ acquired uperatim-.s would nol h.i> e had a sigriifn a:it

mpiici on lite .:.ri':lida:ed n.-t income il'nbutaUe re. V.-n.-ort Ihe .J.-fc- o-th--atnu:-- of 1 eitemari. Il.al were o.ilsiatidi.-.e a: lh.-

Iirne o: Us acq ii is i: by v'en.-.-n wen icp.nd duiiiig xl.- "it I !

Dlli.-r

Dunn| the fourth quarter of 2013, Venzon acquired an industry leader in content delivery networks fur SO 4 billion Wc expert (he acquisition will increase out ability lo meet the growing demand for online digital media content Upon closing, we recorded SO 3 billion of goodwill Additionally, wc acquired a technology and television clnud company for cash consideralmn thai was nol significant The consolidated financial statement! include the results ofthe operations of each of these acquisitions from the dale each acquisition closed.

Oi) Januaiy 21. 201-1 Ven/on announced *n agreement to acquiic a business dedicate J to the development of cloud televisiu products and services foi cash consideration that was riul sign i fie ant The tiam.ai.tion. which was completed in Fi binary 201-I i expected to accelerate the availability of nexl-gcncrainm video services

Othei Intangible Assets

The following tahle displays the composition of Othe

(dollars in millions)

Goodwill and Othet Inlaagilile Assets

Wireless Liermei

Changes ^1,1 'he canyirig amounl of Wueless licenses

At December .

Customer lists (5 to 13 years) Non-network, internal-use softw Other (2 lo 25 years) Total

Gross Accumulated Amount Amrir(i7atlon

979 4.4SJ

i 3.5'6 10.415

(2,660)

lUm

Net Gloss Accumulated Net

Amount Amount Amortization Amount

(2_:*.iH) S I.2IK |b,210) 4,205 (292) 510

S 16,100 S (10,300) S 5,1100 S 14 773 5, (H h40) a 3.933

(dollars it

Balance at January 1, 20! 2

A.'-quiMnonM'Noie 2.1

77.744 579 (2,3*1)

pitalized mieresl on win less licenses

Reclassifications, adjustments and othet Balance ai December 3 1.2012

Acquisitions (N'oic 2}

Dispositions fN'otc 2)

Capitalized inteiest on wueless lu enses

Reclassifications, adjustments and other Balance al December .11,201?

Reclassifications adjustments and othet includes SO <) hillion of Wueless licenses that ate classified as held for sale and included in Prepaid expenses and cither on our consolidated balance sheet at December 3 I 2013 as well js ihc exchanges ot wireless licenses m 201 3 and 201 2 See Note 2 loraddition.il deiails

At December H 2tl|3 and 21112 approximately 17 7 billion and S7 3 hillion. respectively of wireles licenses were undei dc clopmeni for commcicial service foi wlufh wc were capitalizing interest costs

The amortization expense for Other intangible assets was as follows

Years

2013

2012 2011

Insinuated annual amortisation expense for Other intiingible assets is as fcllow

2015 2016

1.5117 1.540 1,505

I,4Kh 1.215

s nf Dccenibei *l. 201 3 Sec Note 1 loi

Plant, Property and Kquipment

Tlie average remaining renewal period of our wireless licei additional details

The following table displays llic details of Plant, piopeity and equipment, which is stated at cost

The increase in Goodwill at Wireless al December 31, 2013 was pnmarity due lu obtaining control of previously unconsolidated wireless partnerships, which were previously accounted for under the equity method and ate now consolidated This resulted in an immatenal gain recorded dunng the year ended December 31, 2013 The increase in Goodwill at Wireline al December 31, 2013 was pr i manly due to the acquisition of a provider of content delivery networks

Goodwill

Changes in the canying an

Balance at January 1,2012

Acquisitions (Note 2)

Reclassifications, adjustments and or her Balance al December 3 1 . 2012

Acquisitions (N'oie 2) Balance at Ds-cembcr 31, 2013

(dollars in millions!

Wireless Wireline Tata I

S I7.<)(,3 S 5,394 S 23,357

209 551 7h0

S It! 172 S 5967 S 24.139

204 291 495

5 1(1,376 1 4,2511 a 24,634

At Dccemher 3 I,

Land

Buildings and equipment

Central office and other network equipment

Cable, poles and conduit

Leasehold improvements

Work in progress

Pumiture, v ehicles and other

Less accumulated depreciation Total

I5J5

3-15 11-50 5-20

3-20

(dollar 201.3

S S19 2J.S57 121,594

55.240 5,»77 4,176

9307.

220,865 131,909

S M,95t

n millions) 2012

S K59 22.909 1)3.2.62 53.761 5.404 4,126 9,254

209.575 120.933

S'attcoBfrolllBg Interests

loresnnents in Uaeosuolldaled Businesses

Nnncontrolling interests in equity of suhsidianes were as follows

Our investments in unconsolidated businesses arc comprised of the following

At IVcfmhet 3 I,

Kquity Inv esteei

Vodafone Ornntiel

(dollars in millions) 2013 7012

23 1% S 2,511

At Decembei31.

Venzon Wireless

Wireless partnerships and olher

(dollars m millions) 2013 20)2

J 55.465 1.115

S 56.5S« S i2,37i

Cost liivr>lrrv I ol.il in'- esrmitii

On idemts and ic pa; nations ot tore: ft ti e amines icccivcd tioiu these in', , ;K es were not significant in 2013 Ml ■'> fill ion i:i .is 1.' and SO "> bit'.ion n: 21) I I Sec N'.m. i 2 n.gj'dilig -md isl rihuKsl C._J.ttiincs .jt oui lelicigi. -ubsi.li ji o.s

Lquitv Method Inv estmeuis

f..',I/>.-c Oinlit.;'

Vodaloiie Oman tel N \' (Vodaloru Urnnitclj is one of the l.ui;cst wireless e omrnunic.uiotis lomparues in Italy A: Deicmbci 11. 2011 and 2012 oui mvc-.tmciil in Vodafone Omrmcl included goodwill ol H 1 billion a:id Si 0 billion respectively As pari of lhe coii.sideia'.ion r.\ tj-.e V.'irelc j-s lr.'.n:a ;ior, -.ubsidi.ir id \\n;.-.5i si.Id its enine owiieisliip inui. si in Vodalo-.w. tViinilr', i» a subsidiary oi'VndjIiir.c on l^:chruarv 2 1, 2l)| 4 yc Note 2 lor additional inform.ili.in

Or/ro /;,/.'.'/v/«.r.i;.'e.(

The remairiir.g investment; unhide wile lees par'.rn i-hips in the I'S limited pattin iMiip investments in intilie. that invest in affotdablr huusing projects and oihei smaller domrsiic and inicrriaiion.il investruenis

Summarised I-mane ill Jnforuiaiion

Summaii/r,! financial information foi our equitv invoice, is as follows AW,.-!,-.

(dollars in millions)

Aii\._eitihet3i_ 2fii_3

l-uiVenl Js"ets'" S. l.Vs.l <.

Noneurreni -'sseis 7.74H >■ ] SU

Toialas.cts S I 11?31 1 1 I. h?5

e urrein liabilities S JftDZ i \Vr.

N"oncuneni luhiliiies ? .s

Veais f.rnieei IVieiube

S H.UH4 1 032

i Wueless) Cc

lis .li Vi 117011

pan! in the sec v.7 0 billion .

If ii,-/, i Joint l,rrti,i,-(Jui Wueless segment is pi F'aitiie'iship is a joint i entu Vodalone As ol Deccinhc remain.nc Ji'. On I ;hiu; Wueless S,cNoic2 tor ad,

illy couipiised ol Cellco Partnership doing but'iucs* as Ven/i.

aimed m Ajuil 2H0(t bv the combination oi'th. US wirclisioj

!, 2111 . \eri/on c.wnetl a controlling 5^'i interesi in Wrifo

21. 2IH-:. Ven/on comj-lelcl li e Vvireless I rjrisa.-i.c i .,

S/'cr i.iV Distribution

h was paid ii .f SS 5 billiu;

In Ma> 201 3. the l.toard oI Repiesentatives oi Wn/on Wireless ilecla;cd a distnhution m n_:.i quarter of 201 3 in proportion to ihen partnership interests on the paymeni date in ihe ag. ic-uli. Vodafone r;:i ttiv eil a cash payiin.nl of S3 I "> bi!li,-ri and ihe lern.iinde i -\ the distiiimiio

es pa.d in lhe 1 510 billion i

lit November 201 ? llic He.aid of Represemalnes of\'eri/on Wueless declared a distribution fourth quarter of 2012 in proportion to then pattnei^hip interests on the payment date in the a result Vodalone received a cash payment ol S3 X billion and ihi remain.le: nl liie dislnhtm,

In July 701 I, lhe Hoard of Represeiilatives nl Ven/on Wueless declared a disiuhmum io it: quartei of 2012 :n piopoumn in then partnership interests ;m tin- payment dale- in the agj re<ub. Vodafone received a ca*ti iriym-.-m of 5 biUmti and lhe rem;.-.tickr .i( inc dutribu-iou

.easiri); Ariaricciurutv

,Vs Lessor

We are the lessen in Leveraged and diisc- iiti.'.iw inc. ie.es- .-et-.;;ii.:nts {:: f.e-iv.r.v i. - I -niet.-n an.; jmwer geeeiJ if.g l.-.e.lnn.s >ehn.

othe t equipment 'these leases have remaining trims of up to ¹7 ycais as of IXccmbcr 'I 201 * In addition ne le.ise sjsacc o certain <■>'. on: cell lowers to olliei w uelrss caner; .'.tiniriiuiii lea'.e jtaymerilt receiv able represent i.npai:! i.T.ials les< pnneipal an :n n i est e:ii rhud-j'aity ne'incc oeiss' debt u l.itir.g lo ie veito'ed lease iian s.n tmrls Sun e we have no general liatnhrv for tins deli

.lllset aganisl lhe inininiimi 1, asc payments ic-.eivable :n ac c orii.iue e w .tb t:S C\.\\- ,\l! i;eourse- dib: is icll-clc.l in cu e.-nso-.nlatcdb.ilares. sheds

Ai each reporting period we niomtoi ibe eicdii quality e'l the various lesseei in oui poitlolnis Pegai.imt; tbe f.-srraged leaj

portfolio, c.xl final credit reports are ujed where available and where nol available we use lnieinjlly developed imin ator:. Thes

indif.iioi'- or ir.tem/l c rcdu n-.k grades- factor insi.uir less expenenLC the i aim oi the cnite'rlyi:!!; .-nil.4iei.il c!eli;i-)ue:n v trend.i

and niditstrv anJ general ,-iorioinic coiidtiiuns Ihe credit quality of our lessees i lines fioin to CO'' foi each leportini

peu.'d ih, I, v, rati'I leases w-illiin the portlolio an- rev ie w.d :',.r indicaluis ot iinpai-iren¹. w:ie:c ii is [inibabl. the lenl dui

md utlici and Othei assets H

oinpuscd of llic following

Ai December 31.

xcraged Leases

consolidated bal

Minimum lease payments rcccivahlc Em mated residua] value Unearned income Total

Allowance foi douhilul accounts 1'inaiu c lease receivables net Prep a ul expenses and ollici Other assets

Direct Leases

1.049 S 16 $ 1.085 S 1,253 $ 5H S 1.31 I

THO 5 785 923 t> °29

(589) (4) (593) 1654) <i0) (f-64)

1.455 ?"4?7

mounted lo 5 I 0 bilhor

Accumulated deferred taxes arising fioni Icvciagcd leases winch aie included in Dcfci ai lVccmber ^ I, 201 - and S1 2 billion al December '1.2012

The following tabic is a summary of ihe componcnis nf income from leveraged leases

Yc.n.s Cnded December 31.

Ainoiii7jtion ol capiial leases is included m Depreciaiion and amortization expense in ihe c Capital lease amounts uu hided in Plant, property and equipment are as follows

Al Dec ember 31

Capital leases

Less accumulated amortization Total

The aggregate minimum rental commitments undo follow!

2014 2015 21) If. 2017 20IX Thcreallci

Iota I minimum rental commitments

Less interest and executory cosls

Present value ol minimum lease pas ments

Less l unenl installments

Lung-trim obligation at Dccrmber 31. 2013

lidatcd statements ol iricoinc--

(dollais m millions) 2013 2012

1 December 31 2013.

(dollars; Opera

The future minimum lease payments lo be icct of iiiiiiic. ourse loan payments related lo levc relating to opciating leases (or the penods slim

Yeais

2014 2015 2016 2017 201K

Thereafter Total

n ancclahle capital leases (dneci financing and levciaged leases) net md .ill.ni.uu es foi doubtful aic.nunls alonr with expected receipts :i il 2(1 H.aicis lollnws

(dollars in millions) Capital Operating Leases Leases

Changes to deht dunng 21) 13

Balance at January 1.2013

Proceeds from long-term boirowmgs

Repay ments of long-term bo no wings and capital leases obligations Decrease in shon-ierm obligations, excluding current maturities Reclassifications of long-term debt Other

Balance a I December 31.2013

within one ye.it is as lnllows

Debt Maturing within One Year

(3,943) (142) 3,121

(dollars in millions) Long-term

49 166 (4J20)

Debt Total

49.164 (8,163) (142)

Wc lease certain facilities and equipment for use in our operations undei both capital and operating leases Total rent expense under operating leases amounted to S2 ft billion in 2013 and J2 5 billion in 20)2 and 2011. respectix-cly.

At December 31

Long-term debt matunng within one year

Commercial paper and other

Total debt ma luring wtihin one j ear

(dollars in millions) 2013 2012

$ 3,416 S 3.K69

447 500

S 3,933 S 4,369

The weighted-ax erage interest rate for our commercial paper outstanding was 0 2% and 0 4% at December 31. 201 3 and 2012, respectively

Credit Facilities

On August 13,2013. we amended our S6 2 billion credit facility with a group of major financial institutions to extend the matunty date tu August 12, 2017 As of December 31, 2013. the unused borrowing capacity under this credit facility was approximately J6 I billion

Dunng October 2013, wc entered into a S2 0 billton 3r>4-day revolving credit agreement with a group of major financial institutions Although effective as of October 2013, we could not diaw on this res olvmg cicdit agreement pnur to the completion of the Wireless Transaction We may use borrowings undei the 304-day credit agreement for general corporate purposes The 364-day rcvolx mg credit agreement contains certain negative covenants, including a negative pledge covenant, a mcrgei or similar transaction covenant and an accounting changes covenant. .ilTumaiive covenants and events of delauli that arc customary for companies maiuiare.itip an i n vest men; grade credit rating In addition tins agieeineni requires us to maintain a leverage nitio (as defined in lhe agreement 1 no: in excess of 3 Mi I 00 until o'ji credit ratines reach a certain icvel

Lorig-I cr m Debt

(dollars 2li 13

Maturities

21)14 - 2(142 2IU5 - 21)41 Illll, -21)43 2018 -- 2«3■» 2D14 - 2(11«

21115 - 2018 2016 ■■ 2032

Outstanding long.lenn debt obligation-. 31c as Inlloess

Inteiest Hates

21H 2

31.9(i 5 5.023 5.500

3.931 1,300 1,075 1 ,«9V 880

I 1 I >.)K 7.tlb 2

Vciir.n Trlrph

II 03 I

5 017

I COD

K 635

nelessnote s pas able and otlici ■ireles!.Alliel assumed notes subsulianes slchenlurcs

OMier sub<idi:i

5 13 -6 «6 7.38 -7 XS 8 00 - 8 75

debentures and othei

Capital lease obligations'avetagc rate uJ ! )°i

■*3.144 3.486

2IJI3 ami 2012. respectively ) t Inamoni.'ed dlsi mini, nei ot premium Total long-ieni; di hi including cum nl inaf.in Less long-lenn debt ri 1.1 Hiring, witlim or:, yea: Total liing-lcnti debt

In addil

013 w

rd 1 air.

Li.

>i lin.n

■.mill!

Dunng September 2013. in connection wilh the Wireless Transaction, we issued S490 billion aggregate pnncipai amount of fixed and floating rate notes resulting in cash proceeds of approximately 148.7 billion, net of discounts and issuance costs. The issuances consisted ol tbe tallowing $2.25 billion aggregate principal amount of floating rate Notes due 20 J 6 that bear interest at a rate equal in three-month LIBOR plus 1 53% winch rale will be reset quarterly, SI 75 billion aggregate principal amounl of floating rate Notes due 2018 that bear interest at a rate equal tn three-mouth LIBOR plus 1.75% which rate will be reset quarterly, $4.25 billion aggregate principal amounl uf 2 50% Notes due 20)6, S4 75 billion aggregate pnncipai amounl of 3 65% Notes due 2018. 54 0 billion aggregate pnncipai amounl of 4 50% Notes due 2020. $110 billion aggregate pnncipai amount ol 5 15% Notes due 2023, S6 0 billion aggregate pnncipai nmount of 6 40% Notes due 2011 and S15 ⁿ billion aggregate pnncipai amount off> 55% Notes due 2043 (collectively, the new notes) The proceeds ol ihc new noies were used to finance, in part, lhe Wiiclcss Transaction and 10 pay related Ices and expenses As a result of ihe issuance of the new notes »t incuned 1 merest expense related 10 Ihe Wireless T lansaciior. ol SO 7 billion during 2013

lili/e.tJII 2 billion

* 1 2' t.ili:.--n a In.' 2D34 The

During Pebruaiv 2U I-. we issued 11 75 hiilion aggregaic pmieipal amount of 2 3 7*% Noies due . pnncipai amount ol 3 25% Notes due 2()2(i and £0 K< billion a;>_L-re<'atc pnncipai amount ot a 7-^L\ Of these Noies is-,ul;cd in cash pioceeds ol approximately 55 i billion net ol dieeounts and issuance tisid ill part to finance ll:. Wireless I ralisac Hon Any in 1 pio. ceds ri. .1 use .1 io fl nam. the Wil. les gi.nci.il coiporare purposes Mm- during fcbniary 2014 we ;ssu. el >i! x bi.li.iii ag£i. gate pi ine ipal dire 2054 resulting in cash proceeds nf.i proximately SO 5 billion, net of ducocnis and nxunrec co for gi ncral e or|nirate* purposes

l'.V,_\-ll .V.lfC.V

i inteiest pavable quarterly v. rare eqn.i! to three month inth I.IMOR plus I 3 72'--.

r financial in.!i:ui:i;n. pursuant to which wc

i costs Hallo: any lo.it:-. undei Hie n-iiu loan years (ilie *-ie:o Loans) lhe 5-Yeai Loans aie uiif.tai:ii:ng Loans undei the n im -nan

ii negiitiee covenant, including ,i negative

■ . oe c nanl. alTlilitaliM env ellallls and ( v e '11.

i.iting In aditittnii the temt lon agieentcni

ii excess of t 50 I [:-'J. until our sre.n; ratings

During I cbrti.il> 2d I-5 in connection with the Wireless 1 riisaciiou we issued » billion aggie;:.!', laic note* Tlie Wu_(vn Noies eecie issued in Iwo separate scnes wilh S2 5 billion Je Kebiu.ns I'ebntaiy 21 2025 T he Veil.-.in Notes beai inteiest al a floating rate, whu fi will be reset quarter!y v. in arieari bei'inrimg May 21 2.014 (sec Noli 2) TTie ciglit-vcal Ven.'i.ri not.'s bear int.iesr :ii a tlo.n LIBOR plus I 22 2%. anil the eleven-year Ven/on notes beai inleresl at a i'lualmg rare equal 10 liner-

T.'rr.Lv,,; .U;,

Dunng t'cinher 2013. we entered into a lenn loan a:!icemein with a gn-np ol m.u drew Sc i. billion to mi a in in par. lire Wireless Tiarisae'.ion and le. pay iratnacti. agrectnenl have a maturity id llncc years and the olher hall'have a maiunty ot f:v provide lui the partial amortization ot pnncipai dunng llu lasi two years thai tbe agteenie r.t beai interest at lluating rales The lenn loan ngreemini eontains cut. pledge coeenn1. a mcrcci m siniii.i: ti.ins.is.lnMi covenari! and an accounting ehar.i ot default that are customary tor iomp.mics inaiinaiiiing an inv estinent ^r.ule cici requires us io maintain a leverage ratio (.is defined in the term loan a;:tefmcnii not

.nc Nctcs di.e l^!sil5 1

s We.c u-.cd I'.n the

nd were repaid In addition, during Jur

I,d were-repaid

1 (.01111r1ar11r.1i

Dining March 21)13 we issued S" * billion -gieg.ite pr: resiilmig in sash proceeds of approximately Si) 5 billion

Dnriii" Apnl :C\?. SI Zul 3 50 < billion ol ■: 3

r,:ig Srptcrnbri 201 t. we entered mio a in 1 t) billmn brni.re c sin agiectm ul prov ided us with the ability to borrow up to Jd I aie.l li.insactu-ii cost, lolloveir.g tin Sipternber 20! 1 issu. ceineiit vv.,.- tedu.ed in i I 2 i! billion Hollowing the etleeiiven. cement was tcrmin.iieei in accuidar.re w:ih lis lenns .md as ■ nine ami (expciisel net during ihe foiuili qnaitci of .Mil i

tin- bndgc ■ the budge

On Nio. -mber 2 .Hi I 2 we announced ihc cotrirtiem emen: ot a lender rdler (the 1 en.lei (ijfeii i-> puiehass- lot cash any .ind .ill ::;

tin outstanding SI 25 biilnu, aggregate pnncipai amun: .ifS ^li5% Wu/on t ominuniiaii:is Nin*i. 2ti-'- l:t lhe feiniti (tile:

tha: was completed Moe ember '> 2012. SU ') billion aggregate principal amounl ol ihc runes was purchased rt a price ol I l i, ot

:!.e principal amuun: oi the noies (s, c Karly Debt Redemption ami f );!ier C.isS j imi <0 ~.s billic: pnnciji.il an ol llu note -

During Novcnihet 2012. wc issued $4 5 hillion aggregate principal amount ot-tixed rale notes resulting in cast) proceeds nl~. approximately S-1 4 7 billion nrl of discounts and issuance costs The issuances consisted ol the following SI t) billion ot U 70'/; Notes due 2015 SO 5 billion nf I 10% Noies due 2017. SI 75 billion of 2 45% Notes due 2022 and SI 25 billion ot ?. H5% Nuns due 2042 Dunng December 2012. ihc nei proceeds were used io redeem SO 7 billion of ihc S2 0 billion of 8 75% Noies due No* ember 201 h ai a redemption pnee of 140 2% of the pnncipai amounl of ihe noies (see 'Party Debt Redemption and Other Costs"). SO 75 billion ol 4 15% Notes due I'eliiuaiv 2011 ,n a redemptiun price of 100 7% ot the principal amount ofthe notes and cciiain telephone subsidiary debt dee Telephone and Other Sithsidiaiy Debt"j. a.s well as for the Tcndct OfTfi and oihei geneial coiporate purposes Any accrued and unpaid interest was paid to the date ot redemption

In addition, dunng 2012 uv utilised SO 2 billion under fixed rate vendor finane nig foe ilities - - ■. -

Verizon Wireless Notes Payable and Other

Verizon Wireless Capital 1.1.C. a wholly-owned subsidiary nf Vcn/on Wireless, is a limited liability company formed undei the taws of Delaware on December 7, 2001 as a special purpose finance subsidiary tu facilitate lhe oflcnng ol debt secunlies of Verizon Wireless hy acting as co-issuci Olher than Ihe financing activities as a co-issuer ol Venzon Wireless indebtedness. Ven/on Wueless Capital l.l.C has no material assets, operations or revenues Verizon Wrrcle.ss is jointly and scv erally liable with Verizon Wireless (_ apiial LLC foi co-issued notes

20/3

During November 201 3, SI 25 billion of 7 375V. Venzon Wueless Noies and Ml 2 billion ol b 50% Verizon Wildest Notes matured and were repaid Also during November 20IV Verizon Wueless redeemed S3 5 billion ol 5 55% Noies. due 1'ebnury 1, 20)4 at a redemption pnee ot 10) % ofthe principal amount ol the noies Any act rued and unpaid interest was paid to lhe date ot ledeinption

201:

During Kehniary 2012 SU X biiJn.ru of 5 25% Vciizon Wireless Nore* matured and were icpatd D-jnug July 2012. SO i< billion of 7 0% Venzon Wireless Notes matured and were repaid

Telephone and Other Subsidiary Debt

Dunng May 2013 SO 1 billion of 7 0% Ven70ii New Yoile Inc Debentures matured and weic repaid Dunng June 2013. JO 1 billion of 7 0% Verizon New York Inc Debentures matured and wen: repaid In addition, dunng June 2013 we ledeemed SO 25 billion uf ' 1 5% Ven7oii Maryland LLC IX-benl'.ires due May 202 3 al a redemption puce of 100% of the pnncipai amount oi the debentures Dunng Ociobci 2013 SO 3 billion of 1 75V. Venzon New Lriglaud Inc Debentures maluied and were lepaul During Novembtti 2013. wc redeemed SO 3 billion nl 6 70% Verizon New York Inc Debentures, due Nnvcinhet 2023 at a redemption pure of 100% ofthe pnncipai amount of the debentures During IX'e ember 2 ill J. wc redeemed S<J 2 hnlnin of 7 0% Ven/on New York Inc Debentures due December 2013 al a redemption price of 1(10'/. of the piiiicip.il amounl ol the debentures and S20 million of 7 0% Venzon Delaware LLC Debentures, due December 202 3 at a redemption pnee of 100% ofthe principal amnum of the debentures Any seemed and unpaid inteiest was paid lo the datr of icdempiioti

2 ut:

During January 2012 SI 0 billion of 5.875% Verizon New Jersey Inc Debentures matured and wete repaid Dunng December 2012. we redeemed the SI 0 billion of 4 625% Verizon Virginia LLC Debcnlures Sene» A. due March 2»I3 at a redemption pnee of 101 1% of the pnncipai amount of the debentures Any accrued and unpaid interest was paid to the date of redemption

In addition, dunng 2012, vanous Telephone and Othet Subsidiary Debcnlures totaling approximately SO 2 billion were repaid and anv accrued and unpaid interest was paid to Ihc dale of payment

Early IW-bt Krdcmplian anil Other Casts

Dun tig November 2012, we recorded debi redemption cosls ol SO ft billton in connection with the purchase ol SO 9 billion ol the S I 25 billion of 8 95% Ven/on Communications Notes' due 2039 in a cash tender oiler

Dunng December 2012, vie recorded debt redemption costs of SO 3 billion in connection with the early redemption of SO 7 billion of ihe S2 0 billion of 8.75% Venzon Comrnunicaiinns Notes due 2018, SI 0 billion of 4 625% Verizon Virginia LLC Debentures, Series A, due March 2013 and SO 75 billion of 4.35% Venzon Communications Notes due February 2013. a> well as SO 3 billion of other costs

Guarantees

Wc guarantee the debentures and first mortgage bonds nf our operating telephone company suhsidiancs As of December 3], 2013, S3 I billion principal amount of these obligations remain outstanding Each guarantee will remain in place for the life ofthe obligation unless terminated pursuant to its terms, including the operating telephone company no longer being a wholly-owned subsidiary of Venzon

Wc also guarantee the debt obligations of GTE Corporation that were issued and outstanding pnor to July 1, 2003 As of December 31,2013, St 7 billion principal amount of these obligations remain outstanding.

