1.) What are some trends that you see in the overall wireless and wireline industry? (growth, profitability, # of subscribers, growth, etc.) Will wireline communication networks eventually disappear, will wireless?? Describe the overall strategy for each firm and what you expect to see going forward based on your analysis of their financials.

2.) Calculate the unlevered free cash flow reconciliation and unlevered free cash flow reconciliation sections for each firm using exhibits 1A and 2A income statements from both firms to complete

3.) For each company, consider the consolidated financial results and provide a margin analysis including (revenue growth, EBIT margin, EBITDA Margin, Tax Rate, Net Income Margin, and unlevered Free Cash Flow.

4.) After reading and analysis of the financials has either, or both companies been reinvesting in its business, provide some evidence to this?

*Also, please help with calculations for the section highlighted in yellow in the excel documents. Thanks.

| B C D F G 2 TN Exhibit 1A AT&T Income Statements 4 Operating Results ($ millions): 5 Total Operating Revenue 6 Less: Cost of Services (Excluding Depreciation) 7 Less: Selling, General & Administrative 8 Less: Impairment & Other Charges 9 EBITDA 10 Less: Depreciation & Amortization 11 EBIT 12 Less: Interest Expense 13 Plus: Equity in Net Income of Affiliates 14 Plus: Other Income (a) 15 EBT 16 Less: Taxes 17 Net Income 18 Less: Income Attributable to Minority Interest 19 Net Income Attributable to AT&T Shareholders 20 21 Unlevered Free Cash Flow ($ millions): 22 EBIAT 23 Less: Change in Net Operating Assets 24 Unlevered FCF 2010 124,280 52,379 32,864 85 38,952 19,379 19,573 2,994 762 1,676 19,017 (1,162) 20,179 2011 126,723 57,374 38,844 2,910 27,595 18,377 9,218 3,535 784 249 6,716 2,532 4,184 240 3,944 2012 127,434 55,228 41,066 0 31,140 18,143 12,997 3,444 752 134 10,439 2,900 7,539 275 7,264 2013 128,752 51,464 28,414 0 48,874 18,395 30,479 3,940 642 596 27,777 9,224 18,553 2014 132,447 60,611 39,697 2,120 30,019 18,273 11,746 3,613 175 1,652 9,960 3,442 6,518 294 6,224 315 304 19,864 18,249 11,744 6,414 5,330 5,531 (9,109) 14,640 7,798 (9,886) 17,684 18,287 5,108 13,179 7,048 (2,509) 9,557 26 Unlevered Free Cash Flow Reconciliation ($ millions): 27 EBIAT 28 Plus: Depreciation 29 Less: Change in Working Capital 30 Less: Investment in Long-Term Assets 31 Less: Change in Investments in Affiliates 32 Less: Change in Deferred Taxes 33 Less: Change in Goodwill 34 Plus: Increase in Post-Retirement Benefits 35 Plus: Increase in Other Long-Term Liabilities 36 Unlevered Free Cash Flow 11,744 19,379 (1,566) 22,432 1,594 (1,609) 765 956 (483) 53,212 5,531 18,377 1,439 21,081 (797) 931 (2,987) 5,208 (49) 48,734 7,798 18,143 (2,559) 20,681 863 23 (1,249) 7,381 (1,102) 49,979 18,287 18,395 1,256 23,851 (721) 748 247 (11,446) 4,174 54,791 7,048 18,273 1,247 27,314 (3,610) (683) 779 7,133 2,223 59,724 38 Margins: 39 Revenue Growth 40 