Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted.

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Acumen Learning, LLC (877) 224-5444 (Terry Tate Video)

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. How much do you know about Verizon Wireless’ Key Success Measures? (or Key Performance Indicators (KPIs) ) Let’s find out! Important Question!

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. 1 - How much Cash was on hand? $______ 2 - How much Cash was generated by Operating Activities?$______ 3 - What is our Net Income? $______ 4 - What is our Gross Margin? ______% 5 - What is our Net Profit Margin? ______% 6 - What is EBITDA as a % of Revenue? ______% 7 - What is VZW’s latest quarter ARPU? $______ 8 - What VZW’s latest quarter Data ARPU? $______ 9 - What is Return on Assets (ROA)? ______% 10 - How much did Total Operating Revenues grow? ______% 11 - How much did Net Income grow? ______% Given all the above, how do we stack up to our competition? For fiscal year: 2010 Its OK to guess!  35 POP QUIZ! Page 35

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Today's Learning Objectives: List and describe the 11 key performance measures that are important V W and the Executive Team. List and describe the 5 business drivers all successful businesses must focus on. Create a personal action plan that can positively impact personal performance and company results. Teach specific components of V W financial statements. Better articulate company performance & strategy.

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement.  Only 5-10% of business start-ups survive past 5 years.  16% of CEOs lose their job every year. Booz Allen Hamilton 5 th annual Study  70% of merger and acquisition activity do not live up to expectation. Wall Street Journal 2007 Business can be tough! So why do businesses fail?

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Acumen Means? …the ability to make good business decisions, in a timely manner, with an understanding of how the decision should impact the business. 3

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement.

Definition: CASH Cas h 8 What is required to grow and maintain the business. Cash: “The bills and coins in the register, petty cash, and cash in the bank. It also includes cash equivalents, like CD’s and other highly liquid investments, that easily convert into cash within 90 days.” M EASURES Cash Flow: “Cash generation or “cash flow” is the difference between the cash that flows into the business and the cash that flows out of the business in a given period of time (month, quarter, annual)” D EFINITION  See Page 58

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Cash & Cash Flow How to obtain Cash Can a company have too much Cash? 9 Earn it Cash from Operation Sell Assets Cash from Investing Borrow it Cash from Financing Pro: No Cost -Con: Time Pro: Immediate -Con: Reduces Assets Pro: Immediate -Con: Cost (Interest) How much is too much/little?

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. (In Millions) Cash Verizon Wireless 9 Why carry more cash? Acquisition? Uncertainty? Cash Cash Flow Partially for the Alltel acquisition: $ 24.0 B assumed debt $ 5.9 B cash $ 29.9 B total (12M Customers!) (S&P 500 Average Cash: 6%)

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Cash Benchmarks 9 (In Millions) Cash Cash Flow

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. CASH Review notes on page 9 4. Benchmark the numbers 2008 2009 2010 Cash $9.2 B $607 M $5.3 B Cash Flow $18.1 B $21.3 B $25.5 B 9 1. Define Cash Driver What is required to grow and maintain the business. 2. Measures of Cash 1.Cash: Easily converted into cash in 90 days or less. 2. Cash Flow : Difference of cash in and cash out over a given period of time. 3. Importance of Cash Driver Have sufficient cash to run the business What is the cost of that cash (capital) Enhance shareholder value Improve attractiveness to suppliers and customers.

Definition: PROFIT 10 Prof it Profit = Earnings = Income and is the money made after expenses are subtracted from sales. Gross Profit ($) and Gross Profit Margin (%) Sales (Revenues) -Cost of Goods Sold (COGS) EBITDA: Earnings Before Interest, Taxes, Depreciation & Amortization Sales (Revenues) -Cost of Goods Sold (COGS) -Controllable expenses Net Profit ($) and Net Profit Margin (%): Sales (Revenues) - all expenses (COGS, Controllables, non-controllables) M EASURES D EFINITION  Profit = $  Margin = % Can be expressed in dollars ($) or percent (%).