Debt Cavenants

Wc and our consolidated subsidiaries a;

n compliance wilh all debt covenants

Dcnx-ative contracts arc valued using models based on readily observable market parameters for all substantia) terms of our denvativc contracts and thus arc classified within Level 2 We use mid-market pnetng for fair value measurements of our derivative instruments Our derivative instruments arc recorded on a gross basis

Wc recognize transfers between levels of the fair value hierarchy as of ihc end of ihc reporting penod There were no transfers within the fan value hierarchy dunng 2013

■ quoted price

Maturities of Loig-Tvrm Debt

Mainlines of long-term debt outstanding at December 31. 201 3 are is follows

2014 2015

2.7-1(1 I O.H IX

Fair Value of Slwri-icrin and Lang-i The lair value of oui debi i.s delenmi is a l.evci 1 measurement as weli ; diseouuied at torrent i.ites which are leases was as fellows

let hods un lu.ling quoted pm es I'm nlc i nts lhe tan value of oui shi.it-tciri: ami

and m.iiunlies which ■rid Inline c.i-h (lows icbi eve ludirie i .ipit.il

Amounl fair Value

s v.i.:'is j, io.'.?:¹

20IX Hie tea It

r Value Measurements and Kmaurial Insti unients

At Deccmbei 3 I

Short- ami loiig-ieim delit excluding capital loses Me I iv alive ln-.li uni.Dts

.iscdDeeeiubei3l

flic* following table ]'J. 2013

We have entered into domestic interest rate swaps to a fixed rates ar.d pay vanable rates based un 1.IHOK. i designate e. as Ijii s slue hedges and hedge ag.unsi cl.-a at lair v alue on no: consolidated ha lam e sheets as assc

;es in'tlie lai: value ol and liabilities

and variable raie debi We principalis receive lee tease to inn rest i xpe rise T lusc sw aps an-b: portfolio We record the m'criei rale swaps

Cash and cash rqinviilmis Fixed income secuniie*-

Miuii-lemi ii Lqiinj s

Othei ass. IS

hirwanl interest rate s 1'ixrd income secuntii

VIVO 3K7

-.filled /V- a result ol llic n (rhe.-, net operatinj- ai

Duiiiij! 2012. inteiest rate- swaps with a notional value of S5 S hillion we proceeds ol SU 7 billion, including accrued interest which is included statement ol cash flows The fan value basis adiusiuieni lo tin underlyim- debt iiiMiunicnt.s w- recognized into cunings as j reduction of Inlcresi expense over the remaining lives ol the underlying debt ohligaiions Uutiiig the second quartet of '.?0I1 inuies; rtitt swaps wnh a notional value of M 25 billion matured ami tin impact io oui consolidate d tinam lal si a:, mcnts was nol matenal IJunng the thud quarter ol 201* we entered ml., itiictcst r-.te swaps wirii a ioi.,1 ■-...ti.m.il value .-: SI > billion Ai l.-ccemhi: 31, 2013 and 2012 lire fan value ol ifns. intctiM late swaps was not male Mai Al Dice mbei 31 Jtlll the lelal iioiiott.il amounl ol these interesi rale .swaps was 51 X billion llu. ine Ih . lis e portion ol these inlet, st t.itc swaps was no: iti.neiial ai nerrruhri il.?t)l 1

Liabilities

(Hirer liabiiiti

r: future interesi rate changes, .luring ihe lourth qua

■f 52 t> Million Vi de-Mgii.ire.l these e tin i, r. a-

mini U 2013

quoted pnecs in active market. I«u nlciiiicai assets hi liabilities

ohsert able input; oilier lhan r:ooled prices in active markets lor ideniic.il assets and liabilities no oilers able pjujiijc inputs in the market

n active markets

billion ot [jiuish Pound Sicdir- and I'uro dt nominated debi into IJ S dollais ami io lix our Inline interest am in U "s dollnis as well as to mitigate the impact ol foreign cuneney imnstntuui gains or losses A potiion ol rei ogm/ed ir. t Uhcr comprehensivc income was reclassified lo t Uher income and re»perise). net io oils,-: ibe il c:iiicuc\ ir.msai lion jf.t:ii or loss on the unde lis del:! ohiig.ili.-ris The Ian value o! tile .-ill sl.md lire, ova;.

i.Vecmbei "i I 201 3 or December 'I 2012 Dunng 21)1 3 and 2012 the gam: with respect n, ibeve swaps vctc n

nteii-i

ir (■ i

wap, d-stf nated ,

tunic .pai bonds Wr u-e qitoicd pn

.il a- 1 . eel 1 for all .-rl.er tix.d ir }iiicing ;i suiting in these di bl mi

Concentrations of Credit Risk

. ["in.111 ci a I in si mine his thai snhjcci us to concentrations of credit risk consul pnmanly of icinpoiaiy cash in vestments, short-icrm .inJ lulig-lcim invctlmcnls Hade receivables." certain notes receiv able, including lease receivahlc's. and derivativeout met:, "Our policy is to deposit our temporary cash investments with major financial institutions Counterparties to our denvalts c cotiliacl* are also major financial institutions with whom we have negotiated derivatives agreements (ISDA master agrccmenij and credit support inn ex agreements which piov ide rules for collateral exchange Wc generally apply coll atctnli7.ed atrangemcnls with our counterparties for uncleared derivatives to mitigate credit nsfc We may enter into sw-aps on an uiicollarcralized basis in certain circumstances While we may be exposed lo credit losses due to the nonperformance ol our counterparties, we consider ihc nsk remote and do nol expect the selilemeru of these transactions lo haie a material effect on our results of operations or financial condition

As oi Deecinhei 3 1, 2011, unrecognized compensation expense n laud to the unvested pott ion nl Venzon s RSUs and PSUs was approximately $1) 4 billion and is expected to he recognised ovei appioximately two years

Tile RSUs granted in 2013 and 2012 have weighted-average giatit-daie lair values ol $47 96".ind S3* f-7 per unit, respectively " ' -■ ■ Dunng 2013, 2012 and 201 I, we paid S I 1 billion, SO b hillion and SO 7 billion, rcspcclively. lo settle RSUs and PSUs classified as liability awards

sltick-Based Compensanu-i

I'cuzitn Couununit 'Hioih /ong-'/tnn h^mtivv /'Ion

The Ven/on CnuiiTiunicaunns Inc Long-Term Incentive I'lan (.the I'lan) pcinuu lhe granting of .stock options slock appreciation rights, restricted Slock, resinned ilock units, perloriiur.ee shares, pcilonnance slock units and other awards 1 he maximum number nf shares available for awards from the Plan is 11⁰ d million shares

Kc*lri< led Slot k L/ij/.t

The I'lan provides for grants ol Restncted Slock Units (RSIM ihal generally vest at the end ofthe thud yeat alter the grain The RSUs are classified as equity awards because the RSUs will be pjid in Venzon common stock upon vesting The RSU equity awaids are measured using Ihe gram date fan value of Ven/on common slock and arc not re-measured at the end ot each reporting period Div idend cquiv alent units aie also paid lo participants at ihe time the RSU awaid is paid, and in the same piopoition as theft SU award

Verformttm e Stork Vnits

The Plan also piov ides for grants of Performance Slock Units (PSUs) that geiieiallj vest ai the end of the thud year abet the giant As defined by the Man. llic Human Rcsouiect Committee of tbe Hoard ol Director- determine lhe nutnhet of l'Sli's u participant cams based on ihc extent to which Ihe corresponding pciformancr coals hair been achieved over llic ihrce-ycai performance cycle The PSUs are classilied as liability awards because thr PSU award* are paid in cash upon vesting lhe PSU award liability is mcas-uicri at it* fair value at the end of each reporting period and. therefore will fluctuate based em lhe price ol Venzon common siock as well as pcrlomtance relative to the targets Dividend equivalent units are also paid to participants at the time that the I'SU award is determined and paid, and in the same proportion as the PSU award The granted and cancelled activity for the PSU award includes adjustments for the performance goals achieved

Ttie following table summan/cs Verizon s Restncted Stock Unit and Performance Slock Unn uciiv ny.

(shares in thousands)

Outstanding January 1.2011 Granted

Pa) mem.s

Cancel Icd/Torf'eiicd Outstanding December 31.2011 Granted Paj menu

Cance I led/Forfeit ed Outstanding December 31.2012 Granted Payments

Canctllcd/Forfelte* Outstanding December 31,2013

Restricted Stock Units

20 923 0.667 (7 nfiDj

19.83b 6,350 (7,369)

18 669 4,950

16,193

Performance Stuck Units

.12.380 I0.34S (12 117) (2,977)

27,(114 20,537 («.499) (1*9)

39 463 7,470 (22,703)

23,724

ue Lxpeciet! voJaiiin;- was period equal lo the VARs

t-lmpluvcf itrnrfits

We maintain non-contributory defined r health can and lite imur.m.c p!.,:.- tor , include a limn on our sbre »l tfn cosi I, and other poMrclirerucrii ben. (its oji

I'ciisi-jii and Otlic i Postieliierm-nl Heme fits

P<(rwv'rr and ollui poelte l.(c«rerrl bcitcfrls lL> vfo.liticatiori; m ber.etiC riavi- b.e:i naiitamc. :i.in.;gei:ieii1 plans flu lolb-u,,, \M_L. :;,.

I'enzon Wue/eil' Long-Term Incentive Plan

The Venzon Wire lets Long-Term Incentive Plan (the Wireless Plan) provides compensation opportunities to eligible employees of Verizon Wireless (the Partnership). Under the Wireless Plan, Value Appreciation Rights (VARs) were granted to eligible employees As of December 31,2013. all VARs were fully \ e.sted We have nol granted new VARi since 2004

The loliowmg tabic si

;ng 201 i

VARs reflect the chungc in (he value ofthe Partnership, as defined in the Wireless Plan Similar to slock options, the valuation is determined using a Black-Scholcs model Once VARs become vested, employees can cacimsc their VARs and receive a payment that is equal tu the difference between the VAK pnee on the date of grant and the VAR pnee on the dale of exercise, less applicable laxes All outstanding VARs are fully exercisable and have a maximum icnn of HI yean All VARs were granted at a pnee equal to lhe estimated fair v alue of the Partnership as dc lined in lire Wueless Plan ai the date of ihc grant

used in iln- m.n-k-Sclmles i

i ihe U S Treasury yield i i.rve m ertevi a: tbe nine .i:n-tij| ami implied v-l at i I im ot publicly traded

Lxpcrte.d term lin years) l:\prried volatilitv-

_L latum fsiirh.'s ae IM ll

The risk-free rate is based o based on a blend o| tb,: i: expected hie ending on the

Crunl-Date Fair Value

Outstanding light- Jjr

1 1 5f.9 (3.303)

J):e fo.'lcnii;:g table icrrur-.n

lis

(shares in thousands)

:.201 I

ii.scd

1(1 ill 1110 I j h;i 1.1 «o 1 * HI

n nt

(l."io)

2 H47

Caneelled/Fortetted Ouisianding lights December 3 1 2011 Cxcrcised . Tyn. cJIcd.Toif. itt-d Ihitsi.tnding nghts December j i 2012 llsrrnsed

Cancelled/forfeited

Outstanding rights. December 1 1. 2011

income .iimbntahle to Verizon was Siotk l)pim<

c et no les,

The Plan ptovidcs lo, ,;_tai_s ,.f _sn, value u: Venzon cotninon stock n siaping at the date »I the gram \vr

Weighted-Average Eiercisc

Stock Options Price

44 25 35 00 51 06

56.J44 (7.104) 121,9211

:i.x\>)

(7.4^7) ll7.0.v-lt

J s | K

12 2S1)

(n:j

The following table summarizes Venzon s stock option activity

(shares in thousands)

Outstanding, January 1,201 I Kxcrcised

34 f.y i-l K5 34 4-* 34.31

Cancellcd/Forfciicd Oiilslandtng. Dei ember 31.201 1 Lxeieised

Cancelled/Forfeited Outstanding, Decembel 31,2012 I'.sncised

nber ? I 2(H3 20i; l.ition abcnit Veil/or

nd 201 I veer s siocie optio

Ciincelled'Turliiled Outstanding, ll. eemtici '1.2013

Mainline a-ul D.cembel

Weij-litcd-Avt-iage Remaining Life (years)

Ml slot V. options outstanding .u D-.ce

.Stock Optiui

(in thousand

1 he fullowinc lablc saiiiiruii/c- ii-,fe:i

Wcighiid-Avetape

9K3

0 I

S30 00-39 99 40 OO-!'! 99 Total

14.15

: retirees and limr dcpclleLne: win; h .in both certain result and luluie icluces Ir. accoidain; ; evpeilsc-s incliiile pension and bctielil related e

total intrinsic v alue for iloek option* outstanding as of Decemhei 11, 20 M is n;»i -significant T h>- loial intrinsic value oi'sioek ins exercised was tun sigmlicant in 2»1 3 and lhe asso. latcd tax benefits were not significant in 201 1 ?UI2 and 2tM I The mt of cash received from lhe exercise of siock upliur.s was 50 1 billion in 2013. 50 3 billion in 2012 and SO 2 billion in 201 I l ve-as no stock option expense for 2013 2012 and 201 1

urilr!

j.o.wr.lmg polny lor pen. ■ 1/or chaigcs based on aeli.a

unipiions including piojccted discouni rates and an estimated iciuiu on plan .iv.cl: These cstnn.iie- .in- updated in the !<n aitei Ki refiecl aciual return on plan J^ts .md updated actuarial a-nim-i'ions 1 |-.c .:d|i.simer,; r.-co--ni/n: in the inc.

many ol our . r.-ifrl.-i ut are sub;-, c; '" . o})i < in < bargairn/ic' agn

mm tun. to time and wc iii.iv al-o ]ieuoduallv .-.men:) the inm-h;

e ben.lit cosi.- as well .r. the rn-li: obli- s plan a-s,n.rd.ds-,

Obligations and Funded Statu*

At December 31.

Change m Benefit Obligations

Beginning of} car Service *■<>« Intents!

Plan amendments Actuanal (gaiiijluss ncl Benefits paid

Cunailment and teuninaiinn benefiis Annuity puirhasc Settlements paid Lnd ofyear

Change m Plan AsM-b Beg inning ol ) ear Actual rc'um on plan assets Company coiitiiliulioiis Bcncfnspaid Sertlemeols paid Annuity puichase find nfy«Mr

Funded Status

tiid nf ><ar

3^9 1.284

(l.S'bl 1.402

(I 744)

(dollars in millions) Pension Health Car e and Life

» 2 (,773 S 30.582 S 26,H44 S 27 2M

(149) (2.327) (1.777)

6 074 (2.715)

318 1,0f 5 (119) (3.576) (1,520)

(K.352) (7tir.)

2,(57

51h

1.360 (1.510)

S 26.773 S 23,042 S 2o.S44

I.4C1

11.744,

S IS.2ft: S 24.1 10 2,126 107 3.71'.' (1,777) (2.715)

(««<») (7KO)

(H.352)

$ 17,111 S IH.2M2

$ t^.^Jl) S (W---91) S (19,989) S (24 1*7)

<d,illaisu<i million tj Health Care and I.lie

The accumulated benefit obligation foi all defined benefit pension plans was $22 9 billion and $26 5 billion at Deceiiilw.il 1.

-.2013 and 2012. respectively -.- -' ■ "

(dollars in millions) 2013 2012

$ 22.610 $ 2(1.151 22,492 26.081 K.350 17.623

Infoimaiiun for pension plans with an accumulated benefit obligation in excess of plan assets follows

At December 3 I

Prnpeeted benefit obligation Accumulated benefit obligation Fan value of plan assets

Net Pm iodic CeiH

The following table summaries the hcncfit (income) cost related to our pension and postretiremen! health care and life insurance plans

Idoilais in millions)

Pension Health Care and Liie

Years fill Jed December 11.

Service cost

063) I 421

(1,245) (1 795) 1,002 I 4J.0

(1 97«.) (143) (171)

I 590 1.095 i,2«4

Amortization of prior service cost (.credit) Siihtnt.il

1,023 1,383 (3 939) 1262

1,500 1 7X7

Expected return on plan assets

Interest cost

Subtotal

Kcmeasurernc.nl (gain) loss, ncl Net periodic benrtii (income) cosi Curtailment and termination benefits Total

S (2.3011) 5 5.553 $4 13') S (2,966) S 2.645

Other pre-tax changes in plan asscis and benefit obligations tecognizcd in oihei comprehensive (income) Im

Dunng 2012, we reached agreements wnh (he Communications Workers of America and the International Brotherhood of Electrical Workers on new, three .year contracts that cover approximately 43,000 Wireline employees This resulted in the adoption of plan amendments which will resull in lower other postretiremen! benefit costs m 201.3 and beyond

At DLceiiibcr 3 I.

Amounts rccogni/cd on the halance sheet

S'diicurrent assets Current liabilities Noiiciuicnl liabilities Toial

.Amounts recognized id Accumulated Other Comprrhensis c Income (Pre-tai)

Pnor Service Benefit (Cost) Total

Reg inning in 2013, as a rcs.ilt ol federal health care reform. V'enjnn _t:contiacts with a Medicare Part U plan on a group hasistiv piovide pee

<76n) (21421)

I 339 $ 236 S

(137) (12')) (710)

(6,123) (t( 59X) (19.279)

S (5,921) $(8.491) $(19,989) $(24 187)

$ (2,120) S (2.247)

$ (Z.I20) $ (2 2471

i longer files lor the Retiree Drug Subsidy (RDS) and instead itnpuon drug hcuetiii to Medicare eligible tr

(dollars in millions) Health Care and Life

Al December 31

S (149) i IK3

Prior serv tec cosi

Reversal ol amortization items

Prior service cosi Total recognized in other comprehensive (income) loss (pre-tax)

$ (ISS) j 1K4 S 121 S (1.737)

The estimated pnni service cost for the defined benefit pension plan thai will be amortized from Accumulated other comprehensive income (loss) mio net periodic henefil cost ovct lhe ne.xi fisc al year is not significant The estimated pnor service etui tbi the defined henefil posiietiicmeiit plan-, ihat will be amortized finm Accumulated orher comprehensive income into net periodic benefit (income) cosi over the next liseal year is SO 3 billion

Assumptions

The weigh tod-average assumptions used in determining benefit obligations follow

HealrhCarc and Life

At December 31

Discount Rale

Rate of compensation intieanes

5.00% 3.(10

4.20% 3 00

5 00 V.

N/A

4.20% N/A

The weigh ted-average assumptions used in determining net periodic cost foi low-

Health Care and Life

Pension Plans

The fair values for the pension plans by asset category al December 31. 2013 arc as follows

v at December H. 2012 are a

Ai December 31.

Discount Rale

Expected return on plan assets Rate of compensation increases

.! trend

. ioll.«

In order to project the long-term targei investment return foi the total maioi asset class over ihe subsequent Kbyeai penud Those estimates market interest rates and valuation levels, ronsrr.sus earnings eipccia ihc aggregate icre.iw Icn tt-.e priiMo.n tr.i'.i tbe pr.-ievte-.l ivinir, cu

aimed health c

Healthcare cosi irend talc assumed loi next year Rate to which cost nend rcie gradualli declines Vear the rate reaches lhe level n is assumed lo remain thereafter

A oiic-peiceiitage point . hange in the assumed he .iltl: i aie i «st t

4.20% 5 00% 5 75% 4.20% 5 00% 5 75% 7.50 7 50 8 00 5.60 7 00 6 00 3 00 100 3 00 N/A N/A N/A

portfolio, estimates are prepared for the total return of each aie based on a combination nl factors including the current lions and hisioiic.il loni'-ienn nsk premiums lo determine It indivi.ia.il .war. chv, is -,|-.ci\ w.-igliieet .■voiding lis the

6 50% 7 (Kj'y,

4 75 5 00

2020 2016

Asset Category

Cash and cash equivalents Fquily securities Fixed income secunlies

.rids

US 'Irc-jMinc-s and agent

Corporate bonds

Iriic'itiiiiioiial b

Othet

Rea! estate Othei

Pin aie equity

Hedge funds "Lola I

The lair values fo,

millions) Level 3

(dollars i Total Level 1 Level 2

968 4,200

40a

1,<*42 I.I9(>

2.579

l.MOn S 17,111

Total Level I Level 2 Lfvfl.l

1 5^ 1.125

nne-Pcicciitage Point

Efleet on 201 3 sen ice and interest cost

filled mi posiietirement benefit obirgallon as ot'IVcenibei 3 I 3'! I 3 Plan Asst»

His lone ally, oui peiilfoliu stmtegy emphasized a long-term equity both public and pnv aie inv esimenis In an cfloit in (educe ihe nsk o

«s- have shitted oui -.trail £> to one lha: ■ ■ mors liability citvrn win pav merits but resull m lower asset returns We irilend lo inline li.C

inirease (releind to as liability hedging) wnh i!ie goal in reduce 1 iicneljcianc-s Bmli acme anil passive tr.a n tig erne iT, .ippiti.irhcs aie ■ other factors Our diversification ar.d nsl control processes sen e io r

(dollats in null si

lnrrfasr Decrease

~S iTi S (150)

2 53^u (2 OHoi

Mentation significant global divctsilicaiion and the use of oui portfolio strategy and better align assets wnh liabilities ' i as), ilovvs Immii iiivi.stnirnts' bctlcr mal-h proje ted beri''ti1

e t;sk ol under (undine li< the plan and lis participants and .eel depend .nt: on petteived niaikei eili.-ier.eies and vaiintis mmi/c the concentration of risk

Cash and cash eqin

Fixed n

US Treasiuiesaiicij Corporate bonds International bonds Othei

Real csiaic

Ihhci

Pin ate equity Hedge funds

lolal

cstaie. hedge

Wi.il

■ ih.-

sill, all

D.i.

which allows us to mrei project.'d benelits paymcnis while lakiri lor plan asscis is dengiied Sei ihal 7H*» ot rln ;is^ci> have ihe nb l.otupr.sed ol public equities, pnv.uc equ; lahililv hedging

V lied'tl

mil dll.

ol a

legy

o ;onsii!erjiioii risk and return The cuncni target alloeatioT e ot achieving a return in excess ol the growth iri li.ibihtie

!s and eniiri'iiig debt I and J0"i- cl the assets an meestsil a'

s jlluwiiioii e. ill sli.f; as (eirdei! M.lius nrprcees to a lugln p;rio.!ic::\ i:- er.suie tire; are lti l.ne w^!, |._u1d nb:eciiv«s

gmfli a.:l , or,, eiltrtitmns of risk, in lenns oi sec tm in,1u-li\

Peiisioii and healthcare and life [dans assets do nut include <■■(■.ri11 ic.

Corporate Bonn's

The following is a 1cconciluUiv.11 significant nnubseivablc inputs

Balance 41 January 1.21)12 \ctual gain on plan as:ets Pi tic fuses and sales Transfers in

Balance ai December i 1. 201 2 Actual gain on plan assets Pure bases and sales Transfers in (out) Balance Jl ISVeenihci .11,101.1

Health ('ttrr and Life I'lan,

The (.in values fix lhe mhci pnsIiLiiicm.nl bene

Asicf Category

Cash and cash equivalents

Fixei/it

US Treasuries and agencies

Cotporaic bonds

International bonds

Cither Total

The lair values for ihc oilier poslrctiieinciil benefit plans bv a

AssM Category

Cash and cash equivalents Equity securities, Fixed income secunlies

US Treasuries and agencies

Corporate bonds

International bonds

Other Total

Real Estate

(I4|

(dollars in million^)

PriMtt Hedge

Equity Funds Total

1224) (1 K.2)

190 5. 2.01H S 5.039 S 55S S 7.81 I

12 Ml 674 84 851

Ib2

(I.i) (A15) (1,712) (124) (2,184)

(33) - (39) 678 606

$ 1.784 1 .1,942 5 1,196 S 7.H84

y at Decmh. i 31.2013

225 854

(dollats in millions) Level 2 Level 3

[ 237 2.178

S 3,053 5, I.5H S 1.520 S

Total Level 1

y .il December 3 1.201 2

S. 2 657 S I 1K0 \

(dollars in millions) Level 2 Level 3

icgoncs as well as the valuation methodologies and inputs used lo dciciiiuric the '-

of investment grade money t classified within level 1 oi

I hc InllowiiiK aie general desLiiplions ol'ass'el c fan value of each majoi category of assets

Cash and cash equivalents include short-lenn investment kinds, primarily in diveisified portfolio mart cl instruments and aie valued using quoted market prices 01 ruber valuation methods and thus;

Equity securities arc investments in common Muck of dome site and international coqioralions in a vanely of industty sectors, and are valued pnrnaiitv using quoted market prices or other valuation methods and ill us are classified within Level 1 or Lev el 2

ind residential real c ned hv using incom n rales financial condition:

Fixed income securities include If S Treasuries and agencies, debt obligations of foreign governments and domestic and foreign corporations fixed income also includes investments in cnllaleialized mortgage obligations mortgage hacked securities and inteiest tatc swaps Ihc fair value of fixed income securities is based on observable puces for identical or comparable assets adjusted using benchmark curves sector grouping, matrix pneing bioker/dealcr quotes and issuer spreads and thus is classified wiilnn Level 1 or Level 2

projec

Rea! estate investments include those in limited partnerships ihat ii:vc»i in vanous commei both domestically and internationally The Ian values of real estate asscis aie typically dc approaches or a comparable sales approach, taking mio consideration discount and capuali. market conditions and the status ofthe Capital markets and thus aie classified within Level i

Pnvaic emmy inv cstmcnts include ihosc in limned partnerships ihat invest in operating companies that are nol publicly traded on a stock exchange Investment strategics in private equity include lev eiaged buy outs, ventuie capital, distressed investments and investments in natural resources These investments aie valued using inputs such a.s trading multiples of compilable public .sceuiities. merger and acquisition ailivtty and pnciug data finm the most recent equity financing taking into consideration i(liquidity. and lhu« are classified within Level 3

Hedge timd in vest merits inc liule those seeking to maximize absolute icrums using a broad range ol siialegn-s to enharue returns and piovide additional diversification The tan values ul hedge funds arc estimated using net assel value pc: share (N'\V) ol the investments Vcr-.mn ha> the ability to icdcem these investments ai NAV uiihtn Ihc neai term and thus ate classilicd wnhm Level 2 Investments ihat cannot be redeemed in the neat term aie classified within Level ¹

Cash Flows

In 2013, contributions to out qualified pension plans were nol matenal Also in 2013 we cnninhuied $0 I billion to our nonqualified pension plans and J I 4 billion to otu oihei positeiircmeni benefit plans We anticipate approximately J I 2 billion in contiibuiioiis lo uur qualified pension pi.ins, 10 2 billion lu our nonqualified pension plans and il 4 billion to our other postictitcmcnt benefit plans in 2014

Estimated Future Benefit Payments

Vear

The benefit payments to retirees arc expected to be paid as follows

Pensian Benefits

(dollars in millions)

Health Care and Life

2011 S 2.980 J " 1,5X2

2013 2.2SO 1.574

I 742 l,53K
1.606 1,506

201R 1.377 1,474

2019-2023 6.712 h.846

Savings Plan and Employee Slock Ownership Plans

Wc maintain four leveraged employee stock ownership plans (ESOP) Only one plan currently has unallocated shares We match a certain percentage of eligible employee coninhutiont to the savings plans with shares of our common slock Irom this ESOP Al December 31, 2013, the number of unallocated and allocated shares nf common Slock in this ESOP was 163 thousand and 62 million, respectively All leveraged ESOP shares arc included in earnings per shate compulations

Total savings plan costs were $1 0 billion in 2013 and $0 7 billion in 2012 and 2011, respectively

Pension Annuitization

On October 17, 20)2, wc, along with our subsidiary Venzon Investment Management Corp . and Fiduciary Counselors Inc , as independent fiduciary ofthe Venzon Management Pension Plan (the Plan), entered into a definitive purchase agreement with The Prudential Insurance Company of Amenca (Prudential) and Prudential Financial. Inc pursuant io which the Plan would purchase a single premium group annuity contract from Prudential

On December 10, 2012. upon issuance ofthe group annuity contract by Prudential Prudential irrevocably assumed the obligation lo make future annuity payments to approximately 4 1 000 Venzon management retirees who hegan receiving pension payments from the Plan prior to January 1, 2010 The amounl of each retiree's annuity payment equals the amount of such individual's pension benefit In add ii ion the group annuity contract is intended lo replicate the same lights to future payments, such »s siux tviit benefits that are cunenilv olfeied bv tin Plan

The components of income before (provision) benefit for income taxes are as follows

Yean Ended December 31.

Domestic

Foreign

Toial

(dollar* in millions)

2013 2012 2011

S 28,833 S 9.31b S 9,724

444 581 759

5 29,277 S 9 897 S I0.4K3

.'012

We contributed appruxtmni transaction so thai die I'lan

S2 r. billio:i to ihe Plan between Sepi nil ing peiccn'.igi- would not di c ieasc

I 2D12 and Dcecvnbe

suit ot Ihc transaction

e loi posiemployrneui he rut

s. g.nnmf .vfW.it

Severance Hrnrfils

The following table accounting siandnn; r

201 1 2012 2U13

(531) (3S1)

ai loidant e with lhe

(dollats, m millions)

h.-i hud ol is-.ii

l-l) 5 1113

}? 101(1

(i.) 757

Total Defence! Fed eta!

5 (1«7) i 2.M 1 |.il

(SU) ri-i 2*.

21)1 1 I'. ."in

292 50S

5,(11.11 i^tr.U) 27(1

h Hi (.'.xj

717 (■llll) (-li?')

Sevenince. Pension mid 8,'nejil (Ciedil»i I 'lunges

Dunng 201 >. wc recorded nd pre-tax severance pension and benefits credits o] approximately So 2 billion primarily im oui pension and puMictiremeni plans m ao oiiian;r wnl; om arc.uniting policy io ie. njmi.'e luarial gatnt and ]>is>es in the year in which ihey occur The credits were |iiunaiily dnven by an increase in oui disce-urn lats assumption «>■.d (e> determine ihe curient year liabilities (mm a weighted-overage ol 4 2*.-; ai December 3 1. 2012 io a weighted-a. eui-e of * 0% at IX-eembvr 31 201 j (14 } billion) lower lhan assnmi if reliiee medical costs _jnd other assumption adjustments ;S ! -1 lo limn) ami tne di Herein e b. iw ecu our estimated return on assets ol 7 5"_t. December 11 J1K2 and our actual relent on j-.sets o! S o% ai DeCcmbci 31 . 2(113 (50 5 billion)

Dunng 20J2. w, ti.oided IHI pre-t-ix srcinmc, pensn::- .md K.ri.li'.-. charges oi appn'vrii.iK Iv S7 ? billiuu pnnianly tor our pension and postretiierncnl plans in acciitdanrc will; oui accounting policv to recegm/r aclu.ir.a. rams and losses in the year in winch tliev occur ihe eh.iry.es weie piiiiunlv Jnvcit by a decrease in our diseeiuul i.itc assumption us<-ii lo detciiunie the cuiiem eear liabilities fmm a weighted ,m erai.e ot **i at EVc.-mbri 31 2011 to a vec;ghie;1 ae .-rage c: ■! 2':'* at December "«I 201 2 (S*< 3 billion) and revisions to ihc rente mem assumptions p.mn ip.ints .md .rl^r ■.■,ui-,pti.;:i a.i_iustn;T;is partialis nlisit bv ilie diileieiiee between oui isiiruicd icluru on assets ol 7 5% and cur actual idem; oi: a-.sets u: I01i iSU ' bnlionj >\s pari o: this charge, we also reeoidcd SI 0 billion lelated to the anninii.'itiiou ul pe-ricion I lain lilies as described ,ibo»c as well as severance charges ni *D 4 btlliur. piimunlv (or appfxiniaieli 1 OOfi mail igetr.eni employ ees

T'oial income i.ix pros ision (benefit)

The lolloieing table shows ihe pnncipai reasons fin the diflei

Years Ended IX-eembcr 31.