EBIT Margin 41 EBITDA Margin 42 Tax Rate 43 Net Income Margin 44 Unlevered FCF Margin 1.4% 15.7% 31.3% 40.0% 16.2% 4.3% 2.0% 7.3% 21.8% 40.0% 3.3% 11.6% 0.6% 10.2% 24.4% 40.0% 5.9% 13.9% 1.0% 23.7% 38.0% 40.0% 14.4% 10.2% 2.9% 8.9% 22.7% 40.0% 4.9% 7.2% 50 51 TN Exhibit 1B AT&T Balance Sheets 52 53 Assets ($ millions): 54 Cash & Cash Equivalents 55 Accounts Receivable 56 Prepaid Expenses 57 Deferred Taxes 58 Other Current Assets 59 Total Current Assets 1,437 13,610 3,045 13,231 2012 4,868 12,657 2013 3,339 12,918 960 3,741 14,845 1,562 1,247 3,792 25,187 2014 8,603 14,527 831 1,142 6,925 32,028 1,170 2,276 19,951 1,470 4,137 22,985 3,110 22,706 4,780 23,196 60 61 Property, Plant & Equipment 62 Licenses 63 Goodwill & Other Intangibles 64 Customer Lists 65 Investments in Affiliates 66 Other Assets 67 Total Assets 99,519 48,741 78,276 7,393 2,921 6,275 268,312 103,196 50,372 79,041 4,708 4,515 6,705 268,488 107,087 109,767 51,374 52,352 76,054 74,805 2,757 1,391 3,718 4,581 6,467 6,713 270,442 272,315 110,968 112,898 56,433 60,824 75,052 75,831 0 3,860 250 8,278 10,998 277,787 292,829 21,260 4,170 1,681 2,479 7,361 36,951 20,055 4,086 72 2,542 7,196 33,951 19,956 3,872 1,003 2,608 3,453 30,892 20,911 3,808 1,026 2,556 3,486 31,787 21,107 4,212 1,774 2,404 5,498 34,995 23,592 4,105 1,091 2,438 6,056 37,282 69 Liabilities & Owners' Equity ($ millions): 70 Accounts Payable & Accrued Liabilities 71 Prepaid Revenue & Customer Deposits 72 Deferred Taxes 73 Dividends Payable 74 Current Portion of Long-Term Debt 75 Total Current Liabilities 76 77 Long-Term Debt 78 Post-Retirement Obligations 79 Deferred Taxes 80 Other Long-Term Liabilities 81 82 Total Owners' Equity 83 Total Liabilities & Owners' Equity 84 85 Source: AT&T 2009 to 2014 10Ks and Casewriter 64,720 27,847 23,579 13,226 58,971 28,803 22,070 12,743 61,300 34,011 25,748 12,694 66,358 41,392 28,491 11,592 69,290 29,946 36,308 15,766 76,011 37,079 37,544 17,989 101,989 111,950 105,797 92,695 91,482 86,924 268,312 268,488 270,442 272,315 277,787 292,829 88 TN Exhibit 1C AT&T Reorganized Balance Sheets 2014 14,527 831 90 Operating Assets ($ millions): 91 Accounts Receivable 92 Prepaid Expenses 93 Deferred Taxes 94 Other Current Assets 95 Property, Plant & Equipment 96 Licenses 97 Goodwill & Other Intangibles 98 Customer Lists 99 Investments in Affiliates 00 Other Assets 01 Total Operating Assets 02 03 Operating Liabilities ($ millions): 04 Accounts Payable & Accrued Liabilities 05 Prepaid Revenue & Customer Deposits 06 Deferred Taxes 07 Post-Retirement Obligations 08 Deferred Taxes 09 Other Long-Term Liabilities 10 Total Operating Liabilities 2009 2010 14,845 13,610 1,562 1,458 1,247 1,170 3,792 2,276 99,519 103,196 48,741 50,372 78,276 79,041 7,393 4,708 2,921 4,515 6,275 6,705 264,571 267,051 2011 13,231 1,102 1,470 4,137 107,087 51,374 76,054 2,757 3,718 6,467 267,397 2012 2013 12,657 12,918 1,035 960 1,036 1,199 3,110 4,780 109,767 110,968 52,352 56,433 74,805 