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Sales Price: $1.50 Water -.04 Label -.11 Bottle & cap -.15 Packaging (Direct Labor) -.20 Total:.50 $1.50 -.50 = $1.00 Gross Profit =66.7% Gross Profit Margin Rent -.03 Selling, Gen, & Admin. (SG&A or Overhead) -.30 Marketing -.08 Shipping -.19 Total:.60 $1.50 - $.50 - $.60 = $.40 EBITDA = 26.7% EBITDA Margin Interest Expense-.04 Taxes-.06 Depreciation /Amortization-.02 Total:.12 $1.50 - $.50 - $.60 - $.12 = $.28 Net Profit = 18.6% Net Profit Margin (Take notes on Page 11) Life Spring Artesian Water Profit ($) / Margin (%)

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. WHY? They sell commodities. “If you’re not unique, you better be cheap!” To drive Profit($) you need either: High Margin (%) or High Volume High Margin vs. Low Margin (Take notes on Page 11) 30% 32% 21% 3.9% 8.0% 1.7% High MarginsLow Margins WHY? They offer something Unique! S&P 500 Averages: Net Margin = 11%

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. = Gross Profit $44,154 Gross Profit Margin 69.08% Sales (Revenues) $63,919 100% - Costs of Goods Sold (COGS) - $19,765 2010 (in Millions) = Net Profit $16,676 Net Profit Margin 26.09% - Interest and Taxes - $1,293 $1.00  Roaming, Cell tower leasing, rent & Maint., rent ($845m)  Hand sets, Head sets, Accessories Income Earnings VZW Gross Profit & Net Profit 11 - Selling, General & Adm.(SG&A) - $18,727 = EBITDA $25,427 EBITDA Margin 39.78% Cost of Goods Sold (COGS) Cost of Service $ 8,342 + Cost of Equipment $11,423 $19,765 - Depreciation & Amortization - $7,458

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Profit Verizon Wireless Gross Profit Margin (%) = Total Revenues – COGS (Cost of Goods Sold) EBITDA (%) = Earnings Before Interest, Taxes, Depreciation, & Amortization: (CONTROLABLES) Net Profit Margin (%) = Total Revenues – All Expenses 11 (In Millions)

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Profit Benchmarks 11 (In Millions)

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Profit Review notes on page 12 1. Define Profit Driver  What is left over after you have subtracted expenses.  Can be expressed in dollars ($) or as a percent (%). 3. Importance of Profit Driver  Net Profit is one of the most important #’s for the business.  Indicates price strength & cost controls  Identifies ability to manage costs 4. Benchmark the numbers 2008 2009 2010 Gross 68.1% 67.9% 69.08% EBITDA 39.3% 38.5% 39.85% Net 26.4% 23.6% 26.09% 11 2. Measures of Profit 1. Gross Profit (Margin): Revenues/Sales - COGS 2. EBITDA: Earnings before Interest, Tax, Depreciation, & Amortization. 3. Net Profit (Margin) – subtract all expenses.

Definition: ASSETS 12 Asse ts What we have and how well we use what we have. ROA: (Return on Assets) M EASURES ARPU: (Average Revenue Per Unit/User) Asset Strength: The ability to remain viable during ups and downs in the marketplace. D EFINITION Data ARPU: – Average Data CHURN - % that leave Asset Utilization: The ability to efficiently and effectively use assets to generate profits.

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Assets Verizon Wireless ROA = Net Income = $16,676 = 12.08% Total Assets $138,044 13 (In Millions)  Total Assets have increased due to: purchase of 700 MHz spectrum in March 2008, which drives the return on assets % down. Rural Cellular, Alltel etc.

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Assets Benchmarks 13 (In Millions) USA Today ComScore/Forrester Research March 25, 2011 Money: Page 2B "A smartphone typically uses 24 times as much spectrum capacity as a regular cellphone. Nearly 66 million people own smarphones now, and that's growing fast, research firm ComScore reports. And tablets -- which provide many of the same features of the smartphone but on a much bigger screen -- can use 122 times more spectrum capacity as an ordinary cell phone. More than 82 million people will have a tablet in 2015, up from 10.3 million last year, Forrester Research projects.”