Maliiiorv federal income la* rate

Male .ir:d local income lax raie.net uf federal tax benefits AlToid.iblc housing crceJit

Employee benefits including I.SOP div idend

l ejuiiy in earnings from une cmsolidiiH d hu;messes

None on tr idling nilcicsts

Other, net

In.

«l'^

amp.!

I.ifectiie income lav rate

ine lav rale foi 201 3

ii-iie.t diituij: ?(M i comp.ii

: i

I" 6) (0 4) td 3) (14 3) ll 9) 11 f*^,:.-

ml rhe staluloiv f.-deia!

(I (1) !l Sf 11 1)

n and benefn-

Dun

2DI 1. ■

iaigc*

appi,

lely (i billion lor our pension and

and lo.-.es ,n tin Veil in which they

liabilities liom 5 iy.-. at Do return on assets ol >.*/. and on olher adjustments to .issumpti

e ai IKecintiei -1 201 I t\> b billion) rl., s ol 5*.'. (SO u billion) and ic* ision. lo the

I Me l< :n i tie tie ei u our , stimaled e expectancy o: participants and

A reconciliation of the beginning and ending balance of unrecognized tax hcncltti is as follows

The cIicltt\ c income lax late loi 2012 was (» 7)% compared lo 2 7% for 201 1 Tin. negative effective income lai tate for 20)2 and lhe deciease in lhe provision l.n income taxes dunng 2012 compared to 201 1 was pnmanly due IO Ic.uci income before income taxes as a result uf higher severance pension and benefit charges as well as eaily debt redemption costs iceoided dunng 2012

of cash laxes paid a

(dollars in millions)

(dollars in 2012

ullioni) 2011

$ 411 S .'51 S 762

1.282 1 30? 1.32X

2,082 I 727 I .«ti3

S. 3.786 S l.jitn S 3,973

issets and liabilities Significant components nt

S 10.242 S 13.644

2.747 4 X19

213 206

959 1,050

14,161 19719

(1.596) (2 04 11

Years Ended December 3 ),

Income taxes, nei of amounts refunded Employment taxes Property and othei taxes Total

(dollars in millions) 2013 2012

Defcned taxes anse because of different es in ihc bonk and lax ba dcletTcd tax assets and liabilities are as follows

M December .11,

Employee benefits T ax loss and crcdn cany forwards Uncollectible accounts receivable Other - asscis

1.121 1.275

14.030 1.1.951

997 1.20K.

21,0.12 22 171

1,470 1.320

40.650 39.927

$ 28,085 S 22,249

Valuation allowances Defcned lax assets

receivable basis difference

Konncr MCI intercompany accounts Depreciation 1.casing activity

Wireless joint venture, including wit Other - liabilities Defcned tax liabilities Net defcned tax liability

Ai Decemher 31. 2013 undistributed earnings of our foreign subsidiaries indefinitely invested outside the US amounted to approx imjicly 52 I billion The majonty of Verizon's cash How is generated Iruin domestic operations and wc arc not dependent on foreign cash or earnings io meet our funding requirements, nor do wc intend to repainale these undtstnbuied foreign earnings lo fund U S opera11oni Furthermore, a portion of these undisinbutcd earnings represent amounts thai legally musl be kept in reserve in accordance with certain foreign jurisdictional requirements and are unavailable for distribution or repattiatmn As a resull, we have not provided US defcned taxes on these undistnbutcd earnings because we intend that they will remain indefinitely reinvested outside of the US and therefore unavailable for use in funding US opetanons Determination ofthe amount of unrecognized defcned taxes related to these undistributed earnings is nol practicable

\l Dccembci 31, 2013, we had ncl after-tax loss and credit cany forwauls for income lax purposes of approximately S2 7 hillion Of these nei after-tax loss and credit carry forwards, approximately $2 1 billion will expire between 2014 and 2033 and approximately SO 6 billion may be earned forward indefinitely. The amount of net after-tax loss and credit carry forwards reflected as a deferred tax asset above has been reduced by approximately SO I billion at December 31, 2012 due to federal and stale tax law limitations on utilization of net operating losses

Dunng 2013, the valuation allowance decreased approximately S0.4 billion The balance of the valuation allowance at December 31.2013 and lhe 2013 acliv rty is pnmanly related to state and foreign tax losses and credit carry forwards

i 2,943 S 3.078 S 3 242

Mb 131 111

456 1644) (56) (3 I)

Balance at Jaiiu.uy I

(801) (210) (168)

Additions based on las positions related In lhe current yrar Additions for lax positions nfpnor yeais Reductions foi lax positions of prior years Seiileinents

Lapses of statutes of limitations Balance at December 3 I.

3.07X

Included in lire total unrecognized tax benefits at De-cembci 31 201 1 2012 and 201 I is SI 4 billion S2 1 billion and 52 2 billion res.pectively.that if rcccigiu/cii, would lavoitsbly atVttct the effective income Ux rain

We recognized the following net altei-t.ix benefits related io interest and penalties- in the pros ision for income taxes

Yeats Ended IX-cemhci 71. (dollars in rmlliousi

The afiet-tax accruals for Ilie payment of inieieM and penalties in lhe consolidated balance sheets are as follows

Al IX-cember.ll

(dollar, in millions) __ __

din. to tlie idulioii ol t.

'v eisies in Canada and Italy

1X6

Ivmg tax ycais2004 through 2006, as well as the ici

Verizon and/or its subsidiaries file income tax returns m the L'S fcdeial junsdictinn and vanous state, local and foreign jurisdictions As a large taxpayer, we are under audit by the IRS and multiple state and foreign jurisdictions fur vanous open lax years The IRS is currently examining the Company's U S income tax returns tor tax years 2007-2009 and Celko Partnership s IJ S income lax returns lot tax years 2010-201 1 Significant lav examinations jnd litigation are ongoing in New Yoilc City feu tax years as early as 200(1 The amounl ofthe liability for unrecognized tax hcnelii* will change in the next twelve months due to lhe expiration ot the statute of limitations in vanous junsdictions and it is reasonably possible ihal various current lax examinations will conclude or require revaluations of ihc Company's tax positions dunng this penod An cstimaic ofthe range ofthe possible change cannot be made until these tax mailers ore further developed or resolx ed

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

J equipment net

Segment Infarmatlan

Reportable Seg in en Is

We have two reportable segments, which we operate and manage as strategic business utms and organize by products and scrv ie

consistent with the chief operating

Wc measure and evaluate our reportable segments based on segment operating decision maker's assessment of segment peiliirmancc

-operational u .essini: segment peri:

iicnt icsiihs thi ol then nur.-tf

Corporate eliminations and other includes unallocated unporaie expenses intersegment eliminations recorded in consolidation

the results ofoiher businesses, such as our investments in unconsolidated businesses, pension and oihct employee benefit related

costs lease financing as well as uthc: adjus'iuents and gains and losses that ate not allocati d in assessing segment peifo:mani c

due to i he 11 non opeiationai natum Milmugh sue I: transactions ai. excluded finm the business se gnicnt u stilts, ihe v are included

in reported consolidated earnings Gains and losses thru aie nol indn idnalK -ip?.if!ca-ii aie included m all segment results as these

items are mcliiiicd in the chid'operaling dec t n ii-'iki: s assessnu nt of si gn::i: pi i:->:iii:iiirr

and c

lid.::

■«pe

segment inioiuialnin wlistc applieal ist of ihe lollowmi:

The reconciliation i mi hides those items management dues n

Wireless

s mid equipment sales

We hjvc adjusted ptioi petiod t onsolidalei

Oui segments and then pnncipai activines,

Segment Drst upturn

Wireless' commiuncnimns prodint' which arc provided lo coosuuier. bu

unhide hinadba i.utage.l iteiwo-k seixn

serines tn, (ude win less vi

iss ihe United Stales

Wire-line's voice data and video eoiiimunivations pn.duels and euli.i daia eorpomte unwinking solutions data eentei aii' eload -e:v.ce-.

local anc! long distance- uur: sciviccs Wc piovide ihc-c pinducts and service in consumers us the 1'niied as wrll as to earners businesses .md government cusiomeis both in ihe United States and in over I Ml .vihei counincs aiound the world

2013

External Operating Revenues

Retail service

Olher service Service revenue liquipmcnt

Small business Mass M.ukeis

Strategic servnr: Core i.tlohal linieipiise

C c

Oltib.il Wholesale Olher liiicrscgnieni revenues T'ulal ope tating rev e

id' S

Celling getieial and admin isl Depreciation and amnmratin

Total npci-aliui: expense tipeiannj iniisriit

Plant ptopeiiv j dpiial expend:

66,282 2,691

8,096 3.H5I

21.D4H 23.176 8.: HI

5 140.429

35.932

(dollars in millions) Wireline Total Segments

66,282 2.691

8,0^6 3.851

H.4IU 6,207

Jt.50¹; 8_127

4^0 1.061

45,^7a 31.771 16.529

5 84.573 51,885

Wireless Wueli

Exit-mill Operating Revenues. Retail service Olher service

Equipment Olher

Consumer retail

Small business Mass Markets

Strategic services

Core Global Lnterpri-e Global Wholesale Oihei

In terse g men I revenues Total operating leventies

Cost ol services ami sales

Selling general and ailministraiive expense

Depreciation and amortization expense

Total operating expenses Operating income

Assets

Plain, properly and equipment, net Capital expenditures

61.3 S3 2 2«ii

(dollars in millions) lie Total Segments

til.3 83

8.010 4 096

2,290

14.043

2.648

8,1)10 4.096

IS .052 7 240

1 a.0J3 2.6-lH

4ft 903 3D.533

S.052 7.240

227, i()n !<7.45o

24 490 22.413 2L650 X.X83 7 ftt.U K.424

S 142 4S^ S.K4.M5

J4 545 52.91 1

KH57 6,342

201 1

External Operating K Retail sets iee Other service Service revenue Equipment

Consume] ictjil Small business Mass Markets

Stiategie seixiccs Coie (llobal linietpiise

Global Wholesale Othei

Inicrscgmcni ie* cnues

Total operating revenues

Cost of services and sales

Selling, getieial and administrative cxpi r

Depreciation and amoni7.aiiiin expense

Tinal operating expenses Opeiating iiis omc

Assets

Plant propenj and equipment net Capital expenditures

(dollars 111 millions) re Total Segments

7,446 3.517

56.D0I 2.4 y 7

7.607 8,014

59.0VK 7.446

7.t507 8.01-1

40,(-

1 lO.H.lf.

4ti.244 28.686 lii,42l) 11.3 50

704 1.2 J 7

70.1 54

24 086 22 158

19.579 9 107

959

10.4 86

7.962 _ 51.627" ""3^.723 "

211.503 X7.000

IK i

I HflK5 54 14 1

(dollars, in millions) 2012 2011

S 120,246 S 1 15.648 S 1 10.816

304 19K 3ft

5 120.550 S I li.scn S l7il.H75

(dollars,n niilbor

2; ^v:s s i-iast.

(7 IKo) fS'iv:.

(912) 1*22)

ll.Vhh 11 IMI 1? Mid

(166) (1 (MM |K| (2.6*7) (2.--71) I? X77)

S 29,277 S 9S97 S 10-S3

During 2011 :()1 atiiibui.ilnc to notieoniiolling ad|ir.ur,ents lor gains (losses):

S 231 (ni: 5 227.3tui

■0.<J°f> [? »iS)

\ Z7-I.«VK S 225 222

Wi i:<.;il<:i;ti,.i< During :013 2012

lt.ji,H. i he cb.,ngi

T lie cli.uiec in Deliucl b. lie vvris pnmanlv .1 result ufpl.11

Reconciliation t* Consolidated Financial InformatioR

A reconciliation ofthe segment operating revenues to consolidated operating revenues is as follows'

Years Ended December 31, 2013

Operating Revenues

Total reportable segments Reconciling items

Corporate, eliminations and o:hei C or.solidated operating rei ennes

A itcoiicilniltoil ol the lo'.al ol lire 1e-pe.11

Yeais Ended December 31.

Operating Income

Total segment operating un nine

Severance, pension and benefit credns<ch.uges)i.Nntc I 11

train on spectrum license liunsactuvn [Note 2)

Litigation settlements (Note Id)

Other costs (Note H)

Coipotaie eliminations and othet Consolidated opnating income

Equity in earnings ol unconsolidated businesses Lnhci income and (expense) net Interest expense

Income [tefore (I'mvisioniHeneln loi Income Taxes

A icceinc illation of lhe lul.il uf the- reportable segments ,.ss is to c

M Dci.eir.bC! 31.

Assets

To'.-l lepoitablc segments Coipuitite eliminations and othei T'.n.ilsoiiso(idaic-d

Cuipmiii-.' eliminations ami utlicr at De.1 ml it r 3 I 2 complete the Wiichss Dansaction on Ichru.ir. 7 I 2t

We gerreiaMv aeeouiii Ij elsejinieiii sales e.) pn

iti-.tomei .li.-inmied I:.; ut-ue than Ii-Tr n-n tot.,. 2d I 1 International operating revenues and long-live

Comprehensive lor, one

Comprehensive income consists of net income and other gains and losses affecting equity that, under U S G.AAP, are excluded from net income Significant changes in the components of Other comprehensive income, net of provision for income taxes ate described below

s lollov

Accumulated Other Comprehensive Income

Foreign riirrenev

iransltitiun

adjustments

The changes 111 the balances ol Accumulated other compreheiisiv e income by component ai

fit

Unrealized Defined bi

Unrealized cam on pension and

10] 33

gam oil cash mat keralife postretiremen!

flnvs hedges, sec imius plans

llalam. at lamuiv I 2U13

511

Amuunls rsi lassiiieel lo ml in. \'c: othei compieh.-r.sive trteonie Ittilanre at December 11,20)1

it pnis-.m an tain e rvpeiis

853

adjustuicuis dining 201 1. 201 2 a iven by lire movements oftlie 1! S

s pnmainy 1 id the l.uro

lhe amounts presented aboec in net Olher ecunpn liensi e e income .nc ncl of lases nd rit>n significant Fui the yd: ended December 31. 2013. the amounts reclassMred to net iinoinc ic postretireinenr p|,ms m the lahie above are included in Cos! of sen nes and sales and Pellin;: on oui consolidated statements ol 00 nine I'm the year ended Dei einbei I. 21)13 all othei a the table above .lie unluded ut ' >thei income net oil oui consolidated statements nl income

/.<.jii;.i,r (>.,/, /7,i_M //V./ge.> d 201 1 Unrealized gains (lu>s

The change 111 Foreign cunenct lianslaire Vodafone Omnitel N V am! was pnmanly

1 (binri)i, Miirl.,bl,- SV,

1 cash llou. hedges included rn Oihei comprehensive 11 IIV HV 11 hitfd to a ct.iss c 111 re nc \ >n ip (see Note «) Rec 1 signitie ani

,,!:,

ir.s Cusv:sireal;/cd 1:

additional Fiiianrial Inform a [ion

11)e tables thai follow pros idc additional financial u

Inrnifie Stalrmenl Information

Years Ended December 3 1,

Depreciation expense Inteiest costson ikbt balance-Capitalized interest costs Adverting expense

Balance Slnet Information

At IXtt'cmbc-r 31,

Accounts Parable and Acc wed Liabilities ■Vcounis payable Vciu/d expenses

Accrued vacation, salaries and wages Inicic.vl payable Taxes payable

O/iti Cm rent Liabilities

Advance billings and customci deposits

Dm iriends payable

Other

5 14,991 3.2i.9 (442)

related lo inn consolidated financial statements

2 977 (4 Oh)

2013

(dollar i 2013

4.V54 3,* 54

$ 15.019 3.421 (754) 2,418

.a. 54 4.52'>
006

1.199 1,556

S 16,453 * 16.1X2

S 2.829 S 3.554

1.539 MS!!

2.296 1.357

During 2003. undei a goveinmenl-approved plan, remediation'commenced at tlie site of a fcuinci Sykaiua facility in llieksvillc, - New York that piocesse.i nuclear fuel rods in"ih'e"l"950s arid "1960s Remediation beyond original expectations proved to be^-necessary and a reassessment ol the anticipated remediation costs was conducted A reassessment of costs related tn remediation efforts at sex eral other former facilities was also undertaken In Sepiembei 200 5. the Army Corps of Engineers (ACL) accepted Ihe Hicksv ilie site into llic Formerly Utilized .Sites Remedial Action Program This may result in lhe ACE performing some »i all of lhe remediation effort for the Micksville site wnh a corresponding decrease in costs to Verizon To the extent thai the ACE assumes responsibility foi remedial woik al lhe llieksvillc site, an adjustment In a n.seixr previously established toi the remediation may be made Adjustments to the reserve may also be made based upon aciual conditions discos cred during the remediation at rlus or any nifrer site requiring remediation

Venzon is tunentty involved in approximately 50 Inderal disincl court actions alleging that Venzon is infringing vinous patents Most ol lluse cases aie hinjghi by non-piaclicing entities and cllc'clnely seek only monetary damages, a small number jic brotiglii hy companies ilia', ie]] ptodirels and Seek injunctive relief as well Ilicse cases have progressed to vanous degrees and a small number may go to trial in the coming 12 months if they are not otherwise resnlv ed In the thud quarter of 2tl 12, we settled a number of patent litigation matte is. including cases with Ai live Video Nctwniks Inc (Activ c Vidcu) and TiVo Inc (TiVu) In connection wnh the settlements with Active Video and TiVo we recorded achatgcofS0 4 billion in the thud quanei of 2012 and will pay and TCCOgni7C ov ci the lulluwiug six years an additional 50 2 billion

In connection wnh lhe execution of agieeuicriis (in the sales of businesses and iris esinieiiis Vcn/on uidmanly piuvide's repre.scniatious and warranties lo the purchaseis pertaining to a vancty of non financial matters such as ownership ol the securities being sold, as well as indemnity from certain financial losses From nmc lo time, rouni. ipanics may make claims under these pm visions, and Verizon will seek to defend arcamsl ihosc claims and resolve theni in lhe ordinary course of'business

Suhsequeiil lo ihe sale nl Ven/on Inhuman on Services Canada in 2004. we continue to pin vide a guarantee in publish dirccioncs, which was issued when the directory business was purchased in 2001 and had a 30-year term (before extensions) Che preexisting guarantee continues without modification, despite the subsequent sale of Veimin In lor mat ion Seix'te _Lj Canada and the spin-uffol out domesNi pnnl and Internet yellow pages directories business Ihc possible financial impact of the guarantee which is not expi ctcd to be adveise.annul be reasonablv est i mated as a v aire I v of the potential outcomes available under the guarantee icsull tn costs and rei emits oi beuelils ih.it may oflsct each othei We do not believe pcrlonu.mee under ihc guarantee is likely

$ 2.122 S 1,971 S 2,629

nillions) 2011

Cash f-Tuw Information Years Ended December 31.

Cash Paul

Interest, ncl of amounts capitalized

Common stock has been used from lime to lime lo satisfy some ofthe funding requirement- of employee and shareowncr plans including 24 6 million common shares issued from Treasury slock dunng 2012, related to dividend payment*, which had an aggregate value of $1.0 billion

Commitments and Contingencies

txcciitcd in ihc normal course i .re outstanding

As of December 31, 2013 leitcis of credit loinltng appioximately SO I billion which were business and support several finane ing arrangements and payment obligations In third panics, v

We have several commitments pnmanly to purchase handsets and peripherals, equipment sot!ware, programming and network services, and marketing activities, which will be used ni sold in lire ordinary course ol hucmcss, from a vaneiy of suppliers, totaling $.33 4 billion Of this total amounl. SI9 7 billion is altnhuiable i» 2014 $8 8 billion is atinhutahle to 2015 through 2016 $4 I billion is attributable to 201 7 through 2018 and SO 8 billion is attributable lo vears (hereafter T hese amounts do not represent oui entire anticipated purchases in the future, but represent only those items thai are lhe subject uf contractual obligations Out commitments are generally determined based on the noncancelablc quantnic-s ni termination amounts Purchases against out commitmenis for 2013 totaled approximately $16 billion Since the commitments to purebate programming services liom television nctwoiks and broadcast stations have no minimum volume requirement, wc estimated our obligation based on number of subscnber.s al December 31, 2013, and applicable rales stipulated in the contracts in effect at thai nmc Wc also purchase products and services as needed with no firm commitment

In ihc ordinary course of business Vcn/on is inv olvcd in vanous i oninicrci.il litigation and regulatory proceedings al the slate and iederal level Where il is determined, in consultation with counsel based on Iiligalion and settlement nsks that a loss is probable and estimable in a given matter, the Company establishes an accrual In none ofthe currently pending matters is the amounl of accrual matenal An estimate ofthe reasonably possible loss or range of loss in excess ofthe amounts already accrued cannot be made at this time due to vanous factors typical in contested proceedings, including (I) uncertain damage theones and demands (2) a let* than complete factual record. (3) uncertainty concerning legal theones and their resolution by courts or regulators, and (4) the unpredictable nature ofthe opposing pany and its demands We continuously monitor these proceedings as they develop and adjust any accrual or disclosure as needed Wc do nol expect lhai lhe ultimate resolution of any pending regulatory or legal matter in future penods, including ihe Hicksx-ille malter described below, will haxe a matenal effect on our financial condition, but it could have anuicnal clTcci on our results of operations for a given reporting penod

Quarterly Flniaclil Information (Unaudited)

VerizoR Communications Inc. and Subsidiaries Pnncipai Suhsidiancs of Rcgislrant ai December 3 1, 2013

Pel Share-

Operating Revenue^

(dollars in millions, except per share amounts) Nei Income (l oss) atinbiitahle lo Venzon '■"

Pei Shine- Income

29.42U 5 2\>,78ti MU7A 31,01.*

6,555 7,128 12,063

Dlllll-'d il.oss)

v 4.855 5,118 5.578 7.9 It.

Septrmbei 30 I>:cemhei3l

2S 5^2

007
04^

i 2x> 4 212 (I 9?6i

5 J.5 I 5 4S3 (3 li.^l

I 593 I t 229

2012 March 31 June 30 September 30 IVcembii31

tl 4>i

(I 4V) : io Wu.-,

Results nf opeiatioiis loi lire sec ond quarter oi 201 3 include aflci-tax credits .mill pension remeasuremenl

elated to Wireless

Ki suits of opeiaiions for the thud qujtui of 201 ? include immatciial afler-ia.x civilns attributable lo Vcii/mi i> iatcd on a spectrum license transact inn as well as immaterial aftertax costs attributable to V't.ii.;oii related to the Transaction

Results of operations for she fourth quartet of J'U.i include alter-ra.x credits atTiiiuitable to Ven/on of S3 7 luilion I severance, pension and benefit credits, a> well as afier-tav costs jiiiihunblc io Vei-.^on of 50 5 billion related lo thr

lor the thud t|L.iitei ol 2lM 2 include atler-rax charges articulable in Ven/on ot iu 2 Inllivii I

ehalges attnliu

i othei costs

Results ol oper. legal settle merits

Results ol opeiatioiis foi the iotinli quartet l>:' .ID I 2 include a

sevetaiicc'. pcnsior. and benefit charg.es ant: early itebt redempt

Venzon California Inc Venzon Delaware LLC Wnzori Honda LLC

VcTI/Oll M.!J>land LLC

Veti/.m New Lnglam! Inc

Vcn/on New Jeiscy Inc

Vcn/on New Ve.;k Ine

Wu/.ui Pennsylvania LLC

GTE Souihwcsi Incorporated (d/h.'a \ cri/oii Southwest)

Verizon Virginia LLC

Hell Mlamie Mebile 'jy.icm.-I

t ellco Partnciship

[d/b/a \cn/o.i Wireless)

GTE Corporation

GTE Wueless Im nrpurated

MCf Cnnv.i:ii:maiioii*Corpoi.>

Ven/on Uusuicss Global LLC

Ci.inlicfty Properties 1.1,1'

Jurisdiction of Organization

New Jer-cy Ness Yo;k

IXI jv. asi-New York

come (|oi«.) an n'.v.i table to V'cuion pet eoir.ttiun *liaie i> Cs-.njurt'.sl iiutcp- -.nUtulv foi cicl: .

EXHIBIT Jl I

, _".' ~". ". Consent ₀f Independent Registered Iridic Account

We consent lo ihe incorporation by reference in ihis Annual Rcpon (Foim I O K) of Ven/on Connnunnations- Im iVen/.uu) of our reports dated February 27, 2(114, »nh rcsp_cci to ihe consolidated financial sialcmcnis nf Venzon and lhe effectiveness, of internal control o\er financial reporting of \ enzon, included in ihe 2t)l 3 Annual Report to Shateow-ners o! Ven/on

Our audits also included the financial statement schedule of \>n/on listed in Item I5(dj This sthedule i.s the responsibility ot Venzon'x management Our responsibility is lo express an opinion based on oui audit* In out opinion, as to which the date is Fehiuaty 27. 2014, the financial statciue-m schedule n. felled to above, when considered in lehition to the basic linancial siatcmcnls taken as u whole presents fanly m all maicrtal icspects the information set forth therein

We also consent to the incorporation by leferencc in the foi low-inn regi strati on statements of V\ii/.nn and win re applicable related Prospectuses, of uur iepulis dated February 27, 2014, with rcjpetl to ihc eOnsedulaled financial statements of Verizun and the efJcriive/if.xs oj in tenia I i nntro) over Jinjncu) reporting of Vm^on. incorporated herein by reference, jnd our report included in the preceding pjiafraph with respect to the financial .statement schedule ol Yer./nn included in this Annual Report ffnnn 10-K) lor ihe year ended December 31. 2013 FonnS-l.No 33?-1 1 573. Form S-S No 333-H 5^U3. Form S-S. No 333-50140. Fotm S-C No 33s-7M71.1'otmS-K,No ns-7dl7l Form S-S No H3-53MII FoitnS-S.No V>1-X2o9ij FonnS-I.No 13 i-l ."MOll* Foiin S-S. No 333-I2JOOS. Fomi S-4. No 33 3-1 3205 I. Form S-Ji No 333-l<>y2r>7 form SJi. No 333-172501 Form S-S No 333-1729Y9 FonnS-3.No 333-1 X2749, l^;on_n S-3. No 333-190954 and Form S-1 No 53J.|^UH'.?S

m/ Ernst A Young LLP limsi Ar Young LLP New York New York

Fcbiuary 27.201 1

I. Lowell L Me Adam, certify that ----- - -■- _ ■■ -

I base reviewed this annual report on Form 10-K of Vriuoii Cuirmiuiiii.il inn* Inc ,
Hased on my knowledge, this report does not contain any udutjc statement ol a matenal fact ot emit in state i material fact necessary, lo make lhe statements made, in light of lhe circumstance's undei which luch statements were made nol misleading with icspect to lhe penod covered by this report.
Hascd on my knowledge the financial statements, and oilier financial inhumation included in this report, fairly present in all material respects the financial condition, results of operations and cash flows ofthe registrant as ul, and for. the penods presented in this report,
The registrant's othet certifying officer and 1 arc responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules I3a-I5(c) and I5d-f5(c)f and internal control over financial reporting (as dc hned in Lxchsnire Act Rules 1 sa-1 5(f) and I 5d-l 5(f)) loi the registrant and have

(a) Designed such disclosure controls and juocctdurcs. oi caused such disclosure controls and procedures to be designed under out supervision, in ensure that matenal information relating in the registrant, including its consolidated subsidiaries, is made known to us by oihcrs wiihin those entities particularly during the penod in winch this report is being prcpaied.

lb) Designed such internal control ovci financial reporting, or caused such internal control cue; financial reporting to be designed under oui supervision, to provide rensnnable assurance legaidiug the reliability ot financial reporting and the preparation ol financial statements lor external purpuscs in accordance wilh generally acccplcd accounting pnnciples.