75,052 1,391 0 4,581 3,860 6,713 8,278 267,447 274,448 6,925 112,898 60,824 75,831 0 250 10,998 284,226 21,107 4,212 23,592 4,105 21,260 4,170 1,681 27,847 23,579 13,226 91,763 20,055 4,086 72 28,803 22,070 12,743 87,829 19,956 3,872 1,003 34,011 25,748 12,694 97,284 20,911 3,808 1,026 41,392 28,491 11,592 107,220 29,946 36,308 15,766 109,113 37,079 37,544 17,989 121,400 12 Net Operating Assets 13 Change 172,808 NA 179,222 6,414 170,113 (9,109) 160,227 (9,886) 165,335 5,108 162,826 (2,509) 2,479 7,361 15 AT&T Net Financial Obligations ($ millions): 16 Dividends Payable 17 Current Portion of Long-Term Debt 18 Long-Term Debt 19 Total Financial Obligations 20 Less: Cash & Cash Equivalents 21 Net Financial Obligations 2,542 7,196 58,971 68,709 1,437 67,272 2,608 3,453 61,300 67,361 3,045 64,316 2,556 3,486 66,358 72,400 4,868 67,532 2,404 5,498 69,290 77,192 3,339 73,853 2,438 6,056 76,011 84,505 8,603 75,902 74,560 3,741 70,819 23 Total Owners' Equity 24 D/E 101,989 69.4% 111,950 60.1% 105,797 60.8% 92,695 72.9% 91,482 80.7% 86,924 87.3% 728 TN Exhibit ID AT&T Wireless Segment Data 2009 48,563 4,941 53,504 33,631 6,043 13,830 2010 53,510 4,990 58,500 36,746 6,497 15,257 2011 56,726 6,486 63,212 41,581 6,324 15,307 (29) 15,278 2012 59,186 7,577 66,763 43,296 6,873 16,594 (62) 16,532 2013 61,552 8,347 69,899 44,508 7,468 17,923 (75) 17,848 2014 61,032 12,960 73,992 48,924 7,941 17,127 (112) 17,015 13,839 15,266 25.8% 37.1% 9.2% 62.9% 26.1% 37.2% 8.5% 62.8% 24.2% 34.2% 10.3% 65.8% 24.9% 35.1% 11.3% 64.9% 25.6% 36.3% 11.9% 63.7% 23.1% 33.9% 17.5% 66.1% | 130 Wireless Operating Results ($ millions) (a): 131 Service Revenue 132 Equipment Revenue 133 Total Operating Revenue 134 Less: Operations & Support Expense 135 Less: Depreciation & Amortization 136 Wireless Operating Income 137 Plus: Net Income (Loss) in Affiliates 138 Segment Income 139 140 EBIT Margin 141 EBITDA Margin 142 Equipment Revenue/Total Revenue 143 Operations & Support/Total Operating Revenue 144 145 146 Wireless Subscribers (000s): 147 Postpaid 148 Prepaid 149 Resellers 150 Connected Devices 151 Total Wireless Subscribers 152 153 Net Wireless Additions (000s): 154 Postpaid 155 Prepaid 156 Reseller 157 Connected Devices 158 Total Net Wireless Additions 159 160 Total Churn Rate 161 Postpaid Churn Rate 162 163 Average Total Customers (000s) 164 Average Postpaid Customers (000s) 165 ARPU Total Customers (S) 2009 64,627 5,350 10,439 4,704 85,120 2010 68,041 6,524 11,645 9,326 95,536 2011 69,309 7,225 13,644 13,069 103,247 2012 70,497 7,328 14,875 14,257 106,957 2013 72,638 7,384 14,028 16,326 110,376 2014 75,931 10,986 13,855 19,782 120,554 4,199 1,438 (801) 1,429 674 1,874 128 2,153 952 1,140 4,608 8,853 1,803 2,077 7,278 1,776 (13) (1,074) 2,032 2,721 1,027 1,171 3,764 3,290 (775) (346) 3,439 5,608 3,722 7,699 1.47% 1.13% 1.31% 1.09% 1.37% 1.18% 1.35% 1.09% 1.37% 1.06% 1.45% 1.04% 90,328 94,634 97,715 100,247 103,632 N/A N/A N/A 12.77 13.44 13.03 13.74 14.35 