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Asset Review notes on page 14 1. Define Asset Driver What we have and How well we use what we have. 2.Measures of Asset ROA – Percent value of total revenue to total assets. ARPU – Average revenue in dollars gained per user/unit. Data ARPU CHURN 3. Importance of Asset Driver Demonstrates ability to work smarter rather than harder. Indicates company invests in “right” assets Indication of execution & efficiency 4. Benchmark the numbers 2008 2009 2010 ROA 11.46% 10.93% 12.08% ARPU $51.72 $50.75 $53.52 13

Definition: GROWTH 14 Grow th The ability to increase year over year, quarter over quarter, and/or month over month. Revenue Growth: Top-line Sales (Revenue increase). M EASURES Customer Growth: Increase/decrease in customer base. Net Income Growth: Bottom-line (Profit increase). “In today’s business world, no growth means lagging behind in a world that grows every day…” “Investors expect it, employees are energized by it, customers are generally attracted to it and executives are measured by it.” D EFINITION

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Growth Verizon Wireless 15 (In Millions)

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Growth Benchmarks 15 (In Millions) Merger: Sprint worth $30 B 2007 Lost 29 B Nextel worth $45 B 2008 Lost 3 B Total: $75 B Total Building out/investing in FiOS. On average, customers pay a monthly bill of $135, about twice the average bill for the Verizon customer.

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. 15 3. Importance of Growth Driver “Investors expect it, employees are energized by it, customers are generally attracted to it and executives are measured by it.” Growth Review notes on page 16 4. Benchmark the numbers 2008 2009 2010 Rev Growth 12.4% 25.9% 2.88% Net Growth 22.8% 10.5% 13.57% Cust. Growth 12.7% 9.4% 7.6% 1. Define Growth Driver The ability to increase:  year over year  quarter over quarter, and/or  month over month. 2. Measures of Growth Revenue Growth: Top-line Sales or Revenues increase. Net Income Growth: Bottom-line or Profit increase. Customer Growth: The increase/decrease in the customers.

Definition: PEOPLE Peop le 16 Customers that has the ability to impact the success of our business:  External Customers  Internal Customers  Vendor/Re-sellers # of Customers: The total # of individual accounts at end of period. Churn: Rate at which current users/units terminate with VZW. M EASURES D EFINITION

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. People: 17 What is more important than meeting customer expectations? Exceeding? “If I would have asked my customer what they wanted, they would have said a faster horse!” ~Henry Ford Anticipating Customer Needs & Expectations!

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Failing to Anticipate customer needs/expectations! 17 What companies have failed to anticipate customer expectations? What were the results? Unprepared for recession and required government bailout money. Ford secured line of credit prior and retained full ownership. Decided to move to digital product line. Polaroid did not and is no longer a serious competitor. In 1943, the CEO said the customer need for their product was approximately 5 computers for the entire world. Did not move to a digital music player and lost a significant market share to innovative companies like Apple and Motorola. GM/Ford Kodak IBM Sony

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. People: (Take Notes on Page 17) External Customers: 1.Have a formal process for listening to your customers 2.Anticipating customer needs is critical! Internal Customers: 1.Meet monthly and ask: #1) Are there any gaps in my performance, and #2) Have my priorities changed?” Top 2 Reasons Why Companies Fail: #1 reason: (Too little Cash) #2 reason: Cultural differences. 17

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. People Verizon Wireless 17 (In Millions)

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. People Benchmarks 17 (In Millions)

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. People Review 17 1. Define People Driver The External Customer, Vendor/Re-seller, or Internal Customer that has the ability to impact the success of the business. 4. Benchmark the numbers 2008 2009 2010 # of Cust. 80.00 87.50 94.14 Churn 1.24% 1.44% 1.33% 2. Measures of People # of Customers: Total # of individual accounts at end of period Churn: Rate at which current users/units terminate 3. Importance of People Driver Without People, then what happens? Anticipate and then exceed expectations. Customer service is for everyone; o Internal customers o External customers o Vendors customers