(cl Evaluated the effectiveness tn the registrant's disclosure controls and procedures and presented in this repim nut Conclusions about the elfecuveness ol the di.se Insure c otnrols and procedures as oj ihc end o) the penod covered hy this repnn based on such evaluation and

(d) Disclosed in this report an> change in llic regislianl s inlcinal coniiol over financial reporting thai occuiied dunng the registrant's most recent ti-cal quartet thai has niateiially affected, or is reasonably likely io m.iteiially alfect the registrant's internal control over financial reporting and

The registrant s oilier certify ing officer and I have disclosed, based on our most recent ev aluaiiou nt internal control over financial reporting, to ihe registrant's auditors and the audit committee of the registrant 's board ol directors (or persons performing the equivalent functions|

All significant deficiencies and material weaknesses in the- design or opciation ot internal control ovci financial reporting winch arc reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information, and
Any fraud, whether or not matenal, that involves management or other employees whu have a significant role in Ihc registrant's internal control ovei financial reporting

Date February 27, 2014 /tl Lowell C McAdam

Lowell C McAdam

Chairman and Chief Executive Olficer

EXHIBIT 31.2

I, Francis J Shammo, certify that

I have reviewed this annual report or. Form IU-K of Verizon Communications Inc .
Based on my knowledge, this report docs nol contain any untrue statement of a matenal fact or omit to slate a matenal facl neccssaiy lo make the statements made, in light ofthe circumstances undei which such statements were made, nol misleading Willi respect lo the penod covered by ihis report.
Based on my knowledge, the linancial state men is, and other financial mloiiuairon included in this report, lauly present in all maic-nal respects the financial conilmon, results nf opt mlions ami cash Hows ol tin rrgi-.ii am a., oi and for lhe penods presented in this report
The rcgistiant's other eerily mc ot]_!lL, am: I .nc u sponsible for , s:.iMi>Iimij: and maintaining cI'.hIomiic ce-ntn>is and procedures (js defined in Exchange Acl Rules I3j-15(el an.I 1 Id-lSte)) ami ic.ieiii.il control ovei linancial reporting las tiffined in Fxihange Act Huli-s 13.1-1 5(f)and I Sd-1 i|i))to: lhe ic-isti.int ar.d have

(aj Designee! such disclosure .uiiih-.le and procedures o: i nisc.1 such di Insure . minis ar.d procedures io be designed unde: -on se:pcn ismn. to cm-_;ui. ih.n nijienal int"rmatiori relatny to ilie registMin including H:. . oii<ol:da1.d subsidiaries is made known to us by otlnis withtu those entities partie ul.nh during the peitod in which ihis report .s being prepared

(hi Designed such internal ntsiti.il ovei linancial icp;;n:r:g or caused such .menial c.m'io! ovet iiii.niei.il reporting to he destgneil under oui supervision io provide reasonable assurance rt eariiini; the u liability ol iirtanc'Ml report ir.i; h.ic' lire piepaiaiioii ol fuuni nil stateuieuls (tu exletual purposes in a^eoidan. c vi illi geneuH;, at t epied at i minting pmn iples

let Evaluated lhe effectiveness of ihc regss'.ran: s disclosure controls and procedures ami presented in tins icpnr. out conclusions about the et fee liven ess ot the dist tosiirc conlio'.s and pro. eduies as ol tbe end ol tire penod eov ctetl by this report hasc-it o:i such evaluation, and

(d| Disclosed i:i ihis report any change in the teginuni s uneinal e-ontnil ovei financial reporting that occurred dunng the registrant's mo.,t recenl fiscal qjjiiri ih it has maieiially alle-eted or is n.isr.mHv itkely to ru.iier.ally alh-et the

lhe registrant s oihei certifying oiliic-r arid 1 have disclosed based or. "nr must leecri: ei al.iaiiori oi iriiernal <orr.ro I over financial icporting. in ihe rcgisiram's audilois ami the audit comrmtiie id ti.e ic ;>i strain s board ot ilinetois (oi persons peiioiming the equivaleiii tuncttons)

(a,¹ All significant deficiencies a:i.| material »eakm-sses tin- design .u nper.r.icn .: intein.ii cmurn; over linaitcial

lepoiiing whn h aif reason.iblv Ijkelv to advet .ell afire 1 lire leg I sti.irit s ability n. jet nr.! process - ■ i :i im.:: l fe ail J iep.nl financial iiifonnaiiml and

Dare Icbniaiy 27.2014 Jsi_ riaireij^Skmi::, _

I r in.- is J shammo

l.seciUivc \ :. I n-snnnt nd t.'hrel 1 mam u: t )lln,.r

EXHIBIT 32.1

CERTIFICATION OF CHTEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. PURSUANT TO SECTION I 350 OF CHAPTER 63 OF TITLE IX OF THE UNITED STATES CODE

1. Lowell C McAdam. Chairman and Chief Executive Officer of Venzon Communications Inc (the Company), certify thai

(11 ihe repon ofthe Company on Fonn 10-K. for the annual penod ending December 31, 2013 (ihe Report) fully complies with the requirements of scclion 13(a) of ihc Securities Exchange Act of 1934 (the f-.xchangc Act) and

(2) the information contained in the Report fairly presents in all matenal respects, the financial condition and results of oprralitius ofthe ( ompany as ofthe dates and l«r lhe penods refened to in lhe Report

Hate i'ebiuatj 27 2'J|4 :V I owe li C McAdatn

Lowel! C Mc Adam

Chairman and Chi"-1 I'x'i c utiv e i lifirri

V signed oiignial ol this vviillei; statement required by Sec Hull 'Hip, oi ulhei document authe tun altrig. ae kuiwlcdgirs!' e-: i lirerwise ade-iting ihc signature lli.U apj.e.irs in ;y pen feMit: " i-fnn the fierir. mc c-rci.oi tins w:nu-i: st.it; mein icqain'.! bv Sceliun 'jrid. has been jitovided to Veri/on C.'ommunif.Hion:. lire and will he retained by Ven/on Coinmiinieaiuins In. and lutnished to the Secunlies and L.vchanj-c Commission e>; its stalTupon request

FMlIitn 31 2

" " CERTIFICATION OF CHIEF HNANCIAI. UIT'ICFR I'l IRSUANT 1 (J SIXTH >X Wb OT THI" SaKBaNESjOXLEY ACT Ol" 2002. PURSUANT TO SECTION 1 350 OF CHAPTER f.3 OF TITLE 1H OF THE UNI TED STATUS CODE

I, Francis J Shammn, Executive Vice President and C"hie( Financial Officer nf Vcn/on Communications Inc (the Company) certify lhai

(1) ihc report of ihe Company on Fomi 10-K for ihc annual period ending December 3 ] 201 3 (ihe Report) fully complies wilh

ihc requirement of section 1 3(a) of the Secunlies Exchange Aci of 1934 (ihe Exchange Acl). and

(2) the inforniaiion contained in the Report fairly presents, in all material respects the financial condition and results of

opeiatioiis of Ihc Company as of the dales and loi lhe penods leleiud lo in die Report

Date February 27, 201 4 /sf Francis J .Shairinin

Francis J Shamrnn Executive \'icc President and ChiclTinaiuial Officer

A signed onguial of this wiirten staicmeni required by Section 90t>. oi other document authenticating acknowledging or othcfsvi!*' adopting ihc signature Ihal appears in typed form willun ihc elccltonic version ul this written slatcmcni returned by Section 40(i. has been ptin-ided lu Ven/on Communications Inc and will be retained by Ven/on Communications hie and famished to the See unties and Lxehange Commission or us staff upon request

EXHIBIT 99

Selected Corporate Governance and Executive Compensation Information Included in the Preliminary Proxy Statement for the Verizon 2014 Annual Meeting of Shareholders filed with the Securities and Exchange Commission on February 26, 2014

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Business Conduct and Ethics

Vonznn is commiticd to operating our business wilh the highest level of inlegnly responsibility and accountability We have adopted a Code of Conduct Ihat applies to all employees, including lhe Chief Executive Officer (CEO) the Chiel Financial Officer and the Controller The Code of Conduct describes each employee's responsibility to conduct business with the highest ethical standards and provides guidance in preventing, reporting and remediating potential compliance violations in key areas Directors arc expected to acl in compliance with Ihe spirit of the Code of Conduct, as well as comply with the specific ethical provisions ol the Corporate Governance Guidelines We have posted the Code ol Conduct on the Corporate Governance section of our wcbsile at www.venzon.com/mvestor. You can also obtain a copy by writing to the Assistant Corporate Secretary at the address given under "Contacting Venzon."

The Board is strongly predisposed against waiving any of the business conduct and el hies provisions applicable to Directors or executive officers. In lhe event of a waiver, we will promptly disclose the Board's action on our website

Related Person Transaction Policy

The Board has adopted the Related Person Transaction Policy trial ts included in the Guidelines, which can be tound in Appendix A. The Corporate Governance and Policy Committee reviews transactions involving Venzon and any of our Directors or executive officers or their immediate family members to determine if any of the individual participants has a matenal interest in the transaction. Based on the facts and circumstances of each case, lhe Committee may approve, disapprove, ratify or cancel the transaction or recommend another course of action. Any member of the Committee who is involved in a transaction under review cannot participate in the Committee's decision about that transaction

From time to time Venzon may have employees who are related to our executive officers or Directors. Francis J. Shammo, Executive Vice President and Chief Financial Officer, has a brotherHri-law who is employed by one of tho Company's subsidiaries and earned approximately $358,000 in 2013. W. Robert Mudge. President - Consumer and

Mass Business Markets, has a brother who is employee] by one of the Company's subsidiaries and earned approximately $126,000 In 2013. In each case, the amount of compensation was commensurate with that of olher employees in similar positions.

{This portion cf Hkj page intentionally loft blank]

Independence

Verizon":; Corporate Governance Guidelines require that a subsianl-al m;i_ln^riy o! tre members ot inc Board be independent Directors Tho Gutoctnes estabtsh starci-mls ft¹' evakiatmn The independence of each Director A Drcc:or is considered independent if ihc Board fines that the Director is independent uncicir ihe NYSE s anc Naidaq s governance standards and the additional standards induced in tho Guidelines which identity ine types of relationships that, if mnienal. would impair a Dtn-cit)r s independence T he standards set munelary iiresholds at which the Board would consider tnc relationships lo be maicnal To dclerm:ne thai a Director :s independent the tioard must lino thai a Director does nol have any relationship inai is likely lo impair his m her ability to acl independently The Board makes this deienninaiion by evaluating lhe (acts and circumstances lor each Director

Ine Corporate Governance and Policy Committee conducts an annual review ot the independence of members cf Ihe Board and its Committees and reports its findings lo Ihe full Boarc Based on the recommendation of the Corporate Governance and Policy Committee the Board has dtierrnired that the Hi incumbent non-employee Directors who are standing for election are inaepencienl Shellye Art ham beau, Richard Cnmon Mulanie Hc-aley, M Frances Keeih. Robert Lane. Donald Ntcolatsen. Clarence Otis. Jr Rodney Slater. Kathryn Tevja and Greod"/ Wasson The Ba-ird also determined lha! Sandra Moose Joseph Neubauer and Hutjli Pnee who a:e retiring from lhe Board m Apnl 2014 and are not standing for re-election, are independent

In determi.-iing the independence ol Mr Camon, Ms Ifealey, Mi Neubauer Mr Otis, Mr Price, Mr Sinter, Ms lesija and Mr Wasson. the Board con&idcred payments for ideco'timuM-caiions spmcos and solutions tfw* the companies ihat employ 'hem made to Venzon In deiennin.nn Mr Ncubaiit-r'b ir.dc-pcr-.tie'nce tlie Board also considered payments '.hat Venron made under a competibvely hid conlract for lood and facility management service!, to the company thai employs turn In deiermining Ms Tcstja's independence, the Bo.i?d al:;o considered payments Ihal Vcruon made- to the company thai employs her in connection wtln sales ol Verizon's products and services m ihat company s stores In determining Mr Wesson's independence Hie Boaro also considered payments fcr workers' compensation prescription benefits itiat Venron m;ide !o Ihe enmnany that emnloys h in In app'y^|ri,-J the independence standards Ihe ineepi/ndent Director's have determined that these general business transactions and relationships are not matt-rial and do not imuair the ability of those Directors lo act independently

(This portion of the paije intentionally lef; blank]

i i

! i !

Audit Committee

. Don .lid Nicolaisen Chairperson M Frances Keeih Sandra Moose

Clarence Oiis, Jr Gregory Wasson

The Board has determined that each member of the Committee is an audit committee financial e*pcrt and meets the independence requirements of applicable laws, the NYSE. Nasdaq and the Guidelines

[This portion of the page intentionally loll blank]

RICHARD L_ CARRION

[This portion of the page intentionally left blanV]

Mr. Cam6n. 61. has served for over 18 years as Chairman. President and Chief Executive Officer of both Popular, Inc . a diversified bank holding company, and Banco Popular de Puerto Rico, Popular Inc's pnncipai hank subsidiary Popular, Inc is the largest financial institution based in Puerto Rico, with consolidated assets of $36 billion, total deposits of 527 bilhon and 8 059 employees as of December 31. 2012 In addition to his cxpcncnce guiding these companies Mr Camon ha? been a class A o rector 0' the Federal Reserve Bank ot New Yorv. since 2008 In that role, he corr.nbi.los lo '.lie fonruilnlron of monetary policy, oversight o' the bank':; ope^ralion;il risk manatit.-n'-eni and the review and appointmonl o! senior iranagemen; ol the bank

As a result o! :ns tenure as Chairman. President and Chir.-f f->.eeu!ivc Officer oi Popular. !nr and Banco Popular do Puerto R:i:u. Vfr Caniiv- brings in ihr- Boa'd a strong one'almnal and s'.r.itciiic background and extensive hus.ncss. Iiv.'i^n.hi" and managrncnl cxfHViPnrc in addition Mr C.ir-.nn*-. kno-Aledtn- ol business aⁿd cor.rume' servi.es gives him irisig.'ii;. in'.o p.'ovnunn services to retail and business r:ij^,%,:um<.-:n. ac'ivitie-'. lhar mah c up a sig.nifin.m: po-licn of Venzons h'jsir.ovs. Mr Camon s r.'xpenenre a: trie Federal Rescvv Bark o' New Yori> ak.e enables him tn .mvr.f: ih>' Boa'd and sonny management on r sk m.-j'iayemont. which is an important a»ca tor a large, complex o'gar.i/stKjn 1-ko

SHELLYE L. ARCHAMBEAU

Mr Carnon has serpen as a Director of Ven. He is On.i.rperscn cf the Finance Committi-i Human F-rsoumor. Committee

on since 1!>.J7 and was a director nl NYNr-X Corporation from 195-5 to 1307 and a member of the Corporate Governance and Policy Cumm.tii-o and the

Ms. Archambeau, 51. rs Chief Executive Officer of Me;rn:3tn.-ar'i. Inc , a load.no. provider o! .T.iv^rnani-p nsk. compl ance and quality management solutions lo corpora:ions across diverse 'ndustne-i Undr-' h(-r leadetsh p. 'he pnvately-hold Metric St ream has grown 2.M07e over the past ten years, with appro* mainly 1 IKK? employees worldwide Pnor lo joining MetncSlream in 2002 Ms Archambeau was Chiel Market rig Officer and Executive Vic President of Sales (o^r Louctcloud. Inc a leaner ;n Intemel infrastructure services. Chief Mark-fiir o Of icer of Nofihl-oint Conimumcaltons and President ol EJIoekhuslcf fne s e-<:omm<-reE: division lie'ore joining Dlocvfcuster she li/-ld domestic and international executive positions dunng a 15-year career at IBM

j served cn

Ms Arehambeau brings to tl.e Board, aironnj offer skills and qualifications Irvulfjrsri.p expcre.nce .n technology, e-commerce. digital media and communications Ar- active participant m Silicon Valley & emerging ncnsar.y community her in depth knowledge of the technology sector and extens.ve background m the apnlicaiion of e'r.ertiir.ii lerlvii-ilogies to address business challenges uniquely posi:ion her to advise the Board and senior management on im:tli'me.n'.irig the Company's growth strategies Ms Archambeau's experience developing and marl-et,eg telf^rmrnunica-mns anii InteTiet services and solutions gives her ms-yln into areas i.nl.cal !o Ven/or- r- succepr.

Ms Archambeau has served as a Director ol VF,r?oe smcf: Decemner 20:.i In the pasl 'i the boarc of Aruilron, Inc

MELANIE L HEALEY

Ms Healey. 52 is Group President - NorHi Arrenca and Gkihal Hyper-Mark Pt Super-Manjiet and Mast Cnannel of The Procter fi Gamble Ccr.pany, a provider of branded consumer packaged goods io customers \r. ovei 1f50 co-.intnes around i'ie world In I Ins role. Ms Hen'ey is responsible for (t>e overall North Anienca business which .r. fiscal 201 J had net sales of S32 S billion *wicl- joining Procter ,1 Gamble in 10F;0 Mr. Heaiey has held positiors ol ir.r leasing responsibility ■nclunmg Group P'esident Globa^: Feminine and Health. C.a'O and President. Global Fenvm.no Care & Adult C-ve

Ms Hf aley brings lo the Boa'd. a-rienn o'.'-.c sH.s and qualifications, an extensive background rn censurnor gcn:i'; marveling and irr.erna'.r.cal operations He- optonce m marketing irv.l.idnig mnrt; ifiav- 15 years outside ihe '.Jmlen Stales un quel-.' pusiiiuns Ms Heal-.w !c advise the Bn.ird and sernar managi:-menl or; crucal issues lacing Vendor. n'Cluc'ing coryjf'J'.e st(ii:eyy v.rln respeci to brand manjgeme"!, the consumer experience and global growth \r, an;i.!io.n Mi I'.eak.-y b leaoersii.p l-j penence at a cciplo inl^m;¹.!ion.nl orgarn/ation with a large, divorce work fore t- gives her ,i ihoroucih urd'i'starirfirnj uf ihe operational challc-in^s lac ng Veri-ron

tiber

Ms H<:.-il.;y h.i:

s J Diniclor c! Veivr.i

cine e

ihi; Huniar- Rescurcc-S Cnrnmii'.ee

^■^fl LOWELL C MCADAM"

■ M. FRANCES KEETH

Ms- Keeth. 67. was Executive Vice President of Royal Oulch Shell pic an energy company. Irom 2005 to 2006 In this lolc?. Ms Keeth was accountable for Shell's global chemicals businesses, which produced 536 3 billion in third party revenue in 2006 and operated in 35 countries From 2001 lo 2006, she was also President and Chief Executive Officer ol Shell Chemicals LP, Shell s U S operating company through which it conducted all of its operations in the United Stales Dunng her 37-year career. Ms Keeth held multiple positions of increasing responsibility al Shell, including serving as Executive Vice President. Finance and Business Systems, and Executive Vice President. Customer Fulfillment and Product Business Units In addition, from 1996 lo 199/, Ms Keeth was controller and pnncipai accounting officer of Mobil Corporation

Ms KeettVs extensive senior leadership experience at Shell, a complex global business c-gantzation, positions her well to pdvisc the Board and senior management on a wide range of strategy and financial mailers Ms Keeth brings to the Board, among other skills and qualltcations, valuable business leadership and operations management expenence in a global, capital-intensive business As a icsull of this expenence. she is able lo provide insights into many aspects of our business, including business systems, public accounting and finance Ms Keeth also has extensive expertise in international operations and strategic partnerships, which assists the Company in rrnpfernenling cur growth strategies

Ms Keeth has served as a Director of Venzon since 2006 and is a member of the Audit Committee the Human Resources Committee, and lhe Finance Commitlee She is also a director of Arrow Electronics Inc fsincc 2004) and, in the past five years, she lias served as a director of Peobody Energy Corporation

Mr McAdam 59, is Chairman and Chief Executive Officer of Venzon Communications Inc. Mr McAdarn became Chief Executive Officer on August 1. 2011 and Chairman on January 1, 2012 From October 2010 until becoming Chief Executive Ofdcer. Mr McAdam served os President and Chief Operating Oflrcer and had responsibility for the operations of the Company's network-based bustnesses-Venzon Wireless and Venzon Telecom and Business-as well as Venzon's shared services operations. Pnor to assuming [his role. Mr McAdam held key executive positions at Venzon Wireless from its inception in 2000 and was instrumental in building Venzon Wireless inlo an industry-leading wireless provider He was President and Chiel Executive Officer of Venzon Wireless from 2007 unlil 2010, and belore Ihat served as the company's Executive Vice President and Chief Operating Officer Before the formation of Venzon Wireless. Mr McAdam held executive positions with PnmcCo Personal Communications, a joint venture owned by Bell Atlantic and Vodafone AirTouch Airl ouch Ccmmunicat ons and Pacific Bell

Mr McAdam bnngs to the Board a unique understanding of our strategies arid operations through his broad expenence in the lelecommuntcaitoris industry and Ins pivotal role in the devclopmenl ol Venzon Wireless Mr McAdam serves a key leadership role on Ilie Board, providing the Board with an in-depth knowledge of the Company's business, industry, challenges and opport urn lies His extensive leadership expenence enables Mr McAdam to play a key role in all matlers involving our Board and positions hurt well lo acl not only as the Board's Cliaimnan, bul also as the pnncipai intermediary between management and the independent members of our Board

Mr McAdam has served as a Dnector of Verizon since 2011 Mr McAdam has been a member of the Board of Representatives of Vcruton Wireless stnee 2003 and lias served as its Cliamnan since 2010.

fDONALD T.NtCOLAtSEN

ROBERTW LANE

Mr Lane, 64. served as Chairman and Chief Executive Officer of Deere 4 Company from 2000 to 2009 Deere & Company is an equipment manufacturer that in fiscal 2009 had net sales and revenues of $23 1 billion and approximately 51,300 employees as of October 31, 2009 Dunng his 28 years at Deere, Mr. Lane held positions of increasing responsibility across a wide vanety of domestic and overseas units These positions included serving as President and Chi#f Operating Officer of the company. President of the Worldwide Agricultural Equipment Division, Chief Financial Officer of the company and President and Chief Operating Officer of Deere Credit, Inc

Mr. Lane's tenure as Chairman and Chief Executive Officer of Deere & Company and as a senior executive in several of its business units provides him with valuable business, leadership and management expenence, including expenence leading a large, complex organization wrth global operations This background gives him a global perspective that positions him well to advise the Board and senior management on implementing the Company s growth strategics. Mr. Lane also bnngs to the Board an extensive background in manufactunng marketing, operations and finance

Mr. Lane has served as a Director of Venzon since 2004 and is a member of the Finance Committee. He is also a director pf General Etectnc Company (since 2005) and Northern Trust Corporation (since 2009) and a member of the supervisory board of BMW AG (since 2009). in the past Wc years. Mr. Lane has served on the board of Deere & Company as its Chairman.

Mr Ntcolatscn. 69, was Chief Accountant of the U S Sccunties and Exchango Commission from 2003 to 2005 In that role, Mr Nicolaisen was responsible fur establishing and enforcing accounting and auditing policy applicable to alt U.S reporting companies and for improving the professional performance of public company auditors Pnor to joining the SEC, he was a Partner in PricewaterhouseCoopers and its predecessors, which hojoinod in 1967. At PnccwatcrhouscCoopers, Mr Nicolaisen served on tho firm's global and international boards, led the firm's national office for accounting and SEC services from 1968 to 1994. led the firm's financial services practice, and was responsible for auditing and providing nsk management advice to large, complex multinational firms.

Mr Nicolaisen bnngs to the Board a range of expenence in leadership positrons in both the public and pnvafc sector His extensive expenence as Chief Accountant at the SEC. an outside strategic advisor to multinational companies and a senior loader of one of the wortd s largest accounting firms cnabtoo him to advise the Board and senior management on accounting matters government relations and public policy. Mr Nicolaisen's unique financial and accounting background also provides financial expertise to the Board, including an irvdepth understanding of risk management, corporate finance and accounting, as well as the numerous issues facing a public reporting company.

Mr. Nicolaisen has served as a Director of Venzon since 2005 and is Chairperson of the Audit Committee and a member of the Corporate Governance and Policy Committee. He is also a director of MGIC Investment Corporation (since 2006), Morgan Stanley (since 2006) and Zunch Insurance Group {since 2006).

KATHRYN A. TESIJA

CLARENCE OTIS, JR.

Mr. Otis, 57, has been Chairman of Darden Restaurants. Inc a restaurant holding company, since 2005 and Chief Executive Officer since 2004 Darden Restaurants :s the largest company-owned and operated full-service restaurant company in tho world As of May 2P, 2013. the company's 206,000 employees operated 2.138 restaurants in lhe United Stales and Canada and generated fiscal 2013 sales ot $8 5 billion Mr Otis joined Darden in 1995 as Vice President and Treasurer and held positions of increasing responsibility, including serving as Chief Financial Olficer from 1999 until 2002. Executive Vice President from 2002 to 2001 and President ol Smokey Bones Uarbeque & Grill a reslaurant concept formerly owned and operated by L>amen P.cblauranlr., Irom 2002 lo 200-1 In addiiiim Mr Otis has seived as a class B director cf the Federal Reserve Bank of Allanta since 2010 In ihat role, he contributes lo the formulation of monetary policy, oversight of the bank s operational nsk mnnagemeni and Ihe review and appointment of senior management of the hank

Mr. Otis bnngs to the Board among other skills and qualifications, a broad backgrounn in consumer services, retail operations and finance, which are cntical areas for Venzon He has extensive business leariershiji and management experience Mr Otis leads a compte* ptg?.ni7.alion with n large divtrou wotklorre wUr.ti ijivvt h.m a thoiouyh understanding of many of tho operational challenges Verizon faces fn add.tion as a icsult of h,s experience at the Federal Reserve Bank of Atlanta. Mr 01* is positioned well to advise the Board ar.d senior management on risk management, which is an important area for a Urge, complex cmanizahori like Vu'i.-on

Ms Tesija. 51. is Executive Vice Piesidenl. Merchandising and Supply Chain and a member of the Executive Committee of Target Corporation, the second largest discount retailer in lhe United Stales with 1 782 slores. revenues ol $70 0 hillion and approximately 365.000 employees in fiscal 2012 In this role, which she has hold s.nce 7008 Ms Tesija oversees all merchandising functions, including product design and development sourcing inventory management merchandising systems presentation ond operations as wcill as the company s global supply chain Ms le:;ija joined Target m 1S86 and was appointed In numerous positions of increasing responsibility at die company, tanning from. Diiec'iiir. Merchandise Planning\o Senior Vice President. Hardlines Merchandising

As a result ol her long tenure al Target Ms Tesr-a has gained broad business and leadership openence Along wnh Iter significant management skills Ms 1 cuna bnngs to t.ne Board an in-depth knowledge of the rei.M ind.retry, expertise ;n loading the complex, largo-scale global retaJ functions of merchandising and supply cham and sign'ficani insight min consumer behavior which give Iter a thorough understanding of many important issues facing Vrnzon I ler oxlorts'vo background positions Ms Tesija well to advise the Venzon Board and scmcr management on implementing the Cur.'.pa"y s sttateyies

Ms 1 esi;a has served as a Director of Venron since December 201? ami is a member of the Corporate Governance and Policy Cornm Itee

Mr Otis has served as a L'mertor of Venmn since ;!006 nnn i Committee and Ihe Hurran Resources Cumminee He is alst

ttn.e trie Finance

rice ::oo-i)

? a member o< the Aud.t Comn' a director of VF Corporation [b

RODNEY E SLATER

Mr Slater, 59 is a partner at the law firm Patton Boggs LLP. locusing his practice i.n the areas of transportation and infrastructure and puhlic policy Pnoi to joining Patton Boggs, from Feb'uary 199/ to January 2001 Mr SLiler was the U S Secretary of Transportalion. In that position Mr Slater was responsible for overseeing national transportation policy, encouraging intermodal transportation negotiating international linnspwtation ngieemeiits and assuring the fitness of U S atrlmes Pnor io his appointment, as Secretary of Transportation frnn 'SiO'i to '⁽)^cji Mr Sinter was the Administrator of the Federal Highway Aan'-tnisnaiion whicn prcv.des Itnancr-I anc technical suupon lor constructing, improving and preserving the U S highway system

Mr SlJlefs e>Dcncncc as the U S Secretary o! 'f.-a.nsj.joiutiori and as lhe Acm rn:,1iaior ot tht¹ Federal Highway Administration position:.; h m well !o prcv oe oversig.nt io our Company wIkI' epeatt-j tr a hijhrv reyukiied industry, and to advise the Board and senior rr-iru?t,'i:£.'rti or¹ loo sturs strategic Dart-crshir:; gov-ir.-imer-.i rob!ions ami pjok policy Koch cf these areas is an important focus for Ven/on and has a fundamental impact on l^j w.iy the Company operates Mi Sl;il«^r also bnngs to the Board hrs experience guiding clients in developing infrastnji tu't¹ ;<:; wdl as insights on (he role of law in our business

Mi SlS'er has served as a Director of Vennuri smce 2010 and is a member of the Corporate Go'.trm.vce and Policy Committee He is also a director ol Kansas Cily Southern {since 2001). Irrmsurban G'oup (smce 2009) and Alums pic [since 2011) In the past five yearn, Mr Slater has served as a director ot Delta Air I mes Inc and iCx Jt.-chnologies.

GREGORY D WASSON

Mr Wasson. 55. is President and Chief Executive Officer of Walgreen Co . tho nation's largest retail dnigstore chain, which in fiscal 2013 had $72 2 billton of net sales, 8 582 locations and 2-iO.COO employees In June 2012 Walgreens announced a strategic partnership with Alliance Boots lhe leading pharmacy-led health and beauty yiourj acioss Luroue with a presence m more lhan 25 countries Mr Wasson has served as President and Chief Executive Ofhcer and as a member of lhe beard of riiiectors of Walgreens since 2009 A registered pharmacist he joined Ihe company in 1980 and was appointed to positions of increasing responsibility mclud.ng President of Walgreens Health Initiatives in. 2002. Senior Vice President of Walgreens in 200-1. E>ecutivc Vice President of Walgreens in 21X15 and President and Chef Operating, Officer ri Waln-ccns ir. TQ07

ana the

Wsr.nvi nas served as u Dm j.man Resources Committee

As Chief Fuecutive Officer ol Wnlgreurs Mr. Wasson has gained valuable operational and management cxper.^nce at a ccinnlo.* organization n-iih a fcirtjc diversi.- workforce and sign fir.ant global operations which twos nun a thcroucn unaen.;landing of the challenges lacing Ven/on in mp'cinew ng our gnjwlfi stmtco'es Mi Wasson t nngi lo fit Beard an "l-dc-plh know lodge or t.ne retail tnt:us'*y and ms.gn: mio the consumer expenence In addition h.s e»renr,ive t>jck'.;^rourid m tho heah'ica'O inuuMry posil.orv.; M> W;i:;so" wdl to advise the Bo_;ird and sento' managc-me'¹! on a¹' area v' incift«r.i'i'j importance to Verzo'i's evolv no business strategy

:tor ol Ven/on S'nce March 2013 and is a member of the Ann : Con-.