1 TN Exhibit 2A Verizon Income Statements 3 Operating Results ($ millions): 4 Total Operating Revenue 5 Less: Cost of Services (Excluding Depreciation) 6 Less: Selling, General & Administrative 7 EBITDA 8 Less: Depreciation & Amortization 9 EBIT 10 Less: Interest Expense 11 Plus: Equity in Net Income of Affiliates 12 Plus: Other Income (Expense) 13 EBT 14 Less: Taxes 15 Net Income 16 Less: Income Attributable to Non-Controlling Interest 17 Net Income Attributable to Verizon Shareholders 2010 2011 106,565 110,875 44,149 45,875 31,366 35,624 31,050 29,376 16,405 16,496 14,645 12,880 2,523 2,827 508 (14) 12,684 10,483 2,467 285 10,217 10,198 7,668 7,794 2,549 2,404 2012 115,846 46,275 39,951 29,620 16,460 13,160 2,571 2013 120,550 44,887 27,089 48,574 16,606 31,968 2,667 2014 127,079 49,931 41,016 36,132 16,533 19,599 4,915 (1,016) 9,897 (660) 10,557 9,682 875 (166) 29,277 5,730 23,547 12,050 11,497 (1,194) 15,270 3,314 11,956 2,331 9,625 19 Unlevered Free Cash Flow ($ millions): 20 EBIAT 21 Less: Change in Net Operating Assets 22 Unlevered Free Cash Flow 8,787 (11,407) 20,194 7,728 (5,387) 13,115 7,896 6,861 1,035 19,181 911 18,270 11,759 (19,084) 30,843 11,759 16,533 24 Unlevered Free Cash Flow Reconciliation ($ millions): 25 EBIAT 26 Plus: Depreciation 27 Less: Change in Working Capital 28 Less: Investment in Long-Term Assets 29 Less: Change in Investments in Affiliates 30 Less: Change in Goodwill 31 Plus: Change in Deferred Tax Liabilities B2 Plus: Increase in Post-Retirement Benefits 33 Plus: Increase in Other Long-Term Liabilities 34 Unlevered Free Cash Flow 8,787 16,405 (5,235) 9,939 379 (1,418) 3,628 (4,458) (503) 20,194 7,728 16,496 (1,007) 16,993 (49) 1,417 2,242 4,793 (790) 13,115 7,896 16,460 4,012 20,135 (47) 837 (383) 1,389 620 1,045 19,181 16,606 (1,337) 15,330 31 362 3,962 (6,664) (439) 18,260 19,211 (2,630) (67) 12,939 5,598 (79) 30,843 36 Margins: 37 Revenue Growth 38 EBIT Margin 39 EBITDA Margin 40 Tax Rate 41 Net Income Margin 42 Unlevered FCF Margin NA 13.7% 29.1% 40.0% 9.6% 18.9% 4.0% 11.6% 26.5% 40.0% 9.2% 11.8% 11.4% 25.6% 40.0% 9.1% 0.9% 26.5% 40.3% 40.0% 19.5% 15.2% 5.4% 15.4% 28.4% 40.0% 9.4% 24.3% 2010 6,668 2011 13,362 48 TN Exhibit 2B Verizon Balance Sheets 49 50 Assets ($ millions): 51 Cash & Cash Equivalents 52 Short-Term Investments 53 Accounts Receivable 54 Inventory 55 Prepaid Expenses & Other Current Assets 56 Total Current Assets 2009 2,009 490 12,573 2012 3,093 470 12,576 1,075 4,021 21,235 2013 53,528 601 12,439 1,020 3,406 70,994 2014 10,598 555 13,993 1,153 3,324 29,623 5,247 21,745 2,223 22,348 940 4,269 30,939 57 58 Property, Plant & Equipment 59 Wireless Licenses 60 Goodwill & Other Intangibles 61 Investments in Unconsolidated Businesses 62 Other Assets 63 Total Assets 91,985 72,067 29,236 3,118 8,756 226,907 87,711 72,996 27,818 3,497 5,635 220,005 88,434 88,642 73,250 77,744 29,235 30,072 3,448 3,401 5,155 4,128 230,461 225,222 88,956 75,747 30,434 3,432 4,535 274,098 