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. 1.What is the basic equation for each statement? 2.What is the purpose of the statement? 3.What are the key numbers and how are they trending? 4.How can you impact each statement? VZW is a privately held company, therefore the following information and documents are Proprietary & Confidential! VZW Financial Statements The Annually Reported Financial Statements Statement of Income (P&L) Balance Sheet Statement of Cash Flows 21

Statement of Income Indicates: Profitability (SG&A) or Overhead SG&A: Salaries Advertising Sales commissions Call center costs Benefits/Severance Rent Bad debt charges Merger integration costs Professional services: Attorney fees, Accounting (Revenue = Sales) = Top Line Interest Taxes = EBIT Equation: Revenues – Expenses = Income Cost Of Goods Sold COGS 25 EBITDA Total Rev: $63,919 Total op. costs: -$45,950 $17,969 Depreciation +$ 7,458 $25,427 _________________________________________________________________________ _ EBITDA MARGIN $25,427 ÷ $63,919 39.78% Net Profit Margin Net Income: 16,676 Total Rev.: ÷ 63,919 = 26.09% 11% = S&P 500 Ave (Income = Earnings = Profit) = Bottom Line How do you impact this statement? Gross Profit ($) 63,919 - 8,342 - 11,423 $44,154 Gross Margin (%) $44,154 ÷ 63,919 = 69.08% 32% = S&P 500 Ave REVIEW  Teach  1 Question P&L

4.7% -8.2% 2.88% 8.0% -6.5% 2.4% _1.5%_ 0.81% 8.57% -72.3% 26.8% 14.6% 33.9% 13.57% 25 Variance Analysis 2010 vs. 2009 How to calculate growth or Year over year change This year ÷ Last year - 1 x 100 = ($63,919 ÷ $62,131) = 1.02877 (1.02877 – 1) x 100 = 2.88%

Becomes Cash < 1 year  Most Liquid  Least Liquid  Due First  Due Last Due in < 1 year Balance Equation: Assets = Liabilities + Equity 138,044 = 38,622 + 99,422 Snapshot in time Indicates: Financial Strength Equity 27 Balance Sheet REVIEW  Teach  2 Questions Equity Position: 72% (99,422 / 138,044)

27 2.75% -18.46% 14.77% Variance Analysis 2010 vs. 2009

Statement of Cash Flow Equation: Cash In – Cash Out = Net Change in Cash Purpose: Cash Management Most important number! = Cash from core business - Cash to run the business Started Year  Ended Year  Net Change in Cash (+/-)  Spending on investments suggests management is investing in the future. ? ? 29 Cash coming in Cash going out +$25,547 -$6,671 -$14,152 +$ 607 $ 5,331 Earn it Sell Assetsset Borrow it

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. $63,919 - $8,342 - $11,423 = $44,154 $63,919 $16,676 $63,919 $16,676 $138,044 $63,919 $62,131 $16,676 $14,684 13.57 % $5,331 $25,547 $16,676 69.08 26.09 12.08 % 2.88 % $63,919 $17,969 + $7,458 =$25,427 39.78 % 1 2 3 4 5 6 9 10 $53.52 $20.51 11 7 8

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Chances of the idea being incorporated into their life is... When a Person Says … *Based on a 1993 Brigham Young University Study Changing Behavior “That’s a good idea”…10% “I’ll do it!” and commits...25% Says when they’ll do it… 40% Plans how to do it… 50% Commits to another…60% Sets a future specific appointment with the person they committed to... 95% Good Management Technique!

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. 47 Where to Find Information: Click On  Investor Relations

Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. One final thought… “People will work… hard for a paycheck, harder for a person, and hardest for a reason.” ~T. S. Monson (Multi-national Leader)

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Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted.

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