Ratification of Appointment of ■■■■■ - -Independent Registcred^Public Accounting Firm

(Item 2 on Proxy'Card)

The Audit Committee of the Board considered the r^rfc*mance and qualifications of Ernst & Young LLP. and has reappointed ihe independent registered public accounting firm to examine the financial statements of Verizon for the fiscal year 2014 and lo examine the effectiveness of internal control over financial reporting Ernst & Young has been retained as Venzon's Independent Registered Public Accounting Firm since 2000

Venzon paid the following fees to Ernst & Young for services lendcicd dunng fiscal years 2013 and 2012

	2013	2012
Audit fees Audit-iclatcd fees Tax fees All other fees	$ 24 6 million $ 4 6 million 54 0 million Si 1 million	S23 9 million $3 3 million $3 8 million SO 7 million

Audit fees include the financial statement audit, the audit of the effectiveness of the Ccmpany's internal control over financial reporting required by the Sarbanes-Oxley Acl of 2002. as well as financial statement audits required by statute for our foreign subsidiaries or by regulatory agencies in the United Slates Audit-related fees pnmanly include audits of other subsidiaries employee benefit plan audits, reviews of controls over services provided to customers, as well as olher audit and duo diligence procedures performed in connection with acquisitions or dispositions Tax fees pr.ma^r;ly consist of federal, state, local and international tax planning and compliance All other fees pnmanly consist of support services to certain Venzon expatriate employees The Committee considered, in consullalion with management and tlie independent registered public accounting firm, whetlier the provision of these services is compatible with maintaining lhe independence of Ernst & Young

The Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to perfoim audit services In order to assure continuing auditor independence, the Committee pcnodically considers whelher there should be a icgular rotation of the independent registered public accounting finn The Committee ensures thai the mandated rotation of the independent registered public accounting firm's personnel occurs roulinely and is directly involved in the selection of Ernst & Young s lead engagement partner

The Committee has established policies and procedures regarding pro-approval of services provided by the independent registered public accounting firm and is responsible for the audit fee negotiations associated with the engagement of the independent registered public accounting firm At the beginning of the fiscal year, the Committee pre-approves the engagement ol the independent registered public accounting firm to provide oud-t services based on fee estimates. The Committee also pre-approves proposed audit-related services, tax services and other permissible services, based on specified project and service details, fee estimates, and aggregate fee limits for each service category The Committee receives a report at each meeting on the status of services provided or to be provided by ihc in<k:pendent registered public accounting finn and the related fees and all fees arc approved

The affirmative vote of a majonty of the shares cast at the annual meeting is required to ratify Ihe reappointment of Ernst & Young for the 2014 fiscal year The Committee believes that lhe continued retention of Ernst & Young to serve as Venzon's independent registered public accounting firm is in the best interests of Venzon and its shareholders If this appointment is not ratified by the shareholders, the Committee will reconsider its decision

One or more representatives of Ernst & Young will be at tho 2014 Annual Meeting of Shareholders They will liave an opportunity to make a statement and will be available to respond to appropriate questions.

The Board of Directors recommends that you vote FOR ratification.

Compensation Committee Report : :r.--.--vr» ->? -:-.>

-The'l I u man" Re's oil fees Committee has reviewed and discussed the" Compensation Discus's ion" and Analysis with management Based on such review and discussions, the Committee recommended to the Board of Directors, and the Board has approved, the inclusion of (he Compensation Discussion and Analysis in this proxy statement and the Company's Annual Report on f'onn 10-K

Respectfully submitted.

Human Resources Committee

Joseph Neubauer, Chairperson Richard Camon Metame Healey M Frances Keeth Clarence Otis. Jr Gregory Wasson

Dated February 25. 2014

Compensation Discussion and Analysis

The Human Resources Committee of Ihc Board of Directors oversees the development and implementation of the total compensation program for Venzon s named executive officers Throughout this discussion and analysis of compensation, wc refer to tho Board of Directors as the Board and the Human Resources Committee as the Committee

Chairman and Chief Executive Officer

Executive Vice President and President and Chief Executive Officer - V Wireless

Executive Vice President and Chief f inancial Officer

Executive Vice President and President - Verizon Enlerpnse Solutions

Executive Vice President - Public Policy and General Counsel

For 2013. Venzon's named executive officers were

Lowell C McAdam Daniel S. Mead

Fiancis J Shammo John G Stratlon Randal S Milch

Executive Summary

Venzon's strategy is to build on tho strength of our network as a platform lor future growth and innovation To that end, in 2013 we focused on lhe growing areas of our business - mobility, broadband, video, cloud services and secunty We also passed a strategic milestone, entering into a transaction that would give us sole ownership of Venzon Wireless, which we expect to enable us to belter leverage our assets and capabilities across our business going forward Under the leadership of our management team, our solid execution on our strategic initiatives and our disciplined locus on our financial objectives delivered strong results in 2013 These included

Pcrfoimanco Metric 1	3013 Result	Change from 2012
Adjusted LPS Total Revenue Free Cash Flow Return on Equity	S2 84 1120.6B 572 2B 23 6%	26 8V. 4 1% 45 1% 654 bps

1A reconciliation of non-GAAP measures to the most directly comparable GAAP measures can be found in Appendix C to this proxy statement.

As discussed in greater detail below, based on Verizon's strong financial performance in 2013 and lotal shareholder return over the past three years, the 2013 short-term incentive award was paid at 110% of Ms targeted level and the performance slock units granted in connection with the 2011-2013 long-term incentive award vested at the 100% level.

Summary of Executive Compensation Program and Practices

Our commitment to adopting industry-tearing compensation and governance practices is reflected in the design of our compensation program. Some of these elements include

Pay-for-Performance

Approximately 90% of our named executive officers' annual total compensation opportunity is vanable. at nsk and incentive-based The primary components of our executive compensation program and their approximate percentage of the lotal compensation opportunity arc as follows

snUv

90% variable, incentive-based pay - composed ol an annual cash incentive based on achievement of pre-established performance goals and a long-term incentive in the form of an eguity-hased award thai vests afler three years and is composed of PSUs and RSUs

i does not include other forms o' fi» guaraniced pension and suppImtu:

1lJ*'c li*ed pay -■ annual cash ha

In add lion. t"*t compensation proo/a non-performance related pay such a benefits

Benchmarking Total Compensation

evaluation of Potential hnkagc between Compensation and Risk Taking

The Committee benchmarks each executive's total compensation opportunity aga nsl a single peer group referred to as the Related Dow Peers and described beginning on page 32 and in Appendix B The Committee references the GO »> percentile ol Hie Related Dow Peers foi tolal compensation opportunity, with further consideration given to the tenure and overall level of responsibility of a particular executive

When reviewing the compensation program and the performance metnes used undo.' the program the Committee consrdeis the impact o! the compensation program on the Company's nsk prctile lhe Committee believes that Venzon's compensation program has been structured to provide strong incentives for executives to appropnatefy balance risk and reward consistent with the Company s enterpnse business nsk management efforts

Shareholder Outreach Piogram

At the request of '.he Committee, management and tin: Comm.ttee's compensation consultant. Pear] Meyer A Partners (tho Consultant), engage i-n a semiannual sharenelder outreach program wilh certa.n insl tudonal investors lo dscuss the design and ooeranon of Venzon s executive compensation program Management a'id tlie Consultant provide a report lo the Committee on Ihe rusul'.s ol that outreach The Committee t-eliuves this program provides opportunities for shareholders to provide input on Venzcn'r. executive compensation program arid policies in addition to the annual say-on-nay vole

The Role of Shareholder Say-on-Pay Votes and Shareholder Outreach

Tin? Company provides its shareholders with ihe opportunity to cast an annual advisory vote on e^c-<:u:ive coinpenr.a (say on-pay) At the Company's Annual Meeting ol Shareholders held in May 2013. approximately 89¹/. o! the vulns c on tlie sny-ori-pay proposal were voted in favor ni trie pro:>osal 1 he Committee consulting this vote as demonstratm strong shareholder support lor the Company s executive compensation programs

Based on the shareholders Strong support for trim Con.pjny s say on pay prop;>;>al in 7013 as well as in each o! Ihr preceding years thai a say-on-pay vole has been held and Hie discussions wilh the Company's investors dunng Ihe semiannual stvm-h older outreach program de*>(.nbed aljove, tlw? Company continued io apply the same eff^ctivr? principles and philosophies highlighted above and doiacnpod more fully below that have been apofn.-d in pnor yuars wn making compensation decisions for 2013

Role ot Benchmarking and Peer Group Selection

The Commiltec bcl eves thai it rr. appropnate to use the same peei group to tic-nchmanX occi.livo pay r.ppor; unities r? to evaluate Verizon s relative stock performance ■under its lung-^:.erm incentive plan Fo^- tn:s

purpose, the Committee uses a single peer group that includes the 29 companies (other than Verizon) in the Dow Jones Industnol Average, plus Venzon's four largest industry competitors that are not included in the Dow Jones Industrial Average This group is referred to as the Related Dow Peers. The Committee believes that this group of companies, compnsed of similarty-eized companies based on market capitalization, net income, revenue and lotal employees that arc included in an estabSshed and recognizable index, as well as Verizon's four other largest industry competitors, is appropnate for the dual purpose of benchmarking executive pay opportunities and evaluating relative stock performance under the long-term incenlive plan because the companies in the Related Dow Peers represent Venzon's primary competitors for executive talent and investor dollars Moreover, this peer group is self-adjusting so that changes in the companies included in the Dow Jones Industrial Average are also reflected in the Related Dow Peers over time For this reason, the Committee believes that the Rclalcd Dow Peers provides a consistent measure ol Venzon's performance and makes it easier for shareholder; to evaluate, monilor and understand Ven.TOn's compensation program

To delcnine whether the compensation opportunities for executives are appropnate and competitive ihe Committee comoares eac»i named executive ctlicers lotal ix.mpensation opportunity -whicn represents lhe aggiegale total amount of the executive s base salary and targe! award amounis under the short-lenn and long-term incentive plans - to the lotal compensation opportuat.es (or executives m comparable positions at peer companies The Committee generally refcences ihe 50 ^,h [ erceriMe of inc Related Dow Peers for total compensation opportunity, all.nougn the total compensation cpportjnuy may i;u above or below tho 50 <'■ percentile depending upon Ihe tenure and overall level of responsibility nf a particular e»ccutivo The Committee believes thai tnis is an appropnate targeted level o' tola; compensation, opportunity because of Venzon's emphasis on pcrlomiancc-basco incentive pay and Venzon s sizc relative to the Related Dow Peer; Actual total compensation may fall above or below the targeted percentile based cn annual and long-temi performance results

Append-x 13 to this proxy statement includes a chart that I sis the companies included in tne Related Dow Peers lor 2U13 compensation purposes, (heir market capitalization as o! December 31 2013. as reported by Bloonineig, and tneir net income attributable to tne company, revenue and total number of employees, as of eacn company's most recent fiscal year-end as reported in SliC Mings

Compensation Objectives and Elements of Compensation Compensation Objectives

Ven/on"s compensalion program is designed to

anagemem and shareholders, the Cornmilieti

Align executives' and shareholders' interests lluough the use of performance-based compensation and Attract retain and motivate high-performing executives

To promote a performance-based culture trial further links the interests of r has developed a compensation progiam that

focuses extensive!/ or vanable. performance -based compensation, wilh fi*ed compensation in lhe form of base salary constituting only approximately 10^a,i of each executive s total compensation opportunity, and does not include such fued compensation elements as guaranteed defined benefit pension and supplemental pension bene'its

In establishing the mix ut incentive pay used in the Company's pay-tor-performance program, the Committee balances lhe importance of meeting the Company s short-term business goals with the need tc- creale st-areliolder value over the longer lenn To nelp ensure that lhe interests of executives remain closely aligrnHi with Ihe interests ol sharelwlders target long-term compen:;al:oii opportunities represent more than twice the target compensation opportunities related tn short-term performance

Additionally, the Company s compensation program features three-year long-term incentive awarcs. including PSUs suhjeel to both performancc-hasec: and time-based vesting requiremenls and to rnrourage high-performing executives to remain with the Company RSUs that vest based on the executive s continued employment through the end of lhe three-year performance evele

Elements ol Compensation,-.-... --. ^ - . :. "■" .- "'

In setting total compensation at competitive levels'." the Committee determines the appropcate balance between

Fixed and vanable pay elements. Short- and long-term pay elements, and Cash and equity-based pay elements

The following table illustrates the pnncipai elements of Verizon's executive compensation program

Pay Element	Characteristics	Primary Objective
Base salary Snort-term incentive opportunily (STI) Long-term incentive opportunity (I.TI)	Annual fixed cash compensation Annual vanable cash compensation based on the achievement of annual performance measures Long-term vanable equity awards granted annually as a combination of PSUs and RSUs	Attract and compensate high-performing and expenenced executives Incentivi/e executives to achieve challenging short-term performance goals Align executives interests wilh those of shareholders lo grow Irjng-temi value and retain executives

As discussed above, the Commillee references the 50 ^ pcrccnlite ol the Related Dow Peers to benchmark ihe total compensation opportunity of each cf our named executive officers However the Committee does not benchmark each element of a named executive officer's total compensation opportunity Instead, consistent with the Committee's emphasis on a performance-hascd culture, lhe Committee has determined that a substantial majority of each named fiAfiTutive officer's total compensalion opportunity should be vanable and performance-based Accord.ngly. Ihe Committee delcrm.ned in its business judgment to allocate approximately 10% of each executive s total compensation opportunity in the fomi of base salary, approximately 15% to 25% in the form of short-term incentive and approximately 65% to 75% in the form of long-lerm incentive

The following chart illustrates the approximate allocation erf the named executive officers' total compensation opportunity for 2013 between elements that are vanable, performance-based and fixed pay

. 2913 Find va, Variable Pay fcVi

.■■^2013 Annual Base Salary ""'.rP¹^' ..." '."■":: '-" "'

To determine an executive's base salary, the Commiticc, m consultation with the Consultant, reviews Ihe competitive pay practices ol the Related Dow Peers for comparable positions and considers the scope of the executive s responsibility and expenence. In particular, tho Committee focuses on how base salary levels may impact the market competitiveness of an executive's lolat compensation opportunity. The Committee also discusses rls assessment of the other named executive officers with the CEO Based on its assessment, the Committee approved a base salary increase in 2013 of 12 5% for Mr. Mead. 10 7% for Mr Shammo. 7 4% for Mr Stratton and 3 1% lor Mr Milch The base salary levels of the named executive officers were adjusted with the goal of providing a total compensation opportunity that more closely approximates the 50 th percentile lor comparable executives within the Related Dow Peers, with approximately 10% of each named executive officer's lotal compensation opportunity provided in the form of base salary In 2013 the indcpcndeni memhers of the Board approved an increase of 7 1% for Mr McAdam This is the first base salary increase that Mr. McAdam has received since 2010 when he was promolc-d to tho position of President and Chief Operating Officer ol Venzon

2013 Short-Term Incentive Compensation

The Vcn/on Short-Term Incentive Plan, which rs refened lo as the Short-Term Plan, motivates executives lo achieve challenging short-term performance goals Each year, the Committee establishes the potential value of the opportunities under the Snort-Term Plan, as well as the performance targets required to achieve these opportunities

The Committee sets the values of the Short-Teirn Plan award opportunities as a percentage of an executive s base salary The applicable percentage for each named executive officer is based on the scope cf the executive's responsibilities and on lhe competitive pay practices of the Related Dow Peeis. These award opportunities are established at threshold, larget and maximum levels The Short-Term Plan award opportunities at the threshold, target and maximum levels for each of the named executive officers are shown in the Grants of Plan-Based Awards table on page 46

The following chart shows the 2013 Short-Term Plan target award tpportunity for each of the named executive officer*;

3.750 000 990.000 852.500 797.500 737,000

2013 Short-Term Plan

Target Awa'd Opportunity

(S)

Named Executive Officer

Mr. McAdam Mr. Mead Mr Shammo Mr Stratton Mr. Milch

&"i»ed r»o*i

Tne 2013 target award opportunities for our named executive officers, expressed as a percentage of base salary, did not increase from the target levels established for their 2012 award opportunities Whether, and the extent to which, the named executive officers earn Ihc targeted Short-Term Plan award is determined based on whether Venzon achieves performance measures established by tho Committee at the beginning of the year

The named executive officers are also eligible lo receive medical, disability and savings plan benefits that are generally provided to all management employees, as wcl as certain other benefits that are desenbed under "Other Elements of the Total Compensation Program* beginning on pago 40.

Determination of Annual Performance Measures

The Committee reviews and establishes the performance measures for the Short-Term Plan on an annual basis to help ensure that the program design appropnatefy motivates executives to achieve challenging financial and operational performance goals. In the first quarter of 2013. the Committee reviewed and approved the following annual financial and operating r^rformance measures for all corporate executives, including the named executive officers, and asenbed to each the weighting shown below as the percentage of the total Short-Term Plan award opportunity at target level performance.

■2013 Shorl-Ttrm PUtn Peilormanc* lW»»urr»

Consislent with 2012, the Committee based the Short-Term Plan award opportunities lor all corporate executives including lhe naiiiwl executive officers, primarily on three Company-widn financial performance measures, as determined by specific goals for adjusted EPS. revenue and free cas'i flow T lu'se three measures we'e selected lo reflect tl» Company's strategy goals of encouraging piofitaale operations, overall growth in tne Company and el'inent use o' capital The Committee believes that these performance measures are appropnate to incentivize the Company's executives to achieve outstanding shorl-t'jnn results and. at the same time, help build long-term value tor 'oharuhnlders

Adjusted EPS. The Commiitee also vit'ws adjusted HPS as an important indicator of Verizon s success Tho Committee assigns the greatest weight tu aujusled EPS in deit-miinuig awards under the Short-iirnn Plan, because it is broadly used and recognized by investors as a significant indicator ol Venjon s ongoing operational performance and is a clearly defined indicator of lhe Company's prcfitaoil.ty Adjusted EPS excludes nnn-recumng and non-operational items, including hut not limited to impairments and gains and fosses 'rom discontinued operations, business combinations, changes in accounting pnnciples the net impact of pension arid po'jt retirement uonutt costs extraord nsrv tems and restructurings At, a result. ad;iistec EPS is :ic1 pos.tively or negatively impacted l.-oin |n."iod to penod by tliese types of items, so the Committee believes it bout¹ rellvcls the relative success of Ihc* Company s orvicmg business

is an important indicator of :In> irllecis the level of penetration

Revenue The Committee also vievts achievement of consolidated total revenu Company's growth and success in managing its capital investments 1 his measi ol Venzon s products and services in key markets

Free Cash Flow Th« Committee views consolidated fir.c cash flow as anotmji important mrfiroiir of Venzon's success m deliven.ng shareholder value because investors often cor.sidui (ret; cash flow as part ot ilieir uqu ty vaUalion model? Tree cash flow is determined by subtracting capital expenditures Irom cash flow from cpfr.itniis The Committee believes that this type of cash flow measLre is relevant for Verizon Because Venzon s businesses require significant capital investment, ana the level of free- cash flow reflects how u^!rcionlly a hu'.,i'ie:-.s js manaji-g its cainlal expenditures Free cash flow clso provides an ■noicalion of lhe amount of cas'i U'al the Ccmoury ho* available to return lo shareholders m thy form of dividends and lo red yew its oulslanaing oebt. DOth ot which we uunside: lo Ul- imputtiii'.: goals

Diversity The Company is committed to promoting diversity among its employees and to recognizing and encouraging the contribution of diverse) business partners to the Company's success To reflect that important commitment, the 2013 performance measures also Include a diversity measure. For 2013, the Committee determined that the diversity target would be measured for these purposes by the percentage of new hires and promotions at and above rhe manager level consisting of minority and female candidates and the levels of supplier spending at the corporate level wilh minority* and female-owned or operated firms.

The value of the Short-Term Plan award opportunity with respect to each performance measure vanes depending on tho Committee's assessment of the Company's performance with respect to that measure. The Committee also has the discretion to mod.fy awards based on olher factors that it deems appropriate

In addition, under the Short-Term Plan nc awards may be paid if Ven/on's return on equity for the plan year calculated based on adjusted net income (ROE;), dues not exceed 8%. even if some or all of the other performance measures are acrueved

2013 Annual Performance Measures

The 2013 annual performance measures for all corporate exe

including the named executive office's.

An adjusted EPS laryei rangi.- oi $2 52 lo $2 66.

A consolidated tola¹ revenue target range of $121 4 bill-on to $172 0 billion, A coi"".tlidated tttfC cash flow target range ot S20 8 billion '.o $?? 4 bi'.l'On and

A diversity targe! ot (i) having 50V,- of new h.res and pro mot. oris at and above the manage* level consist ot minonty arid female candidates and (:i) directing at leasl 10% of the overall supplier spending at the corpora! level lo minonty- and female-owned or operated firms

2013 Company Results and Annual Performance Awards

In 2013. Ven/on reported generally strong results Venzon s 2013 results 1 included ROL- of 23 6%.

Adjusted EPS of t? 8-1. which exceeded the target range.

Consolidated total revenue of S1T0 5 hillion. which was just helnw the target range.

Consolidated free cash flow ol $22 2 billion, which was within the targol range, and

Diversity rn now hires and promotions above target performance and supplier spending above targei

performance

Alter considenng Ihe level of performance with respect to eacti perfonnance measure and applying its business judgment har.od on its assessment ol the level of achievement of each goal individually and collectively, ine Commit; ann for Mr McAdam. ihe independent members of lhe Board, determine the final Short-Term Plan awards al a percentage of thr; targe; level for all participants For 2013. the payout percuntngc was determined lo be 110% of ine iargei level to* all corporals executives Tne following tnhle show.¹; lhe amount cf the Short-Term Plan awards paid to f.Hch named p ><■.-:■ nivi; nlfu-e'

125.000 1.0R9 000 937 750 877.2r.fi 810 700

Actual 2013 art-Term Plan Aw

Named Executive Officer

Mr McAdam

Mr Mead

Mr Shammo

M' Strailon

ii fo.rnJ if Appendix C

Mr Milch

, of non-GAAP mi atcmflnl.

>sl drectly comparable GAAP mcasi

Long-Term Incentive Compensation

The Venzon Long-Term Incentrve Plan, which is referred tb as the Long-Term Plan, is intended to reward participants' for the creation of long-term shareholder value over a three-year penod and further link executives' interests to shareholders' interests In considenng the appropnate duration of the performance cycle under the Long-Term Plan, the Comm,:tec believes that it is important to establish a penod that is longer than one year in order to meaningfully evaluate (he pc-rformance of long-term strategies and the effect on value created for shareholders Based on this consideration, the Committee determined that a three-year performance cycle for the Long-Term Plan awaids was appropriate

Consistent with the three pnor award cycles, the 2013 PSUs are payable rn cash and the 2013 RSUs are payable in Venzon shares The Committee believes that paying PSUs in cash and RSUs in shares creates an appropnate balance between the potential shareholder dilution from paying awards in shares and cash flew considerations, and that both types of awards further align executives' interests with those ol Venzon's shareholders as the ultimate values of the awards are based on the value of Venzon's common stock In addition, paying ihe 2013 RSU awards in slwires is consistent with Venzon's policy of requmng a significant level of equity ownership by our named executive officers

The value of each PSU is eaual to the value of one share of Ven/on common stock and iiccrucs dividend equivalents that are deemed to be reinvested in PSUs The d.vidend equivalents are only paid to the extent that PSUs aro vested and earned The Committee determines an executive's Iclal compensation opportunity by assuming thai he or she will earn 100% of the PSUs initially awarded' in any performance cycle However, the number of PSUs that are actually earned and paid is determined based on Venzon's acmevement of the pre-established perfonnance goals over the three-year performance cycle 1 he. final value of each PSU is based on the closing pnee of Venzon's common slock on the last trading day ol the year that the performance cycle ends As a result, awarding PSUs provides a strong incentive to executives to deliver value to Venzon's shareholders

On the date tbe long-term incentive is awarded, the Committee also establishes the number of RSUs that may be earned based on the executive's continued employment with the Company through the end of the three-year award cycle as reflected in the award agreement The value cf each RSU is equal to the value of one share cf Venzon common stock and accrues dividend equivalents that are deemed to be reinvested in RSUs The dividend equivalents are only paid to the extent that the RSUs vest The 2013 RSU awards are payable in shares at the end of the three-year award cycle and provide both a retention incentive and a performance incentive as the value of the award depends on Verizon's stock pnee The Committee determines an executive s total compensation opportunity hy assuming he or she w;|| earn 100% of the RSUs awarded

2013 Long-Term Plan Award Opportunities

Consistent with the 2012 awards, for 2013. each of the named executive officers received 60% of their 2013 Long-Term Plan award opportunity in the form of PSUs and 40% of then award opportunity in the form of RSUs. Two-thirds of the PSUs are eligible to vest based on Venzon's relative TSR performance and one-third is eligible to vest based on Venzon's cumulative free cash flow This allocation reflects the Commillees focus on encouraging both outstanding relative TSR performance and free cash flow creation and the retention of tho Company's highly-qualified cxeculive team.

The Committee generally establishes an executive's Long-Term Plan target award opportunity as a percentage ol the executive's base salary. The Long-Term Plan target award opportunity for each of the named executive officers in 2013 was 625% of base salary for Mr McAdam. 525% of base salary for Messrs. Mead, Shammo and Stratton and 500% of base salary for Mr Milch. The target award opportunities for the named executive officers increased over their 2012 target award opportunities solely as a result of their base salary increases identified above (re, their target award opportunities, expressed as a percentage of therr base satines, did not change) The Committee determined that these award levels were appropnate so that each executive's target annual Long-Term Plan award opportunity would constitute a significant portion of the executive's benchmarked total compensation opportunity consistent with the objectives of the Company's pay-for-performance program. The target award opportunity for an executive is allocated between PSUs and RSUs as noted above, and the target award opportunity allocated to each type of award ts converted into a target number of shares using the closing pnee of Venzon's common stock on the grant date.

The following table shows the target value of the awards.granted to the named executive officers dunng 2013 in

connection with the annual long-term incentive compensation opportunity Additional detail regarding the 2013 PSU

■-awards, including tne performance requirements, tullows.the table.' 7^.,... ."."L"'-: _i .- '- . ~r _z ■

Named Executive Officer

2013 Long-Term Plan

Target Award Opportunity

(S)

Mr. McAdam 9.375.000

Mr Mead 4.725.000

Mr Shammo 4 0613.750

Mr Stratton 3 806.250

Mr. Milch 3.350.000

Terms of 2013 PSU Awards

Two-thirds of the number of PSUs awarded are eligible lo vest based on Venzon's TSR as compared to the TSRs of the companies in the Related Dow Peers, as constituted on the grant dale of the award, over the 2013-20*5 performance cycle One-third of the number of PSUs awarded is eligible lo vest based on Verizon's cumulative dee cash flow over the 2013-2015 performance cycle compared agamst the performance targets established by the Committee at the beginning of the performance cycle

TSR Metric. With respect to PSUs that vest based on relative TSR performance (TSR PSUs). the following chart shows the percentage of tne 1SR PSUs awarded for the 2013-2015 performance cycle that will vest based on Venzon s relative I SR positioning compared with the companies in the Related Dow Peers

Venzon's TSR dunng the thrco-ycar performance cycle must rank at least 15 th, or at the 58 th percentile, among tho Rotated Dow Peers in order for 100V. of the target number of TSR PSUs lo vest. Similarly, the maximum number of TSR PSUs (200% of target) will vest only if Venzon's TSR dunng the three-year performance cycle ranks among the top four companies in the Related Dow Peers, which corresponds to tho 91 » percentile or higher. If Venzon's TSR dunng the three-year performance cycle ranks below 25 th. or below approximately the 27 <h percentile of the companies in (he Related Dow Peers, none of the TSR PSUs will vest.

Free Cash Flow Metric The percentage of PSUs awarded for the 2013-2015 performance cycle Ihat will vest based on Venzon's cumulative free cash flow (FCF) (referred to as FCF PSUs) will be determined based on the extent to which

Venzon's cumulative FCF over the performance cycle meets or exceeds the cumutatrvo FCF

performance levels that were established by the Committee at the beginning of the performance cycle FCF ts determined by subtracting capital expenditures from cash flow from operations, and is subject to adjustment to eliminate the financial impact of significant transactions, changes in legal or regulatory policy and other extraordinary items.

At the end of the performance cycle, the number of FCF PSUs that will vest, if any. will be determined by companng the actual performance of the Company against the performance objectives. The cumulative FCF target for the 2013-2015 performance cycle was set at a level that the Committee believes may be challenging in light of the economic environment, but attainable. The number of FCF PSUs that will vest will range (rom 0% if performance is below the threshold cumulative FCF level and up to 200% for performance at or above the maximum cumulative FCF level The number of FCF PSUs that will vest in between threshold and maximum performance levels will be determined by linear interpolation between vesting percentage levels

2011 PSU Awards Earned in 2013

Wiin respect lo the PSUs awarded in 2011. Hie Comm'tlec liutermincd lhe number of PSUs ihat vested (or a participant nased on Verizon s TSR for the 2011-2013 three-year performance cycle relative lo the TSRs of tho Related Dow Foors ar. constituted on the date the awaid was granted The following table shows the percentage of PSUs awarded for the ?011-2013 performance cycle that could vest based on a range ot Venzon s relative 1 SR positioning compared with the compan es in the applicable Relalea Dow Peers

Venzon s Relative ISR Ranking Among the Companies in the Related Dow Peers	Correspond rvg Relative ISR Percentile Ranking Among the Companies in the Related Dow Peers	Percentage of Awarnetl PSUs that will Vest
1 -4 5-8 a -12	91 ^ to 100 U' 79 tn to 88 th 67 in to 76 u»	200% 175% 150%

17-21 22-25 26-34

39 tn to 52 "<J 27 I" to 36 th 0 to 24 Ui

75% 50% 0%

Over the three-year performance cycle ending on December 31, 2013, Verizon's TSK ranked 13 "». ot at the 64 in percentile, when compared to the Relates Dow Peers As a resull ol this achievement, in early 2014 the Committee approved a payment to all participants including tlie named executive officers, of 100% of the number of PSUs awarded lor the 2U11-2013 performance cycle, plus dividend equivalents credited on those PSUs that vested pursuant ic the terms of tne award As a result, even though the Company achieved performance at the W "> percentile of the Related Dow Peers the named executive officers wily received lhe target number of PSUs gianted. plus dividend equivalents

Otfier Elements of the Total Compensation Program

I hp Company also provides the nameo n>ccutive officers with certa-n imi.lcd persona! benefits ai generally dc-senhef below None ol the named executive officers is eligible '.qi any tax gross-up payment in connection with any of tnese benefits includ ng with respect lo the e*cise tax hahility undei Internal Revenue Code Section 4999 (elated lo anv Section 280G e*cess parachute payments

Transportation

Tne Company pruvides certain, n. re raft and giound transportation benefits (o enhance the sak-ly and security o! certain named executive ollicers These transportation benefits even wnen classilied as a perquisite under applicable Sf!C lules. also serve business purposes au they fiecuontly enhance (he ability ol the executive to attend to business matters while in transit Additional inlormation, on Company-provided transportalicn is included in footnote 4 to the Summary Compensation Table un uayu 45

Executive Life Insurance ... '

The Company oilers the named executive olhccrs and other executives the opportunity to participate in an executive tile insurance program m lieu of participation in the Company's basic and supplemental life insurance programs The executives who elect to participate in the executive life insurance program own the life insurance policy, and ttie Company provides an annual cash payment to lhe executives to defray a portion of the annual premiums Additional information on this program is provided m footnote 4 to the Summary Compensation Table on page 45

Financial Planning

The Company provides a voluntary Company-sponsored financial planning benefit program for the named executive officers and other executives Add-iional information on this program is provided in footnote 4 lo the Summary Compensation Table on page 45

Retirement Benefits

In 2006, the Committee determined that guaranteed pay m the form of pension and supplemental executive retirement benefits was not consistent with the Company's pay-lw-periormanc.c culture Accordingly, eticc'.wc June 30 200G. Venzon froze all future pension accruals unaer its management tax-qualified and supplemental defined benefit retirement plans These legacy retirement benefits that were previously provided to Venzon's named executive officers are described rn more detail under the section titled "Pension Plans" beginning on page 48

Dunng 2013, all ol Verizon's named executive officers were eligible to participate m the Company's lax-qualified and nonqualified retirement savings plans These plans are described in the section tilled "Defined Contribution S3vmgs Plans" beginning on page 50

Severance and Change in Control Benefits

The Committee believes thai maintaining a competitive level of separation bcncfiis is appropnate as part of an overall program designed to attract, retain and motivate the highest quality management team However, the Committee does not believe that named executive clficers should be enutled to receive cash severance benefits merely because a change in control transaction occurs Therefore, the payment cf cash severance benefits is tnggerod only by an actual cr constructive termination ol employment

ThC Company was not a party to an employment agrcemcnl with any of the named executive officers in 2013 All senior managers of the Company {including each of the named executive officers other man Mr McAdam) are eligible lo participate in the Venzon Senior Manager Severance Plan, which provides certain separation benefits to participants whose employment is involuntanfy terminated without cause from the Company Mr McAdam is not eligible to participate in the Senior Manager Severance Plan and is not eligible for cash severance benefits upon a termination

The Senior Manager Severance Plan is generally consistent with the terms and conditions of Venzon's broad-based severance plan that is provided to substantially all of Venzon's management employees other than senior managers Under the Senior Manager Severance Plan, if a participant has been involuntanfy terminated without cause or, in the case of a named executive officer, if the independent members of the Board determine that there has been a qualifying separation, the participant is eligible to receive a lump-sum cash separation payment equal to a multiple of his or her base salary and (argot short-term incentive opportunity, along with continuing medical coverage for the applicable severance period. To the extent that a senior manager is eligible for severance benefits under any other arrangement, that person will nol be eligible for any duplicative benefiis under the severance plan. The plan does not provide for any severance benefits based upon a change in control of the Company

Under the plan, (he named executive officers (other than Mr McAdam) arc eligible lo receive a cash separation payment based on a formula equal to two times the sum of their base salary end target short-term incentive opportunity Other senior manager participants are eligible to receive a cash separation payment based on a formula equal to between 0 75 and two times their base salary and target short-term incentive opportunity depending on their position at lhe time ol their separation from employment. In order to be eligible for any severance benefits, participants must execute a release satisfactory to Verizon and agree not to compete or interfere with any Venzon business for a penod of one year after their separation from employment.

Consistent with the Committee's.belief thai named executive officers should not be entitled lo receive cash severance bene''!s merely because a change in control transaction occurs, the Long-7 emi Plan does not allow "single trigger" accelerated vesting and payment of outstanding awards in connection with a change in control of Venzon Under the Long-Term Plan, rf. in the twelve months following a change in control the participant's employment is terminated without cause, all den-unvested PSUs will fully vest at the target level performance, all then-unvested RSUs will fully vest and PSUs and RSUs (including accrued dividend equivalents) will become payable on the regularly scheduled payment date after lhe end of the applicable award cycle.

Selected Compensation Policies

Stock Ownership Guidelines

To further align the interests of Venzon's management with those of its shareholders, the Committee has approved guidelines that require each named executive officer and other executives lo maintain certain slock ownership levels

The guidelines require the CEO to maintain share ownership equal to at least seven times his base salary and require the other named executive officers to maintain share ownership equal to at least lour times their base salaries

Executives are also prohibited from short-selling or engaging in any financial activity where they would benefit from a declme m Venzon's stock pnee.

In determining whether an executive meets the required ownership level, the calculation includes any shares held by the executive directly or through a broker, shares held through lite Venzon tax-qualified savings plan or the Venzon nonqualified savings plan and oilier deferred compensation plans and arrangements that are valued by telerence to Venzon's stock The calculation does not include any unvested PSUs or RSUs Each of tlw named execulivc officers 15 m compliance with thu stock ownership guidelines None of the namod executive officers has engaged in any pledging transaction with respect to shares of Venzon's stock

Recovery of Incentive Payments

The Commilloc believes that it is appropnate that the Company's compensation plans and agreements provide lor the termination or repayment ot certain incentive awards and payments if an execuiive engages in certa:n fraudulent or other inappropnate conduct Accordingly the Committee has adopted a policy that enables tho Company to claw back and cancel certain incentive payments received by an executive who has engaged in financial misconduct The Committee reviews this policy from lune lo time and will refine the cuncni policy to take into account changes in applicable law, including, for example, pny changes that may he required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

Shareholder Approval of Certain Severance Arrangements

The Committee has a pohcy of seeking shareholder approval or ratification of any new employment agreement or severance agreement with an executive officer that provides for a total cash value severance payment exceeding 2 99 times the sum of Ihe executive's base salary plus Short-Term Plan incentive larget opportunity The policy defines severance pay broadly to include payments for any consulting services, payments to secure a non-compete agreement, payments to settle any litigation or claim, payments to offset tax liabilities, payments or benefits that arc not generally available to similarly-situated management employees and payments in excess ol. or outside, the terms of a Company plan or polxy

Tax and Accounting Considerations

Federal income tax law generally prohibits publicly-held companies from deducting compensation paid to a named executive officer (other than a chief financial officer) that exceeds $1 milPon dunng the lax year unless it is based upon attaining pre-established performance measures that are set by the Committee pursuant to a plan approved by the Company's shareholders. The Committee has the flexibility to take any compensation-related actions that it determines arc in the best interests of the Company and its shareholders inctudtng determining when to request shareholder approval of the Verizon incentive plans and when to award compensation that may not qualify for a tax deduction. The Committee considered the desirability of tax deductibility for performance-based executive compensation tn determining to submit the Long-Term Plan to the shareholders for approval in 2013. Compensation paid to the named executive officers under the Short-Term Plan, as well as the PSUs

awarded under the Long-Tern Plan, are generally intended to meet the performance-based exception for deductibility under the tax taws.

The Committee also considers the effect of certain accounting rules that apply to the vanous aspects of the compensation program available to the named executive officers The Committee reviews potential accounting effects in determining whether its compensation actions are in the best interests of the Company and its shareholders The Committee has been advised by management that the impact of the vanable accounting treatment required for long-term incentive awards that arc payable in cash (as opposed to fixed accounting treatment for awards that are payable in shares) will depend on future stock performance

Committee Actions Taken After Fiscal Year 2013

On February 6, 7014. the Committee recommended, and the Board of Directors approved cumpensalio'i aujuslmciis 'cr Mr McAdam and tl« Committee approved compensation adjustments tor Messis Mead Shammo. Straunn a."'! M-lcn In making these decsions. tlie Committee, and in the case of Mr McAdam. the Board. nol>:d tha; the Changes re'leU Venzon's commitment to emphasizing performance-based incentive pay and compensfitn'g its executive olficers a: levels commensurate with Venzon's position in the marvel For 20*4. Mr McAoam's target annual ^:ong-term incentive opporlunrfy. expressed as a percentage of base salary, was increased from 625% to 'fWA. and tho large; annual short-term incentive opportunity for each of the named executive off cers othe* than Mr McAdam c> pressee as a percentage of base salary was increased from 110% to 150% The base salaries cf each of ihe named executive officers were increased as follows for Mr McAdam, 6 7*/-, lor Mi Mono. 5 6% lor V.i Sn.-m-.mo. 6 1oi Mi Si mil or, 10 ^-3*'i. a:«! for Mr Milch, fl 2% The base salary adjustments are effective March 2. 20"4 No cha"ge was made to Mr McAdam s target annual short-term incentive opportunity, and no change was made lo the target annual rung-term incentive opportunities for any ol the named executive officers other than Mr McAdam

urn P'csiJ-. VnrL-onCM ScLlJ.-.t

2ii:.l ?ni?

>"'.U 731 72T, (>j:j

Compensation Tables

Summary Compensation Table

Non-Equity Incentive Plan CorrpensaW"

/3<i ilr"l

Nonqualflcd Deferred

tThe amounts m this column reflect the grant dale fan value of the PSUs and RSUs computed m accordance with FASB ASC Topic 718 based on the closing pnee ot Verizon's common slock on the grant date- 1 he grant dale fair value of PSUr. g>anted to the named unutu'.iv*) officer*; -.n the designated year as part ot Vcvcn'*:. annual Ijiwj-term incentive-awara program and, in the case ci M' McAdam, the special PSU award granted in 2011 rn connection with his appointment to CEO, fiat; txien determiner! based on the vesting ol 100% of the nominal PSUs awarded. wh:ch is the performance threshold the Company liehevevl was most likely to he achieveo under the giants on the grant date The following lable reflects the gran; date fair value of these PSUs as well as the mammum grant date fan value of ther.e awards based on she closing pnee ol Venzon s common slock on the grant rinle if rii«; to the Company's performance during the applicable performance cycle, Uv; PSUs vested at their maximum level

5t'0 cay :■■ b.vj 01;

7 70i 00? 7 ail 2>jf 1 95tl 01i' 2 010 Ofu

in ^ou ci!)

!. (MC Olfi b 1.70 07*

4 ilfi l 83? W0

i £.;rj * Mi 'jib

3 a?* ! u?o oue

'The amounts m this column lor 2013 reflect the 7013 Short-Term Plan award paid to the ivjitimJ executive officers in February 2014 as dssenbed on pager- 3-1-37

31 hi; amounts in this column for 2013 reflect the abovf.-.ma'kef earnings on jmounts field in riunttualified deferred compensation plans Messrs Shammo ami Stratton are not eligible (or pension lienehts For M>;bs<s McAdam Mr-ad and Milch, lor 2013 there was. a riHluclion n pensron value o1 S233 303 J.tft ?31 ami 1,13 16? rr-S|n-_;:.liv«lv based on the applicable calculation, formula In accordance with SEC rules because the augiecalr; change m lhe actuarial prusuni value of the accumulated i>;nc^ril under the uefinec benefit plans was a negiiti-.-e n.n.-nbr:' ior 701!? tfie amounts shown in ihis column for 2013 for Messrs McAciam Mean and Milch reflect above-mart.'.': eammni only Veri:-on's defmcd benefit plans were frozen as of Juno 30 7^06, and Ven/on sioppod all future Len.jni accruals -jndiv those plans as ol tha; d.-jie All accruals under the Vt.-nzon Vi'irulesv pension plan wo'0 IroLVn a? ot DoccmK" 31 ?QK

he I olio wing (able provides the detail for 2013 compensation reported in the "All Other Compensation' column

Tot.il

Nonq unified Deferral Pbn W

Company Contiibutmni to the Life tnuiranoe Benefit^c<S)

19.050 13 050 H 71Z 19 050 19 0S0

780 B?4 286 634 163.476 130 433 129 710

315 233 104 241 32.637 S3 184 78,742

Saving* Plan

168.253

Mi McAdam Ur Mead Mr Shammo Mi Si ration Mr M1H1

21918

""The aggregate incremental cost of the personal use of a Company aircraft is determined by multiplying the tola! 2013 personal flight houis by the incremental aircraft cost per hour The incremental aircraft cost per hour is derived by adding the annual aircraft maintenance costs, fuel costs, aircraft (np expenses and crew tnp expenses, and then divid.ng by the total annual flight hours

"The aggregate incremental cost of the personal use of a Company venicle is detenmned by (i) calculating the incremental vehicle cosi per mile by dividing the annual lease and fuel costs by the total annual m.les, (n) multiplying the total 2013 personal miles by Hie incremental vehicle cost per mile, and (in) adding ihe incremental dnver cost (the 2013 driver hours for personal use multiplied by the dnvcr's hourly rate) ^Executive Ifo insurance is available to executives on a voluntary basis Executives who choose to participate in this program arc excluded from the basic and supplemental life insurance programs that Venzon provides to management employees. The executive owns the insurance policy and is responsible for paying the premiums However, Venzon pays each executive an amount, which is shown in this column, that is equal to a portion of the premium Executives who choose not to participate in the executive life insurance plan do nol receive that payment. For all named executive olftcers the executive life insurance policy provides a death bcncltt equal to two times the sum of the executive's base safary plus his short-term incentive opportunity a: 67% of target level if Ihe executive dies before a designated dale For Messrs McAdam, Mead, Shammo and Stratton. this dale is the latest of the participant's retirement dale, the date on which (he participant reaches age 60 or the filth anniversary of plan participation For Mr Milch, this date is the c-artici of five years post-refrmment or the date on which he reaches age fi5. tJThis column represents tho total amount of other perquisites and personal benefits provided These other Benefits consist o'. (\) for Mr McAdam, non-reoumng expenses for home security. (») for Mr Mead financial planning services and personal travel, and (nr) for Messrs Shammo. Stratton and Milch, financial planning services 1 he Company provides each of the named executive officers who elect to participate in the financial planning program with a financial planning benefit equal to the Company's paymenl for the services, up to $10,000 The aggregate incremental cost of personal travel for Mr. Mead is equal to tlie direct expense related to his spouse's attendance at a business event at the request of the Company These expenses include lodging, ground transportation, meals and other travel-related items 5As desenbed in footnote 1, this amount includes the grant date fair value of the special equity award granted to Mr McAdam in 2011 in connection with his appointment to CEO. with 70% of the award opportunity in the form of PSUs and 30% in the form of RSUs, which may become payable after the completion of the five-year performance cycle ending Jury 31, 2016, provided that Mr. McAdam remains continuously employed, subject to the terms of the award agreements. The number of PSUs that will vest at the end of the five-year performance cycle will be determined based on Venzon's average annual ROE dunng the performance cycle, and lo the extent the performance cnlena is achieved, the final award will include dividend equivalents that accrue on the vested portion of the award No PSUs will vest unless Venzon's average annual ROE meets Ihe minimum threshold of 10% If Venzon's average annual ROE meets the target percentage of 15V,, 100% of the nominal number of the PSUs granted will vest A maximum of two times Ihe nominal number of PSU$ granted wilt vest if Vcn/on s average annual ROE is at least 20% If Venzon's average annual ROE dunng the five-year performance cycle is greater than 10% but less than 15%, or is greater than 15% but less than 20%. the Committee will determine the extent to which the PSUs will vest, provided that the vested percentage must be between 50% and 100% and betwoen 100% and 200%. respectively. The award will be settled in shares of Venzon common stock, and Mr McAdam will be required to hold any shares he receives for at least two years following the vesting date unless he dies or becomes disabled.

Plan-Based Awards . - v - l ^ tr. ■ -f -. .>.-:■-.'■

_:\-The following table provides.information about the 2013 awards granted under the Short-Term Plan and the l.ong_:Teim

Plan lo each named executive officer." ~. "~ ^-" " ~~"' '

f'SUnaled Future Payoull

Under Equity Inccnin*

Ptin Award* J

I hreshoM Target Maumurn

LilimalbCJ Future Payouii

Under Non-Equity Inccni.ve

Pbn Award* J

hre*hoH Target Maivnum

(J) IS) (Vl

fc) Id) {*)

Grants of Plan-Based Awards

AlOlhur Al Olher

Stock Oplron Oram

Awards A war eii Excrcoc Dale

Number of Number of or Haw? Fai V.ilie

Shurctol Sc-eurnts Price oi of Slock

Stock or Underlying Oplion _Urid Cpnoa

Unrts⁴ Option* Award! Award* S

1*1 l«) (VShj (S)

(') 10 l^k) (D

McAiliim ST IP 1 B75.0D3 3 7fjO.OO0 5.S25.000

PSU H/a.'zOU 37 53? 1*7 286 234 572

mil :i.'a.'?ot3

Mr Mead ST IP 4S5003 030 G00 1 400 300

16 289 50 902 101 804

PSU 3'B.'2013 18916 59.112 11B2?4

PSU j.'aiyuu

STtP 42G2S0 852.500 1.278 750 PSU 3/8/2013

RSU 3/6/2013

51rallon STP 308 750 757,500 1.196 250

PSU 3/8/2013 15 238 47 618 95 236

13411 41,910 83820

HSU j/B/2013 31 74ti

SIP 3C8 5O0 7.17 000 1 105 500 PSU 3/8/2013

RSU 3/8/2013

¹ These awards arc described in the Compensation Discussion and Analysis on pages 34-39

?Tho actual amount awarded in 2013 was paid in Febmary 2014 and is shown in column (g) of the Summary Compensation Table on page 44

3These columns reflect the potential payout range of PSU awaids granted in 2013 to our named executive officers in accordance with the Company's annual long-term incentive award program, as desenbed on pages 38-10 At the conclusion of the three-year performance cycle, payouts can range from 0% to 200% of the target number of units awarded based on Venzon's relative TSR position as compared with the Related Dow Peers and Venzon's cumulative free cash flow over the three-year performance cycle as desenbed in more detail on pages 38-40 PSUs and the applicable dividend equivalents are paid only and to lhe extent that the applicable performance cntena for the award are achieved at the end of the award cycle. When dividends arc distnbutcd to shareholders, dividend equivalents are credited oh the PSU awards in an amounl equal to the dollar amount of dividends on the total number of PSUs credited as of the dividend distnbution date and divided by the fair market value of the Company's common stock on that date.

<This column reflects the RSU awards granted in 2013 to the named executive officers in accordance wilh the Company's annual long-term incentive award program When dividends are distributed to shareholders, dividend equivalents arc credited on the RSU awards in an amount equal to the dollar amount of dividends on the total number of RSUs credited as of the dividend dtstnbvtion date and divided by the fou market value of the Company s common stock on that dale.

SThis column reflects the grant date fair value of each equity award computed in accordance with FASB ASC Topic 718 based on the closing pnee of Venzon's common stock on the grant date For PSUs, the grant date fair value has been determined based on the vesting of 100% of the nominal PSUs awarded, which is the performance threshold tho Company believes is the most likely to be achieved under the grants.

Option Exercises and Stock Vested

Outstanding Equity Awards *t Fiscal Year-End

	Option Award*	Stock Awvda
Nam* (*)	EauNr Pbn Awards Number of Number ol Nuribw ot Secunlre* Secur4m Secuntict UndcrVing Underlying Undn tying Unx«rtid Unexercised ununited Opim OMiona Opium Unearned Eie'cue Option If) () Option! Pnee Exprellor Eirrmahfc UrwinotaMr <) (S) Dale (bl It) (di Ic) (fl	Fquaj Eq}>ly Inter** fricanlrve Pbn Award* Pbn Award* Markal cr Numb* of Payout Value Number of Market VaUe Unearned of Uncamto Shari er ol Share* or Sham Unll* Share* Unn Unrl* of Slock Unit of Stock or Oincr Riahti or Olher Kqhli Trial Have Nut Thai Hava Thai Have Nol THU Have Nol veiled < Nor vaiiad' veiiM i vit«i < l») (J) t») (S) &jn! <0) (hi I! (.! 01*
	0 0 0 0 R	VJ ra* 451719* .t? ;7f .'i n,t n.o .■■uon 97 Ti: «801 119 :71<H r. 5/0 7W V2:?01? BO filll 3*11/1 M 31J i.-.J-IWI I'STOVJ
Mr M,-:irl	0 0 0 0 0	J6 W.¹ T 304 m M 7:« t r.3 91/ IT/l'dir «3t77 1 9M, ill 47 134 ?UiS.'^,l un:?!")
'Jr Snam-no	0 0 0 0 0	41 tit ? 01C CC/ 7.' ;S* 3 199 '(!.- VTl?ni? HZ-Ki 1710 161 40 fj:* ?DI!)'-f! ViV?fll>
M, ■;:,,:,	o o o ii o	39 171 19-:'.!/ JCCSf Iii V.-\'?ill? >? t« i r.ae :'m .v ; w--. z/o i-c'jm;
W Mil,	o o n o o	y>:9j 17?i-. 43ii i-w-.' .i i»3 'sr r?i?oir }KfCt 1*1L«/'J V- .-Ol lU'.bOlw VS ?0i:-

Uhe annual 2012 and 2013 RSU awards vest on December 31, 2014 and December 31. 2015 respect-vety Mr McAdam's 2011 special RSU award vests on July 31. 2016 RSUs accrue quarterly dividenos that are reinvested into the participant's account as additional RSUs and will be included m lhe dual RSU paymenl i^; ihe awaids vest This column includes dividend equivalent units that have accrued ttirouyh December 31, 2013

?This column leprcsents the value of the RSU awa'ds listed in column (g) based on a share (.ru e ol S-19 14 the closing onci: of Venzon's common stock o>i December 31. 2013

-TThe annual 2012 and 2013 PSU awards vest on December 31 2014 and December 31. 2015. lesoei.lively Mr McAdam's 2011 special PSU award vests on July 31. 2016 PSUs accrue quarterly dividends lhai are reinvested i:ViO (tie participant's account as additional PSUs PSUs and '.he applicable diviuend equivalents are paid if and lo the extent that the applicable PSU award vesls As required by SE£C rules, the number ol ur.iis m this column itipmsents the 2012 PSU awards at a 119% voting peicentagi:. the 2013 PSU awards at a 78% vesting |Hirr,unlagB. and Mi McAdarn's 2011 special PSU Award at a 200% vesting percentage, in each case including accrued dividend equivalenls through December 31 2013 that will bo paid lo the executives if the awaids vest al the indicated levels

"This column represents the value of the PSU awards listed in column (i) based on a share pnee ot $49 14. the closing pnee of Ven7on's common stock on December 31 2013

Value Realized from Stock Options and Certain Stock-finscd Awards

The following table reports the value realized from the vesting of the following stock-based awarcs lor the named executive officers

2011 PSUs Ihat vested on December 31. 2013. and 2011 RSUs that vcsled on Decemner 31. 2013

The foNow.ng table also reports the number of partnership value appreciation nobis ("VAHs") Mr McAdam e>L-icii,ed m 2013, which were granted to Mr McAdam on MjicIi 31 2001, by Ven.ron Wuek;ss r-rs employer ci thai dale V.r McAdam exeicsco h'S VARs in December 2013 in connection v.-.th the impeiKimij e>p r.-:!io-i ul the 10 year :erm of vie awaid and the expiration of frb VAR program on Marcn 31, 20K

In 2014, based on the Company's relative TSR as compared wiin Ine Related Dow Peers, me Committee approved a vested percentage of 100% of the taioet number ol PSU awards gianieo for the 2U11-2013 perioimanct- cycle for all participants, including the named cubculivi- officers The values ot tho 2011 PSU awarns upon vesting for Mi McAdam Mi Mead. Mr Shammo. Mr Stratton and Mr Mifch were J8.1C5 769. S3.5&2 093. S3 30/ I3fl $?./SS.6!i⁽j. and 52 916.366 respectively and the value of lhe 2011 RSUs upon vesting (cr Mi McAdam, Mr Mead Mr Shammo Mr StrattonandMr Milch were $5 4^3.827 S? 368 062 S2 20-1.769. $1,866 497 and S-1.9-W ?44. respectively

	Option Award*	Stock Award*
Mam* fa)	Number ot Shares Acquired on Value Realized ar Everdie ' Exerdu 1 (#) (5) <b) (O	Number of Shore* Acqured on Vakje Realzad on Vetling > Veitng 2 S () fi) f<0 <«)
Mr McAdam Mr Mead Mr Shammo Mr Stratton Mr Milch	420.863 20.820.093 0 0 0 o 0 0 0 0	276.956 13.609.596 120.e75 5.920.155 112.16/ 5.511.898 94.957 4 666 186 98 914 A (160610

iThc cpnon awards Isied tor Mr McAdam represent VARs granted on March 31. 2004. by Venzon Wireless, his employer on that da:e The value realised on exercise represents the dilference between $63 36, tho value of the correspond ing Vcn7on Wireless partnership ngh'.s on the date the rights were enercised. and S13 89. the exercise pnee fct such ng'nts The value of the Ven:<on Wireless partnership nghts was determined by an independent thud party valuation in November 2013 in accordance wilh Ihe terms of the VARs and consistent with past practice

i'The aniounls include dividend equivalents that were credited on the PSU and RSU awards that vested on December 31 2013 in «cco'dar-ce with the terms of the awards Thr; amounts in this column represent the number of shares acquired on vesting multiplied by S-19 14, trie closing pnee of Venzon s common stock on December 31, 2013

3The amounts in this column include $2,960,078 for Mr Mead and $466,619 for Mr Stratton ihat weie deferred under the Ven?on Executive Deferral F'lan in 2014 when the amounts would h;ivo otherwise been paid

Pension Plans

Effective June 3('. 2006. Vurzon froze all future pension accruals under i:s management tax-qualified and nonqunl-lied defined benof't pension plans Al) accmaJs under the Verizon Wireless defined Ixrnclit retireriun! plan (lat-cjualififd and nonqualified) wore fiozen as of December 31. 2006 Lach ot the namnd executive officers other than Messrs Shammo and S'.iallon is eligible for a dozen pension benefit

Venzon Management Pension Plan and Ven/on txcess Pension Plan The Verizon Management Pension Plan is a tax qualified defined benefit pension plan and the Verzcn Cxcess Pension Plan is a nonqualified defined benefit pension plan Messrs Mead and Milch are eligible foi benefits under the Verizon Management Pension Plan and the Venzon Cxcess Pensio'i Plan. Mr McAdam is nol eligible for benefits under either ol Itiese plans because he was employed by Ven/on Wireless pnor to January 1. 2007. Under the Ven/on Management Pension Plan and Ihe Ven/on Excess Pension Plan, the normal retirement age is age 65 with al least 5 years of service and the early retirement age lor unreduced benefits is age 55 wrih 15 or more years of service and lotal age plus years of service equal io al least 75 Messnj Mead and Milch a-e eligible for early retirement benefit! under lhe Venzon Management Pension Plan and ilie Venzon F*cess Pension I'lan Foi Messrs Mead jnd Milch their benefit under tin? Venzon Excess Pension Plan is bas^i on lhe cash balance formula noted below and e;n.h of them is vested in the benefit

Ll-rtil June- 30 2006 Mt Mich earned pension benefits under a cash balance formula tha! provided for retirement pay r.rt'dit^ equal to bctwuyn four a-id seven pe'Ceu: (dupe.'id.riy on ag-_- and service) of annual ehyibln pay for each year of service Under tin: casn oalancu formula a participant's account balance is also credited with monthly interest based uncm the prevail no market yields on cctain U S Treasury obligations Eligible pay under ttii; Ven/on rVar sifter mm! P«;nsi.'in Plan cons.sled of ttit,- onip.oyeebase salary and tin; shod-torin incentive award up lo lhe IRS qualified plan ci ni i per is at i m lunt Pension benulits to? all eligible pay m exiess uf the |RS limit won; provided under the Vi.-n.-t.-n IT/C'ss 1-VriMun Plan bated on l*n; cash balance formula At the turn.' thai ine la.x-quaVied a'id ronqualifn.-c pension plans wen,- fnven io 'utu'e pension accruals un June 30, 2000 plan participants were provided wilh a one-timi; radd lionnl 18 monlhs ol benofils as a transition matter

tie: employee of GIF Wireless Incorporated Mi Mead ea'ned a pension bencn! under the Vtm/cn Management en^ion Plan hasnd on the better of two highest ave.'aui? pay formulas The firsl formula was based

. ...on 1.35% ol his average annual eligible pay lor lhe five highest consecutive eligible years of service Ihe second formula. _ . * ■ - was.based on "eligible pay for lhe five highesf consecutive eligible years of service and was integrated with social secunty, with a 1 15% accrual for eligible pay undei the social secunty integration level and a 1 4i% accrual above the social secunty integration level Both of these formulas were discontinued on May 31. 2004 for former GTE Wireless Incorporated employees employed by Venzon Wireless, and Mr Mead ceased to accrue a pension under I hose formulas on May 31. 2004 Effective October 23, 2005. Mr Mead transferred from Venzon Wireless to Venzon. and he started lo again earn a pension under the better of (i) the 1.35% highest average pay formula or (n) the cash balance formula. Mr. Mead s service with Venzon Wireless Irom June 1. 2004 through October 22. 2005 was excluded from any pension calculation. As noted above, accruals undei the 1 35V* highest average pay formula and cash balance formula were frozen effective June 30. 2MB At the time of Mr. Mead's transfer from Venzon Wireless to Venzon effective October 23 2005, the value of his nonqualified benefit was determined as a lump sum. and a nonqualified cash balance account was created under Ihe Venzon Excess Pension Plan using this value as the opening balance as of November 1. 2005 Mr Mead earned retirement pay credits equal to 7% (based on age and eligible service) ol annual eligible pay in excess of the pay cap for each year ol service after October 23, 2005. including monthly interest credits As noted above, accruals under the nonqualified cash balance formula were frozen effective June 30. 2006 Venzon Wireless Retirement Plan In 2001, Venzon Wireless consolidated the pension plans of several predecessor companies under the Venzon Wireless Retirement Plan Mr McAdam is entitled to both a tax-qualified and a nonqualified pension benelit under this plan Mr McAdam's tax-qualified pension benefit was determined under two formulas (i) for Ihe penod from January 1. 2001 until May 31. 2004. a cash balance formula thai provided pay crcdils equal to two percent of annual eligible pay up to the [RS compensation limit (under the cash balance formula a participant s account balance is also credited on an ongoing basis with interest credits based upon the 30-year Treasury bond), and (n) a final average pay formula based on 24 years of service multiplied by 1.45% of Mr McAdam's average annual eligible pay for the five final consecutive years for each year of service through lhe end of 2006 The normal retirement age unoer the Venzon Wireless Retirement Plan is 65 The early retirement age (for unreduced benefits) under the plan is 55 Mr McAdam is eligible for unreduced early retirement benefits under the plan Mr McAdam s nonqualified plan benefit was deiermmed using the 1 45% final average pay formula and was calculated based cn 10 years of service and only included his eligible pay in excess of the IRS compensation limit ihrough the end of 2006, ot which lime no further adjustments to eligible pay were recognized under the plan For Mr McAdam. eligible pay consisted of base salary and the short-term incentive award No participant under the plan was eligible lor cash balance credits under the nonqualified portion of (he plan The following table illustrates the acfuanal present value as of December 31. 2013 of pension benefits accumulated by the named executive officers, other than Messrs Shammo and Strallon who are nut eligible for pension benefits Pension Benefits Present Vaiur- of Number of Years Accumulated Payments During Credited Service Benefit < Last Fiscal Year Nam* «. Plan Name (*) (S) (S) (»l (b) (c) (d) (e) Mr. McAdam Venzon Wireless Rrtrement Plan - Qualified 30 1.082.237 0 Venzon Wireless Retirement Plan - Nonqualified 10 2 1 630.091 0 Mr Mead Verizon Management Pension Plan 35 1.760 100 0 Verizon Excess Pension Plan 8 2 3 477 986 0 Mr Milch Venzon Management Pension Plan 20 167,319 0 Venzon Excess Pension Plan 9I 102.526 0 i The values are based on the assumptions for the actuarial determination of pension benefits as required by the relevant accounting standards as desenbed in note 11 lo the Company's consolidated financial statements for the year ended December 31, 2013, as included in the Company's 2013 Annual Report lo Shareowners However, in accordance with the requirements for this table, the values are calculated using the executive's retirement at the 49	earliest age at which he can retire without having the retirement benefit reduced under the plan For Mr McAdam; the assumptions are generally the same as'dcscnbed above "' "■' " ~" ' 2T)ie years of ci edited service for each ol Messrs. McAdam, Mead and Milch with respect to the applicable plan is less than the named executive officer's number of actual years ot service with the Company. For Mr McAdam. the 10 years of credited service represents the penod over which he earned a benefit in the nonqualified portion ot the Verizon Wireless Pension Plan For Mr. Mead and Mr Milch, the 8 and 9 years of credited service represent the penods over which they earned a benefit in the Venzon Excess Pension Plan, respectively Defined Contribution Savings Plans The named executive officers are participants tn the Company's lax-qualified defined conlnbulton savings plan, Ihe Venzon Management Savings Plan, which is referred lo as the Savings Plan and us nonqualified defined contnbulton savings plan, the Venzon Executive Deferral Plan, which is referred to as the Deferral Plan Tlie named executive officers participate in these plans on the same terms as other participants in these plans Under the temis ot the Savings Plan, particip'inls are eligible to defer up to 16% of then eligible pay into ihe Savings Plan up to the IRS qualified plan compensation limit Venzon provides a matching contribution equal to 100% of the first G% of clig.ble pay ihat any participant contributes lo the Savings Plan Under the Deferral Plan, a participant may defer up to 100% of base salary in excess of the IRS qualified plan compensation limit, short-term incentive compensation and long-term incentive compensation Venzon provides a matching contribution equal to 100% of the first 6% of base salary and short-term incentive compensation that a participant contnbutes to the Deferral Plan Deferrals ol long-term incentive compensation, such as PSUs and RSUs. are not cligihle for Company matching contnbutions Participants in the Savings Plan and the Deferral Plan are eligible lor an additional discretionary profit-sharing contnbution of up to 3% erf eligible pay, in the case of the Savings Plan, and eligible deferrals, in the case of the Deferral Plan In detenrunrrig whether to male a profit-shanng contnbution. the Committee uses the same cntena it uses to determine the short-term incentive award paid to employees at the corporate level For 2013. the discretionary contribution was 3 0% Messrs McAdam, Mead. Shammo and Slratton were participants in the Venzon Wireless Executive Deferral Plan while they were employed at Venzon Wireless Under the Venzon Wireless Executive Deferral Plan a participant may defer up to 100% of base salary m excess of the IRS qualified plan compensation limit and short-term incentive compensation Venzon Wireless provides a matching contnbulton equal to 100% of the first 6% ol base salary and short-term incentive compensation that a participant contnbutes to lhe plan Participants are eligible for an additional discretionary prolit-ahanng contnbution to the Venzon Wireless Executive Defenal Plan of up to 3% of eligible pay and eligible deferrals In determining whether to make a profit-sharing contnbution, the Verizon Wireless Human Resources Committee uses the same cntena used to determine the short-tenn incentive award pard to employees al the corporate level Parlicipanis in the Deferral Plan and the Venzon Wireless Executive Deferral Plan may elect to invest their deferrals in a hypothetical cash account that earns a return rale equal lo the long-torm, high-grade corporate bond yield average as published by Moody's Investor Services or in the other hypothetical investment options available to all plan participants under the Savings Plan Participants in the Deferral Plan and the Verizon Wireless Executive Deferral Plan may generally elect to receive their benefits in a lump sum or installments, commencing on a separation from service or specific date elected by the participant. Messrs Mead and Milch also have account balances under the Income Deferral Plan (referred to as the IDP) The IDP is a nonqualified deferred compensation plan that was the predecessor to the Deferral Plan. The IDP was amended to freeze the accrual of benefits under the plan as of the close of business on December 31. 2004 Participants in lhe IDP no longer accrue any additional benefits other than market-based investment earnings or losses on their individual accounts. No new deferrals were permitted after 2004 Participants retain the ability to invest their frozen accounts in the investment options available under the plan. Participants in the IDP do not receive matching conlnbulion credits or retirement credits under the plan. Messrs McAdam, Mead, Shammo and Stratton also have account balances under the Venzon Wireless Executive Savings Plan (referred to as the ESP) The ESP is a nonqualified deferred compensation plan that was the predecessor to the Venzon Wireless Executivo Deferral Plan. The ESP was amended to freeze the accrual of benefits under lhe plan as of the close ol business on December 31, 2004. Participants in the ESP no longer SO

accrue any additional benefits other than market-cased investment earnings or tosses on their individual accounts No new deferrals were permitted after 2004. Participants retain th* ability to invest their frozen accounts in the investment options available under the ESP. Participants in tha ESP do not receive matching contribution credits or retirement credit* under tho plan. The following lable shows the 2013 account activity for each named executive officer and includes each executive's contributions, Company matching contnbutions, earnings, withdrawals and distnbuttons and the aggregate balance of h.s total deferral account as of December 31, 2013 Nonqualified Deferred Compensation Executive Registrant Agiiri'fjafr Aggie-gate Agginiii!? Ccntiibulioni Contnrji.-Joris Lnrwvis in Wili-.d~avt.ils/ liaiiince a: in Last FY i in Last FY ? La-,1 F"~Y 3 OiMnbuions L.-.sl TYC * Mar. <S) (S) (S) (S) (S) (3) (ti) (c) Cd) M If) !W McAdam Ven/on Executive Delerral Plan ?G2 W6 315233 ill-177 0 HKiSfr Verizon Wire-loss Executive De'crral Plan 0 0 ."'0 004 0 -157 760 Veriiwi Witness Executive Savings Plan 0 0 95 V2 0 ?.li6.7'4 Mr MeaJ Verizon fixeculivc Deferral Plan 4.111 1R9 104 2-1 ". Off- 37J 0 iri.4(:6 DxT-1 Verizon Income Deinrral Plan 0 0 12 68 0 239 423 VerironWirolos. Ev.eo.tive Dotorr.il Plan 0 OP? 0 1 r«0 019 Vr.riziWir«'lf";i EiecuUvo S.iM'i.y, Plan 0 (l 6-10 l.M6 4f-: Mi Shammo Verizon Executive Dirfornl fu- fl'Jib 92 fi.Vf fiOl 0 3L-1iy.-6 Vftrirnn Wireless Executive D-r-'cnul Plan 0 0 CCS5 0 :j'j?b.i Verizon Wire res* E xttirave Savimjs Plan 0 0 151 171 0 1 ?32-lG5 Mr 5-ration Ven/on Executive Deferral Plan 350 023 83 1&4 4<JT 0/1 0 3 074 116 Ven/on Wnok-ss Executive Deferral Plan 0 0 23J-975 0 2.260 556 Verizon Wireless Executive Savings Plan 0 0 394 2(11 0 3 6C14M Mi Milch Vciifon Hxaeuiivis Dff«iial Plan 633 750 78 742 476'.Si? 0 4 £.14 169 Verizon income Deferral Pl.in 0 0 4iii4ro 0 0 314 501 'Ol the amounts listed in this column, lhe following amounts are aiso included in the Summary Compensation Table in columns (c) and (j) for Mr McAdam. $73,546. for Mr Mead. $156 442. fo; Mr Shammo $30 335. foi Mi Stratton $161 135, and for Mr Milch. $24 669 2The amounts listed in this column are also included in columns (i) and (j) of Ihe Summary Compensation Table ?Of the amounts listed in Ihis column, the following amounts are also mcldc'ed in trie Summary Compensation Table in columns (h) and rj) lor Mr McAdam. 554. fiSG. loi Mr Mead. $199 644. fo> Mr Snammo J10 47S !or Mr St ration. S3/.128. and for Mr Milch. $73,527 ■-The aggregate amounts shown in columns (el and (f) include the following amounts thai were nvpo-tiM as compensation to the named executive officer in Ihe Summary Compensation Ta:i!e m previous proxy stati-menr? of me legstrar.l Foi Mr McAdam. a lotal ol S2 t".5b>13 was reported {2008 to 2013i. For Mr Mead, a total ol S1.437 B73 was reported (2011 to 2013). For Mr Shammo. a total ol $479 4-'-6 was reported (2011 to 20:3) For Mr Stratton a lotal of $469.<t8.i was reported (2013). and For Mr. Milch, a total ot $329,291 was reported [2012 to 2013) Potential Payments upon Termination or Change in Control The fo!lowmg summanes and lables descnije and quantify the potential payments and benefits that would be provided lo each of our named executive officers if a termination of employment or cnanye m control of Vi."i.-on hao occurred at Ihe end of 7013 under Venzon s compensation plans and agreements Payments Made upon Termination RegarolOis of tlv» manner in wh ch a named exccut.ve o'heer s employment lerminates tlie oi-cutive -s emitted lo receive amounts earned ri.jnng the term of employmeni Th.s includes amo.inti acc'Vrd and vcsiod iint:-i: uur	pension plans and nonqualified deferred compensation plans, which are reported In the "Pension Benefits" and "Nonqualified Deferred Compensation" lables above. Those benefits are not included in ihe summanes and tables below In addition, amounts earned under our 2013 Short-Term Plan awards and amounts earned under our 2011 Long-Term Plan awards are not included in the summaries or tables below Amounts earned under our 2013 Short-Term Plan awards are discussed in the Compensation Discussion and Analysis on pages 34-37 and arc reported tn the Summary Compensation Table on page 44. Amounts earned under our 2011 Long-Term Plan awards are discussed in the Compensation Discussion and Analysis on pages 38-40 and arc reported in the Opiion Exercises and Stock Vested table on page 48. If a named executivo officers employment had terminated on December 31. 2013 for any reason other than tor cause, the- lull amount ol the 2013 Shorl-T erm Plan award and the lull amounl of tho 2011 Long-Term Plan arwaros in each case to the extent earned, would have been payable These amounts would be determined and payable at the same time as awards are deiermmed and paid to participating employees generally undei those plans In tin¹ event of a termination for cause, no amount would have been payable under these awards Potential Payments upon Qualifying Separation or Involuntary Termination Without Cause Mr McAtUm As Chairman and CEO. Mr McAdam ;s not eligible to participate in the Senior Manager Severance Plan riesinbt-d rx.-low Mr McAdam 15 also not a party '0 an employment agreement wilh Verizon or any other agreement ihat would piovide hun with cash severance benefits :n the event his employment is mvoluntanly terminated by Venzon without cause Sen/or Manager Severance Plan Venzon provides sove:ance benefits to certain emp'oyecs includ rvj all of the named executive oncers other than lhe Chairman and CEO. under its Scmcr Manager Severance Plan Under the plan, a named executive olficwr is eligible to receive severance benefits if he expenences a "qualifying separation" from Venzon. wlw.h is ueuera'.ly dt-finod us an involuntary tcniiination by Vwtizon witlioul cause, a voluntary Uimurmtion by tlv-. executive solely due to thu executive's refusal In accept a uuahfymg reclassification or relocation fas those terms ;wc. oefined in the plan) or a determination ty the independent members of the Board ihal the named executive o'fic^r has incurred a qualifying separation A severance bene'it. if tnggmed. is payable to an executive only if the executive executes a release of claims against Verizon in the form satisfactory to Venzon and agrees not to compete or intcrfore-witti any Venzon business for a penod of one year after ttw mi nation from employment and always ro proiect Venzon's trade secrets and propnclary information If a named executive officer incurs a qualifying separation under the plan he is eligible to receive the following l>nefits. (1) a lump-sum cash separation paymenl equal lo two times the sum of his base salary and target short-term incentive opportunity and (u) continued medical dental and vision coverage for two years In addit.on. if the executive's qualifying separation occurs pnor lo the last day of the year, the executive will receive a prorated Short-lenn Plan award foi tlie year in which the termination occurs, determined based on the acluaf lf;vel ol acluevvmenl of Ihe performance cntena unuor thii Short-Term Plan for the applicable year and payable ot the time thai awa-ds aie pjyable lo participating employees generally undei ttie plan To the exlenl ttiai an executive also becomes eligible fo' severance benefits under any outstanding agreement plan or any othei arrangement, the executive s cash severance payment under the Senior Manager Severance Plan will be reduced on a dollar-for-dollar basis by the amount ] o^r '.inole-suni value ol Hie sevcance beneiifs payable to the e-eculive under such other agreement, plan or annngemfi-.t : Oifxvr Oermfits U\|x.m an irivclurta~y !cPTinai-on 0' employment without cause, a named executive officer would also be ^ ■rhg-bli.- to rirceive financial planning and outplacement services for one year 'ollowing termination on the same bar, s as 1 ptcv.oc-U to other senior executives HouvcMei i:x<.-t:uuvu«, wilt only tra >;iY.itU;d to receive f .r.ansial plantiuvi sr-rvicot il 1 trit~y participate n ttir_: program in the year ir. which- their emplcyitHiiH tcrni nates Mr McAdam did ro! part-ciial'.¹ ui Ihe 1 manual p'anning crognir-. in 2013 and. as a result wouio not have been ertnled lo receive iir-a.-iual p.onn no services if \| liii> ':rrploymenl had tenn.natcd on Ifie last business day cf 2013 In audit on. under tho terms o^! ific executive lie insurance pUm cadi named executive office who is ieti^remenl eligible upon termination and who continues io pay the annuai oremiums on the life insurance podcy owned by the c>>.'cutive would be eligible to receive an annual payment fmn: Ve'izon tu pay a port'Oii of Ihe annual p:omiu:n until (1) in trie case erf Messrs McAdam, Mead. Shammo and Station the latest of lhe executive's aiiainmert of ayu tiO. the compk-ticn ot 5 years ot plan participa'iiMi ex cuahfying retirement, or (n) in the case of Mi Milch, the later ot the executive s attainment of age 65 01 15 yean; of plan participation Retirement eligibility is generally defined as 57 i 1 i

having attained 75 points (age plus years of service) with at (east 15 years of service As of December 31. 2013.

Mr Mead had attained plan matunty and would not have been entitled lo receive any additional payments from Venzon

. .with respecUo t.nis_benefjt if his employment had terminated.on lhe List business.day of 2013 - .

Planning 2

(5)

Continued Health Benefits 1 fS)

Cash Separation

¹ TsT*

Estimated Payments The following (able shows Verizon's estimate of the amount of benefits the named executive officers would have been entitled to receive had their employment been involuntanfy terminated without cause or terminated lor good reason on the last business day of 2013 and had incurred a qualifying separation under the Senior Manager Severance Plan

Namo

Outplacement Services

10 000 10 000 10 000 10.000

3 780 000 3.255 000 3C45O00 2 814 000

24 700 37.057 37 057

37 057

182.534 181 859 134.B53

Mr McAdam Mr Mead Mr. Shammo Mr Stratton Mr Milch

i The amounts reflect Ven/on s estimated cost of providing medicaf. denial and vision coverage for two years

2Mr McAdam did not participate in the financial planning program in 2013 and. as a result would not have been entitled lo receive financial planning services if his employment had terminated cn the last business aay of 2013

3 |f Mr Mead had retired on December 31. 2013, he would not have been entitled lo receive additional company contnbutions because he had reached plan matunty as of that date

Potential Payments upon Death, Disability or Retirement

Under the terms of the executive life insurance plan, in (he event of disability or a qualifying retirement, a named executive officer who continues to pay the annual premiums on the life insurance policy owned by the executive would be eligible to receive an annual payment from Venzon to pay 3 portion of the annual premium until (1) m the case of Messrs McAdam, Mead. Shammo and Siratton, the laiest of the executive's attainment of ago 60, tho completion of 5 years of plan participation or qualifying retirement, or (ii) in the case of Mr Milch, the later of the eneculivc's attainment of age 65 or 15 years ol plan participation. If the named executive officer dies. Ins beneficiary would be entitled to receive the proceeds of the life insurance policy owned by the executive, payable by lhe ihiid-party issuer of the policy As of December 31, 2013 Mr Mead had attained plan maturity and was no longer eligible to receive any additional payments from Venzon with respect to this benefit if his employment had terminated on 'he las! business day of 2013

Under the Short-Term Plan, if the named executive officer's employment terminates due to death, disability or a qualifying retirement prior to the last day of the year, the executive would be eligible for a prorated Short-'I erm Plan award for Ihe year m which lhe termination dale occurred, determined based on the actual level of achievement of tlie performance cnlena under the Short-Term Plan for the applicable year and payable at the time that awards arc generally payable to participating employees under the plan. As desenbed above, if the executive s employment terminates on the last day of the year for any reason other than for cause, the full amount ol the Short-Term Plan award, determined based on Ihe actual level of achievement of the performance catena under the Short-Term Plan for the applicable year, would have been payable.

In addition, upon death, disability or a qualifying retirement, each named executive officer would atso be eligible to receive financial planning services for ono year following termination on the same basis as provided to other senior executives, provided that they participated in the program in tho year 111 which their employment terminates Upon disability, tho named executive officers would also be eligible for disability benefits under tho tax-qualified and nonqualified disability plans

Estimated Payments The following table shows Venzon's estimate of.the amount ct benefits.the named executive

Uaatxfcv Benefit

officers would have been en'niled to receive had tlieir employment terminated due to'dcath. disability or qualifying "'" ".

■ retirement on the last business day of 2013 -.£- j"*-;-... " _-,y.^:_ i-"-*-...-:-^.:- .-

8.026 000 163 157 163 157

F-nanoal Punning

10.000 10 000 10 000

Mr Mr: A dam Death Disafiiliry cmcnl

7 696 000 182 534 1B2 514

10 000 10 000 10 000

Mr Mearj Duath Disability

Mr Shammo Death Dis anility

Khaton

Death

1.768.505

1O.C00 10 000 10 000

DinahiMy Retirement

Disability

2 328.000 134.B53 134.853

1 In the event of death, the amount represents the proceeds from the life insurance policy owned by the named executive officer, payable from the third-party issuer of the policy. In the event of disability or retirement, the amount if any. represents the total amount of annual payments to tho named executive officer to pay a portion of the annual premium of lhe liie insurance policy owned by him. provided that the named executive officer continues lo pay the annual premiums pursuant to the terms 0' the executive life insurance program II Mr Mead had retired on December 31. 2013. he would not have been entitled lo receive additional company contributions because he had reached plan matunty as of that dale

2Assumes that each named executive officer would be immediately eligible for long-term disability benefits Irom Venzn'Vs qualified and nonqualified disability benefit plans Messrs Shammo and Siratton dc not participate in lhe nonqualified portion of Ihc disability benefit The assumptions used lo calculate the value of the disabilily benefits include a discount rate of 5 0% and modality and recovery based on the 1987 National Association of Insurance Commissioners Group Disability Table These rates represent the probability of death or recovery between the date of disability and the payment end date. The qualified portion of Ihe disability benefit for Messrs. McAdam. Mead. Shammo. Stratton and Milch is estimated nt $445,974, $410,789, $420,677. $423,793 and $591,385, respectively, and the nonqualified portion of the disability benefit for Messrs McAdam. Mead and Milch is estimated al $887,687. $817,654, and $1,177,120 respectively In order to receive the nonqualified portion of the disability benefit, the executive musl pay the premium associated wilh ihe qualified portion of the benefit

3Mr McAdam did not participate in the financial planning program tn 2013 and, as a result, would not have been entitled lo receive financial planning services if his employment had terminated on the last business day of 2013

4Mr Siratton would not have been entitled fo receive executive life insurance benefits or financial planning benefits because he had not fulfilled tho eligibility requirements for retirement under the terms of those programs on the last business day of 2013

Potential Payments upon Change in Control

Venzon does not maintain any plans or arrangements that provide for any named executive officer to receive cash severance or any other cash payments in connection With a change in control of Venzon. If lhe named executive officer's employment terminates in connection with or following a change in control, he would be eligible for the same benefits, if any, that would become payable to the executive upon his termination under the circumstances as desenbed above. Under tlie Short-Term Plan, if a change in control occurs, all outstanding awards will vest and become payable on the regularly scheduled payment date

The Dneclurs are eligible to participate in lhe Ven/on Foundation Matching Gifts Program Under this program, wmcn

- - '- " - Foundation maicries up lo 55 000 per yea' uf chantable contnbutions to accredited

^h """lbutiorr., to any non-profit with 501(c)(3) status and Si.000

opim lo all Ve-'ii' college¹

Equity Awards

As is the case for all participants under the terms of the Long-Term Plan and the applicable award agreements, upon an involuntary termination of employment without cause, death, disability or qualifying retirement, each named executive officer's then unvested RSUs will vest and be paid on the regularly scheduled payment date after the end of the applicable award cycle and each named executive officer's then unvested PSUs will vest and be paid on the regularly scheduled payment dale after the end of the applicable award cycle, but only if and to the extent that the applicable performance cntena for the award arc achieved at the end of the applicable award cycle. However. Mr. McAdam's special PSU and RSU awards granted in 2011 will be forfeited rt Mr McAdam retires pnor to July 31. 2016. Under the Long-Term Plan, a qualifying retirement generally means to retire after having altaincd at least 15 years ol vesting service (as defined under the applicable Venzon lax-quahlied savings plan) and a combination of age and yeats ol vesting service that equals or exceeds 75 poinls As of December 31. 2013. Messrs McAdam Mead Shammo and Milch were retirement-eligible under the Long-Tenn Plan

In addition, undei the teims o! the Long-Term Plan and the applicable aware agreements, if in Hie 12 months Ir-ilnwuirj a change in control of Ver.zon, a participant s employment is involuntarily terminated without cause all then unvested RSUs will vest arid be paid on the regularly scheduled paymenl date after the end of the applicable award cycle and all then-¹ invested PSUs will vest at target level perlonnance and be paid cn the regularly scheduled paymenl date alter the end ot the applicable award cycle

Ur.der Vie Long-Term Plan, a chang*- in control of Verizon is genet ally ttelmed as :rx.' occLrrerce cf any of trV J oik wing

Any person becomes a beneficial owner of shares representing twenty peicr.-nt or more o' Verizon s outstanding vntmg stock,

Vtjnzo*". consummates a merger, consolidation, reorganization or any other business comlirinticn. or

The Board adopts resolutions authorizing the lieaidatior. or dissolution or .sale of all or substantially all of Uu:

assets of Venzon

However, a change in control will not occur if

The amount of Venzon voting slock outstanding immediately before the transaction lopresents at least forty-five

percent of the combined voting power of the corporation that survives the transaction,

Vtnzon Directors constitute at least one-half of tho boarc of directors of ihe surviving corporation.

Vtjnzons CCO rs the CEO of the surviving corporation, and

The headquarters of the surviving corporation is located in New York. New York

Estimated Payments The following table shows lhe estimated value of the payouts that tne named executive ofhceri. could have received in respect of their outstanding unvested equity awards it any of the following events occurred on ihe last business day of 2013 (1) a change in control of Ven/on without a lennnatio'i of employment, (n) a change m eontiol of Venzon and an involuntary iennination of employment without cause and (mj a temimation employment as a iesu!t of an involuntary termination without cause, qualifying retirement, or death or disability The amounts represent ine estimated value of the RSU and PSU awarrjs granted m 2012 and 2013 and in addition for Mi McAdam. Ins spf-cial 2011 PSU and RSU awards, that would have been payable pursuant to the terms of the awaid agreements, calculated using the loial number cf units (including accrued dividends) o" tho last business day of L'013 and $49 li, Ven/or. s closing stock pnee on that date, and lor the PSUs. assuming the award would vest al target porionrmr.ee love-Is 'Pie actual amounl Day able under these awards can Ik dolennined on'y at (he time the awards would be paid

1 Mr Stratton would not have been entitled to receive any amount in respect of his outstanding unvested equity awards upon retirement because he had not met the eligibility requirements for retirement under the terms of the Long-Term Plan on the last business day of 2013.

Non-Employee Director Compensation

In 2013. each non-employee Director of Verizon received an annual cash retainer of $100,000 Any Director who served on liie Board for less than the full year received an amount pro-rated to reflect the portion of the year he or she served The Corporate Governance and Policy and Finance Committee Chairpersons received an additional annual cash retainor of $15,000, tho Audit and Human Resources Commitlcu Chairpersons received an additional annual cash retainer of 525,000. and the Presiding Director received an additional annual cash retainer of $10,000 Each Director also received an annual giant cl Verizon share miuivalunts valued at SI50,000 on lhe granl date No meeting fees weiu paid a Director attended a Board ui CommiHet.' mooting on Ihe cay befr.vt? ot tf 10 day of a tcyularly scht-dulad Board meulmg t:ach Dueutor who attended such a meeting held on any other date received a meeting fee of S2 000

In addition m 2013 the Board estaohstied a committee composed of Mr Pnee (Chairperson) Ms Keeth and Ms Tcsija to assist the lioarri in responding to a shaioholder demand The Chairperson received a cash retainer of S5.000. and each Commit ice member received a meeting lee of S2 000 for each o' the three meetings held hy ihc Committee dunng 2013

ii grant of 3.0.10 Ven/on sharr- r.-quivafonfs valued af the closing

A riuw Director who joins f 'ie Board loceive:; a ore-t. pnee on ihe date that the Director joins ihe Brxiid

All sham equivalents are nutuTiahcally credited to the Director's deferred compensation account under the Verizon Executive Doicral Plan and invested in a hypothetical Verizon stock fund Amounts in the deferred compensation account are paid m a lump sum in the year following the year thai the Director leaves she [Jean:

Under iht Vcn/on Executive Deferral Pl::n. Diiectors may defer all or part of their annual cash retainer and meeting fees A Director may elect to invest theso amounts in 0 hypothetical cash account that cams a return rate ocual to the long-term high-grade corporate hond yield average as published by Moody a Investor Services or m the other hypothetical investment options available to participants in Venzon's Management Savings Plan

rtnch is

it ploy

ri-rsilies, $1,000 per yea- of chantable coil able donations lo designated disaster relief campaign:

Directors who served as d;rcctois ot NYNF.X Corporation participate in a chantable giving program Under this program, ivnrrn 3 participant wires from ihe Board ut attains age 65 (whichever occurs l.jler; or dies, one or more chant able contnbutions in the aggregate amount ot SI.000.000 arc made, payable in ten annual installments Directors who served as dircctrxs of GTE Corporator, participate m a similar program for which the aggiegale conlnbulioii is $1,000,000. cayahle in (rve ai'.ri.ial installments commencing upon the Director's death. The GTE arid NYNEX programs are financed through ihe purchase of insurance 01 the l.fe o! each participant The charitable giving pnxjranis are closed to future participant In 2013. the aggregate cost of maintaining and administering the legacy chan-.ahle giving programs for all rarticipants was $62,165

3/ Oil? ;_;Uc io i$2'::? 0 33£ >:W e m:: iTi.i 7 s?? 1H

Change in i^Junsiun Value and Nonqualified

Deferred Compensation Earnings S (S) (0

All Other Compensation

Slock

Fees Earned or Awards Paid in Cash 1 2 IS) (S)

(i» (£!

Director Compensation

Total (5) (">

(S) Ifl)

Non-Equity Option Incentive Plan Awards Compensation

ii) <J>

W (e)

(a)

fl 313 17? 500

4,317

276 717 ?7FJ 750 2S4 000 282 4G2

iaa2aa

150 000 150.000 150 OC0

tsn.ooo

150 000 150 000 15C.O00 150 0RC 150 000

2 T2 POO 2R2 832 360 4H3

SheBy* L Arrhamonair PKr.t'd L Carrion* Uebn* L Heatey M F rances Kcilh RotJi"1 W I anr Sjndrn O Mooje" Joiejj'¹ Neutiuuisr* DonjU 7 NKjolaiutn-KLircice OliS J' HuiJt'B Ptrx' Rodney £ Stum Kainiy" A Tvs|a Gieqo'y ⁿ Watton

10? 333 2CS 160

' Denotes a Chairperson uf a standing or special committee

Th's column includes all fees earned or paid in 2013. whether the fee was paid m 2013 or deferred
For each Director this column reflects the grant date fair value of the Director's 2013 annual stock award computed in accordance with FASB ASC Topic 718 For Ms Archambeau. this column reflects the grant date fair value of her annual share equivalents award valued at $12,500. which was prorated to reflect the portion of the year that she served on the Board, and includes the one-time grant of 3.000 Venzon share equivalents with the grant date fair value of 1147.780 that she received upon her appointment to the Board effective December 1, 2013, in each case based on the closing pnee of Venzon's common stock on the grant date For Mr Wasson, Ihis column reflects the grant dale lair value of his annual share equivalents award valued al $125,000. which was prorated to reflect the portion of the year trUt he served on the Board and includes the one-time grant of 3 000 Venzon share equivalents with the grant date fair value of $140,160 Ihat he received upon his appointment to the Board effective March 1. 2013, in each case based on the closing pnee of Venzon's common stock on the grant date The following rtrftects the aggregate numbei ol share equivalent awards and the aggregate number of option awards outstanding as of December 31. 2013 for each person who served as a non-employee Director dunng 2013 Sheilyo Archambeau, 3,254 and 0. Richard Camon 90,366 and 0. Melamo Healey, 11.007 and 0, M. Frances Keeth, 38,399 and 0, Robert I ane. 48.982 and 0, Sandra Moose. 80.085 and 0. Joseph Neubauer, 99,201 and 7.798. Donald Nicolaisen. 45,615 and 0. Clarence Otis. Jr. 44,994 and 0, Hugh Pnco, 70.160 and 0. Rodney Slater, 20.131 and 0. Kathryn Tcsija. 6,646 and 0, and Gregory Wasson, 5.851 and 0
This column reflects above-market earnings on nonqualified deferred compensation plans Non-employeo Directors do not participate in any defined benefit pension plan.
This column reflects matching contnbutions made on the Directors' behalf under the Venzon Foundation Matching Gift Program.

Security Ownership of Certain Beneficial Owners and Management

Principal Shareholders

On March 3, 2014. there were approxirnatcly {XX] billion shares of Verizon common stock outstanding and each share is entitled to one vote. The foDowing table sets forth infonnation about persons we know to beneficially own more than five percent of the shares of Venzon common stock, based on our records and information reported in filings with the SEC To the extent that information in the table is based on information contained in an SEC fifing, it is accurate only as of the date referenced in the firing On February 21, 2014 in connection with the Venzon Wireless transaction, we Issued approximately 1.27 billion shares, thereby increasing our outstanding common stock by approximately 45% As a result, il Is possible Ihat shareholders' percentage Interest in our outstanding common stock has changed significantly since that dale.

-1 Name and Address 0! ■■: ^ - - - Beneficial Owner	Amount and Nature "of" Beneficial Ownership	" Percent of Class
BlackRock Inc. 40 East 52"l Street New York New York 10022	169.544.335	5 9%

* This information is based on a Schedule 13G filed with the SEC on February 10. 2014 by BlackRock Inc . setting forth information as of December 31. 2013 The Schedule 13G stales thai BlackRock Inc. has sole voting power with respect to 137.363.936 shares and shared voting power with respect to 17 014 shares and sole dispositive power with respect to lhe 169 527.321 shares and shared dispositive power with respect to 17.014 shares

Directors and Executive Officers

In the following table, you can find information shewing the number of shares of Venzon common slock beneficially owned by each of the named executive officers, each Director and all executive officers and Directors as a group as of January 31, 2014 "1 hs inlormation includes shares held m Venzon's employee savings plans and shares that may be acquired within 60 days pursuant to the et erase of stock options and/or tho conversion of certain slock units under deferred compensation plans The aggregate number of shares owned by executive officers and Directors represents less than one percent of the total number of outstanding shares of Venzon common stock Unless we have indicated otherwise, each individual and/or his or her family members) has or have sole or shared voting and/or investment power with respect to tho secunlies Executive officers and Directors also have interests in other stock-based units under Venzon deferred compensation plans and stock-based long-term incentive awaids We have included these interests in tlie Total Slock-bascd Holdings" column in the table below to show the total economic interest that the executive officers and Directors have in Venzon common stock

322.191 46.164 73.686 53.197 76.131

1.296.685 434.4-92 410.817 378.090 345.210

Total Stock-based Holdings 2

3.254 91.626 11.007 38.399 48.982 80.085 145.348 45.615 47.9S4 70.218 20.131 6.646 5,851 4.734.567

Named Executive Officers Lowell McAdam* Daniel Mead Francis Shammo John Stratton Randal Milch

3.000 2.559

Directors: Shcllyc Archambeau Richard Camon Melame Healey M. Frances Keeth Robert Lanu Sandra Moose Joseph Neubauer Donald Nicolaisen Clarence Otis, Jr. Hugh Pnee Rodney Slater Kathryn Tesija Gregory Wasson

All of tho above and other executive officers a* a group 3

811.605

* Mr. McAdam also serves as a Director.

1 In addition to direct and indirect holdings, the "Stock" column includes shares that may be acquired within 60 days pursuant lo the conversion of RSUs granted in 2011 as follows. 109.531 shares for Mr. McAdam; 23,823 shares for Mr Mead; 44,360 shares for Mr. Shammo, 33.779 shares for Mr. Stratton; and 39.119 shares far Mr Milch The 'Stock" column also includes shares that may be acquired within 60 days pursuant to tho conversion of certain stock units under deferred compensation plans as follows: 12.771 shares for Mr Milch; 3.191 shares for Mr Camon, and 2.501 shares for Mr. Pnee Prior to conversion, the shares underlying tho RSUs and deferred compensation units may not be voted or transferred. No shares are pledged as secunty

2 The Total Stock-based Holdings" column includes, in addition to shares listed in the "Stock" column, stock-based units under deferred compensation plans and stock-based long-term incentive awards, which may not be voted or transferred.

Section 16(a) Beneficial Ownership Reporting Compliance

SEC rules require that we disclose any late filings of stock transaction reports by our executive officers and Directors. Based solely on a review of the reports that we filed on behalf of these individuals or that were otherwise provided to us, our excculivc officers and Directors met all Section 16(a) filing requirements dunng calendai year 2013

(This portion o1 the page intentionally Ie1l blanV)

Appendix A

CORPORATE GOVERNANCE GUIDELINES

The Board has adopted these Guidelines and the Committee Charters to provide a framework for tho functioning of the Board The Board will penodically review these matenuls and piactices in light of ongoing developments and the Corporation's needs fo determine whether any changes are required

Role of the Board

The business of the Corporation is conducted by management, undo' the direction of (he Board of (Directors The Board, and each committee ot Ihc Beard, has complete access to management In addition, the Board and each committee have access to independent advisors as each deems necessary or appropnate

Strategic Planning and Management Development At least once a year, the Board conducts a strategic planning session with management The Board reviews succession planning and management development at least annually. The process includes consideration of organizational needs competitive challenges, the potential of key managers planning for future development and emergency situations

Executive Sessions The independent Directors of the BoanJ meet at least twice each year m executive session The non-employee Directors of the Board meet at least three times each year in executive session. Any Director has the noht to call a meeting or executive session of the independent Directors or of the non-employee Directors In at least one executive session, the Board assesses the process and efferliveness of lhe Board [including opportunities tor continuing educat.on and orientation of new Directors) and considers any olher matters that the Directors request In an executive session of independent Diieclors. the Board receives the Human Resources Committee 5 report on the CEO's performance and compensation

Presiding Director. At or prior to the Annual Meeting of Shareholders, ihe independent members of the Board of Diieclors shall elect an independent Director lo serve as Piusiding Director until the next Annual Meeting, or until his or her successor is ejected and quad/ied. Tfie Presiding Director shall act as Iraison with the Chairman, m corsultutK-n with ttie other Directors In addition, all Dnectors shall have direct and complete access to the Chairman at any time as they deem necessary or appropnate The Presiding Director shall chair all executive sessions of the Board and all other meetings of the Board at which the Chairman is not present The Presiding Director may, in his or hei discretion, call a meriting <jf the Board or an executive session of the Board, and shall call an executivo session at the request of any olher Director.

The Presiding Director, m consultation with the Chairman, shall review and approve the schedule of meetings of the Board, the proposed agendas and the matenals to be sent to the Board. Directors shall have the opportunity to provide suggestions for the meeting schedule, agenda items and materials to tho Chairman or the Presiding Director. Any shareholder or interested party may communicate directly with the Presiding Director-

Venzon Communications Inc

Presiding Director

Board of Directors

140 West Street. 29 th Floor

New York, New York 10007

Co/nm/rfees There aie three (3) standing committees of ihe Board Audt. Corporate Governance and Policy, and .

Human Resources The members of the Audit. Corporate Governance ond Policy and Human Resources committees ." will'be independent as requned by law or regulation The Board may change the number of committees from time to time " The'iesoonsibilities of each committee are set forth in its charter, winch is approved by the Board and posted on the

Corporation's website Each committee Chair approves the agenda and matenals for each meeting and reports its

actions and discussions to the Board as soon as practicable At least annually, each committee conducts an

assessment ol Us charter and ils processes and effectiveness

Membership- The Corporate Governance and Policy Commitieii annually reviews and recommends the members and Chn.7 of each committee lor approval by tfie Board The Committee pcr.odicaliy considers Totaling Chairs and members of the committees

fVfcet/rjf/s. Directors are expected lo attend all meetings of the Board and each committee on which they serve Directors o'e provided with a copy of the proposed agenda sufficiently in advance of each scheduled meeting in order to have the opuortunity to comment on or make changes to the agenda Direclors standing for election are expected to altend the Annual Meeting ol Shareholders Board Composition and Director Qualifications

The Board will penodically assess the needs of the Corporation to determine the appropriate size of the Board At all times. 3 substantial ma.orrty of Ihe Board w>|l be independent ana not more than two Directors will bo current or former employees ol Venzon Qualifications A candidate must « Be ethical,

Have proven judgment and competence,
Have professional skills ond experience in dealing with a large, complex organisation or in dealing with complex problems that are complementary to the backgiound and experience represented on tlie Board and that meet the needs nt the Corporation.
Have demonstrated the ability lo act independently and be willing to represent the interests of all shareholders and not just those of a particular philosophy or constituency, and
[ie willing and able to devote sufficient tune to fulfill his or her respo-isibihties lo Venzon and its shareholders

In assessing the appropnate composition of tho Board, the Corporate Governance and Policy Committee also considers olher factors that are relevant to the current needs of the Corporation, including those that promote diversity Identification and Consideration of Candidates . Tho Corporate Governance and Policy Committee considers candidates proposed by members of the Committee, other Directors, management and shaieholdcrs The Committee considers candidates lot re-election, provided that the candidate h3S consented to sland for re-election and tendered an irrevocable resignation to the Chairman ot the Committee pnoi to nomination each year. All candidates are evaluated tn the same manner. After the Committee has completed its evaluation, it presents its recommendation to the full Board for its consideration and approval In presenting its recommendation, the Committee also reports on other candidates who were considered but not selected.

Venzon will conduct an onenlalion program for each new Director that includes, among other things, a review of the Corporaiiori's business, financial condition, strategy, elhwraf obligations, key issues and otter relevant topics Independence. A Director is considered independent if the Board finds that the Director is independent under the corporate governance listing standards of the New Yorlc Stock Exchange and the Nasdaq Stock Market. In addition, in evaluating independence, the Board will not consider a Director independent if:

1 Within the past three years, tho Director or a Member of the Director's Immediate Family has: * Been an employee of Venzon or a Venzon subsidiary ("Verizon"):

Received dunng any 12-month penod more than $100,000 in direct compensation from Venzon (other than Director's compensation and other than pension or other deterred compensation for pnor service with Venzon);

♦ Been an executive officer of a company where at the same time a Venzon executive officer or executivo in compensation Band 1 (each a "Verizon Senior Executivo") served on the company's compensation committee.

The Director is retained under a personal or professional services contract by Venzon.
The Director is an employee, or a Member of lhe Director's Immediate Family is an executive officer, of a company that has made payments to. or received payments from. Venzon in an amount that, m any of Ihe past three years, exceeded the greater of SI million or o.ne percent of that company's consolidated gross revenues,

4 The Director is an executive officer of a lender lo Verizon and Venzon s outsort rig indebtedness lo liie

lender in any of the past Ihiee- years exceeded one percent ol trie lender's ou;siand:ng loans al lhe end c'. V-ie lender's fiscal year.

:i The Director is an executive officer of a non-profit entily Ihat has receved contnbutions from Veu/on or ts Foundation that, in any ot the past three years. c>f eecod one per cent of mat entily s ( nr,sn1n::.-itec: ::ruus revenues (excluding matching gift contributions hy Verizon's FouniMltur-l or G The Oiteclot has- any o'.het lela'.ionslup ibttt the Beam dele-nnrws is inconsistent v.-itM arohcal!.' laws and regulations on directors' independence or thai is likely to impair the Director's ahilily 10 ar t inaup^ndiiiitly For purposes of these Guidelines exceol otherwise noted a Member of a Din.'clur's Irmnedrati' Kimily includes his or her spouse, parents, children, siolings mothers and fa-hc-rs-tn law sons and daught(.TS-!.n-l.iw. brotho's and sisters-in law and anyone (oilier than domestic employees) who shares the- Director's home

An executive officer of a company on whose board n Venzon Senior Executive serves is not eligible foi normn-jtion as a new Director of the Corporation Related Person Transaction Policy Definition* . For purposes of this Policy. " flvlalod Person ' moans

any peison who has served as a Director or a Venzon executive officer CGltieei-) at ary time dunrw! the Corporation's last fiscal year,

any person whose nomination to become a Drector has bes'i presented in a pro>y itatomcnl rol--.iT-r-.ci lo the election of Directors since the bcgirm.no. ol ihe Corporation's l;,sl 'itcal yeor

any person who was at any time dunng the Corporation's last fiscal year an -Immediate Tamily Member' c>⁽any of the persons listed above Immec'iate Family Member means spouse child slenclvlc parent stepparent, rihl.ng. mother-m-law. fatr.er in-law. son-m law. daughter-.n-lav. brother-fn law or :;:s:er-ir.-W.v of the Director. Officer or nominee, and any person (other than a li-jnant or employee) sr--irng the household cl such Director. OfiVor or nominnc, or

A>n tn IK- Cd'P'

■r.strm Ic !»■

any person w. wy ItT.mcdJio Fifn-ly Member o'. surli person v, be'»efiLial owner of rnoe:- triur, b percurl ol tee Ctvpcratic-n's sli df.fined below)

' Related Person's Fimi" means any firm, corporation cr olner entity in which a Hl-LiUm: F^r-on is general partner or in wh ch all Related Perscns together have a 10 perctnt or more o-.vru.-i:,hp inter

compensation to an Officer who is not an Immediate Family Member of a Director or of another Officer and which has been approved by the Human Resources Committee or the Board.

a transaction in which the rales or charges involved are determined by competitive bids, or which involves common, contract earner or public utility services at rates or charges fixed in conformity with law or governmental authonty.

a transaction that involves services as a bank depositary of funds, transfer agent, registrar, indenture trustee, or similar services; or

a IransacOon in which the RelalcO Person's interest anses solcfy from the ownership of Venzon slock and all shareholders receive the same benefit on a pro rata basis

(c)

dialed Person irar . adopted this policy

Rrlatod Perron Transaction " means a Transaction in which a Related Person is determined tc have, had. or will kc a d.mr.t or indirect material interesi

bactions can presort potential

ivlvch shall be followed in connecticn

Policy Statement "■ he Beard of Directors reconnizes that i- i:n(fic .'s o' .nN>rr_:<j: for me pe'i.<-■ prion :h,"rv(rf 1 :nci iheneforc tin with all Related Person Transactions rnvolvrig '.he Company

Process Annu.illy each Director and Officer shall submit to Ven.;on the rami.-' and employment atfilinton o! his or her |:iMr.ed'a!e Family Merrht.-rs and the name oi any Related Pcrsor s Firm with which an/ of them are affiliated Diicttois am: Oil ecu s'Kili ui'.ily Verizon prompt^!y cf any chariot:*- to tins inlormation bach Director and Officer shall also identity any Transaction thai iney. their Irnmeoiate Family Members or Hum Related Person Firms are oi will be involved in On an on;70ir.j bas -, Directors and Ofli::r-rs shall promptly advise the Committee of any changes to such Immediate Tamily Venib'r-*;, Tiofisarlrons oi Related Peison Fim-S

Vi;;iia:ii:mcni shall sub'n.l Tiansaciions anu approbate supplemental information lo trio Corporate Governance and PcIt.v Cum'ii.llee for its review

Tni* Co^rpoi_rite Governance atv: Pol cy Committee stull review Transactions ir. order lo determine whether a Transaction is fi Related Person Transaction 1 ne Committee shall take sucn action with respect to ihe Related Person Transactum as it de-ems* rwi.ussary and appiopnate, under \tv_£ uitumstances. indudiiig apptuval. dtsappnjval. ratification. carK-ella;.nn. cr a recuitimeridation :u management Only disinterested members of the Committee, shall participate m Vio;.e ue'.enninations In thu event it is not practical to convene a meeting of the Corporate Governance and Policy Committee; Ihe Chair n' thai Committee shall have the ugh: to make such determination and shall promptly report his or her delemnnaiioii m wnliny lo the oihei members of thu Committee

r iimpi')y^r"ont s!a!us or pnncipai responsibility lhe Director will tender a oveinanrp ana Policy Cc-mrr nteo will recommend to Ihe Board whether Ihe

The Committi-.e shall import its ar.Hun with respect to any Related Peison Transaction to the Board of Directors

Change in Status or Retirement

If a DniTtor retires or changes h.s o^r I ri-si-in.it on io Veuron The CO'po-nle n-sirjri.it on j.houla OO accepted

Service on Other Boards

f.> Annual V.e'/luit; of Sfvirci-ijideis i-ext Inilc

A Dm--.-to- wfo serves as a^r; t.'.eiutive olhcfi ot a public cumpany shrill nc. -^rvn on more lhan ihiee public cumpany bear oi, inriudinrj that o! Mis or her own comcany. and other Direct sir- should r.ot serve cn mme ilvrn six publn: company board! In orrt./r rot to disrupt c*isnng affiliations vntn othe- beards, a Director may rr-.anraiii current positions even il the nu'Ti!!-r nf :h'Wpe<-.iticr-is exceed these hrmts. uniess Hit* Boa.-i d-jtc-mnnos that pemnttinr, the position to cont'njc- will uripj:' trie ri:r.-;r (or s ab litv lo M.-ive on the Ven^O'i Rnnrd Directors are mpoutc-d to ailvise the Corporate Govt-mance .uio f'cicy C o nm tic,- cf ivy cii.ing^s ri Hv-i iiie"ir.ershi;- on nther t-na'fis

: from the poa-d th-

Retirement

A Director wi¹

nno diileim nes Din.'Cli

' Transaction means any transaction .■wranaumern cr relationship with Vt.»vn. Corporation S larl fiscal year in an a'liOi.n: greater than $1.^JC 000 tha: involves -jr Related Person s ruin |; does not include

(a) compL-isation ir; a Drector or Officer wh-ch is or v. proxy statement

sii'i-f Un? bee rj/ujiy of the vili involve- a Ri.-t:jTr_:rf Person n

closet in I' (■ Ctvp;:-'

.-niLjicallv i" bribed ut\ :i .■riiti-nt a-ivi:

_ Stock Ownership ^_;, _ - ... ■- --. _ -_T- ,

Within three years ot joining the Board, each Director shall acquire, and continue to hold dunng Ins or her tenure on the - -Board. Verizon stock with a value equivalent to Ihree times the cash component of (he annual Board retainer Shares held by the Director under any deferral plan are included in determining the number of shares held

Business Conduct and Ethics

Directors arc expected to act in compliance with these Guidelines, applicable laws and regulations, and the spin! of the Venzon Code of Business Conduct for employees Employee Directors arc also governed by Venzon's Code of Business Conduct

Conflicts of Interest A Director should ovoid situations that result or appear to result in a conflict of interest w.th Venzon A Director may be considered to have a conflict nf interest if the Director's interest interferes or appears to interfere in any material way wrth the interests of Venzon, including if

The Director, any Member of the Director's Immediate Family, or any company with which any of them is associated as an officer, director, five percent or more owner, partner, employee or consultant (i) is a five percent or more owner of, or (n) has any management interest in, any company that is in the same business as Venzon ('potential competitive interest"), or
The Director offers gifts or other benefits lo or solicits or receives gifts or other benefits from another entity as a result of his or hci position wrth Verizon, or
The Director has any other relationship that the Corporate Governance and Policy Committee believes is likely to result in a conflict of interest with Venzon

A non-employee Director is expected to advise Venzon prior to acquiring or continuing any interest or entenny into any transaction or relationship that may present a potential competitive interest. The Corporate Governance and Policy Committee, in consultation with the CEO and Chairman, will review and advise the Board as soon as practicable whether a conflict would be presented

Corporate Opportunities A Director should not take advantage of an opportunity to engage m a business activity that property belongs to Venzon, including any activity that is discovered as a result of the use of Venzon information or property or in connection with his or her service as a Director A Director stuuld nol use Venzon information, pioperly or his oi her posiiion with Venzon (or personal gam

Securities Transactions . A Director should not trade, or enable any other person lo trade, in Venzon's secunties or the secunties of another company while aware of matenal non-public information

Confidentiality Directors should maintain the confidentiality of information about Venzon and other entities which Venzon entrusts to them, except where the disclosure is authonzed or required by law

Fail Dealing . Directors should act fairly in any dealings with the Corporation's stakeholders, including customers, suppliers, competitors, employees and shareholders

Waiver. No waiver of any provision of the business conduct and ethics requirements for a Director, or of any provision of the Verizon Code of Business Conduct for a Verizon Senior Executivo. may be granted without the approval of the Board of Directors. The Board is strongly predisposed against any such waivers. However, in order to approve any such waiver, the Board must affirmatively find that the waiver does not violate any applicable law or regulation and that the waiver is in the best interests of the Corporation. In the event the Board approves a waiver, it will ensure that the waiver and the Board's rationale for granting the waiver are promptly disclosed, consistent with applicable legal and stock exchange requirements.

Verizon Senior Executives Serving on Outside Boards

A Verizon Sertor Executive must obtain approval from the Corporate Governance and Policy Committee in advance of accepting any new membership on the Board of a public company. Venzon Senior Executives may not serve on the Board of more than two public companies other than Venzon

A Venzon Senior Executive wiD not accept a new directorship with a company if the CEO or other executive officer of that company is serving as a Director of Venzon.

Shareholder Communications with Directors'/- -

11 a shareholder wishes to communicate directly with the Board, a Committee of the Board or with an individual Director, he or she should send the communication lo

Venzon Communications Inc

The Board of Directors (or Committee name or Director's name, as appropnate] 140 West Street, 29 th Floor New York. New York 10007

Venzon will forward all shareholder correspondence about Venzon to the Board. Commitleo or individual Duoctar(s) Policy on Adoption of Shareholder Rights Plans

The Corporation does not currently have a shareholder nghts plan, or "poison pill," and the Board currently has no plans to adopt such a plan However il the Board is presented with a set of facts and circumstances which leads it lo conclude ■hat adopting a nghts plan would be m the best interest of shareholders, it will seek pnor shareholder approval unless the independent Directors, exercising their fiduciary duties, determine that such submission would not he in the best interests of shareholders under the circumstances If any nghts plan is adopted without pnor shareholder approval, it will be presented lo shareholders withm one year or expire within one year without being renewed or replaced Any plan adopted by lhe Board will also contain a "sunset" provision, providing that shareholders will have the opportunity to ratify or reject the plan every three years following the date of initial shareholder approval

Shareholder Advisory Vote

Effective with the Corporation's 2009 Annual Meeting of Shareholders, a management proposal related to executive compensation in the form approved by the Board of Directors will be submitted annually to shareholders for a non-binding vote

Appendix B

Appendix C

Related Dow Peer Information

The following chart lists the companies included in the Related Dow Peers for 2013 compensation purposes, and their market capitalization as of December 31, 2013, as reported by Bloomberg, and net income attributable lo the company, revenue and total employees, as of each company's most recent fiscal year-end as reported in SEC filings.

Company	1 Nei Income Market Attributable to Capitalization the Company (5 Millions) (5 Millions)	Revenue IJ Millions)	Lmployner.
3M	93 300
Alcoa	1; 385
American Express	97 1«c
ATM	IBS.tj.'.t
Bank of America	160 072
Boc'no	102 566
Caterpillar	57 IS7\
CenturyLrnV	16.826
Chevron	240 224
CisCC Systems	119 975
Cccfl-Co la	1821??
Contrast	134.9fl\|
DuPonl(b'l) I GOIOfei
Exxon Mobil	442.0i,'4\|
General Electric	283.590
Hcvtliitt-Piichaid	53 409
Home Depot	115 953
IBM	2U3 b7<
Intel	129 022
Johnson & Johnson	258.41b
JPMorgan Chase.	219 837
McDonald s	96.548]
Mcrfk	146 ?4 3
Microsoft	31?2!Sfi
Prize*	1S8 515j
Proc'or & Gamble	221 251)
SDnrisNuirteJ	.2 27:
Time Warner Cable	36.19^
Travelers	32 V<J
UnitcriHoailh	7:- eu&l	I
United lcc*-.;>olO!iies	lit- 4 21!	I
W.i i.M.i rt	254.623'
Walt Oisncy	13-1
Von ,;r>n	M0 G?6
Verizon's Ranking	15
Verizon's Percentile Ranking	5fiV.

Verizon Communications Inc. Reconciliation of Non-GAAP Measures Adjusted Net Income Reconciliation

Year Ended December 31.

Reported Net Income Attributable to Verizon

msc Tran

n cn Spcr.tr i

■ The after-

Scvirrance, Pension and Benefit Credits Gam on Spectrum License Transaction Wireless Transaction Costs Adjusted Net Income Attributable lo Verizon

icton amriunlffd to $47 8 million

Adiusteri EPS Rcconciliniir.

Year Enucd Dec.emhc 31,

Reported EPS

Severance. Pension and Benefit Credits Gain on Spectrum License Transaction Wireless Transaction Costs

Adjusted EPS

Note EPS may not acd due to rounding

Free Cash Flow Reconciliation

Year Ended December 31.

Not Cash Provided by Operating Activities

Less Capital Expenditures iinclud/.tnj capitalized sottwaii) Free Cash Flow

(dollars in billions) 2013

11 5 (? 9)

2013 _

£■1 00 (1 35) (0 02) 0 20

%2&s

(dollars in billions)

2013

S 38 8

16 6

Legislation Text

Legislation Details

Legislation Details (With Text)