89,947 75,341 30,367 802 6,628 232,708 65 Liabilities & Owners' Equity ($ millions): 66 Accounts Payable & Accrued Liabilities 67 Other Current Liabilities 68 Current Portion of Long-Term Debt 69 Total Curent Liabilities 15,223 6,708 7,205 29,136 15,702 7,353 7,542 30,597 14,689 11,223 4,849 30,761 16,182 6,405 4,369 26,956 16,453 6,664 3,933 27,050 16,680 8,649 2,735 28,064 70 55,051 32,622 19,190 6,765 45,252 28,164 22,818 6,262 50,303 32,957 25,060 5,472 47,618 34,346 24,677 6,092 89,658 27,682 28,639 5,653 110,536 33,280 41,578 5,574 71 Long-Term Debt 72 Post-Retirement Obligations 73 Deferred Taxes 74 Other Long-Term Liabilities 75 76 Total Equity Attributable to Shareholders 77 Plus: Non-Controlling Interest 78 Total Owners' Equity 79 80 Total Liabilities & Owners' Equity 81 Source: Verizon 2009 to 2014 10-Ks. 41,382 38,569 35,970 49,938 85,908 33,157 52,376 85,533 38,836 56,580 95,416 12,298 1,378 13,676 84,143 86,912 226,907 220,005 230,461 225,222 274,098 232,708 3 TN Exhibit 2C Verizon Reorganized Balance Sheets -5 Operating Assets ($ millions): -6 Accounts Receivable -7 Inventory 8 Prepaid Expenses & Other Current Assets -9 Property, Plant & Equipment 0 Wireless Licenses 1 Goodwill & Other Intangibles 2 Investments in Unconsolidated Businesses 3 Other Assets 4 Total Operating Assets 2009 2010 2011 2012 2013 2014 12,573 11,781 11,776 12,576 12,439 13,993 1,426 1,131 940 1,075 1,020 1,153 5,247 2,223 4,269 4,021 3,406 3,324 91,985 87,711 88,434 88,642 88,956 89,947 72,067 72,996 73,250 77,744 75,747 75,341 29,236 27,818 29,235 30,072 30,434 30,367 3,118 3,497 3,448 3,401 3,432 802 8,756 5,635 5,155 4,128 4,535 224,408 212,792 216,507 221,659 219,969 221,555 6 Operating Liabilities ($ millions): 7 Accounts Payable & Accrued Liabilities 8 Other Current Liabilities 9 Post-Retirement Obligations DO Deferred Taxes 01 Other Long-Term Liabilities 2 Total Operating Liabilities 15,223 6,708 32,622 19,190 6,765 80,508 15,702 7,353 28,164 22,818 6,262 80,299 14,689 11,223 32,957 25,060 5,472 89,401 16,182 6,405 34,346 24,667 6,092 87,692 16,453 6,664 27,682 28,639 5,653 85,091 16,680 8,649 33,280 41,578 5,574 105,761 04 Net Operating Assets 5 change 143,900 132,493 NA (11,407) 127,106 (5,387) 133,967 6,861 134,878 911 115,794 (19,084) 7 Verizon Net Financial Obligations ($ millions): 08 Current Portion of Long-Term Debt 09 Long-Term Debt 10 Total Financial Obligations 11 Less: Cash & Cash Equivalents 12 Less: Short-Term Investments 13 Net Financial Obligations 7,205 55,051 62,256 2,009 490 59,757 7,542 45,252 52,794 6,668 545 45,581 4,849 50,303 55,152 13,362 592 41,198 4,369 47,618 51,987 3,093 470 48,424 3,933 2,735 89,658 110,536 93,591 113,271 53,528 10,598 601 555 39,462 102,118 15 Total Equity Attibutable to Shareholders 16 Plus: Non-Controlling Interest 17 Total Owners' Equity 41,382 42,761 84,143 38,569 48,343 86,912 35,970 49,938 85,908 33,157 52,376 85,533 38,836 56,580 95,416 1,378 13,676 19 D/E 71.0% 52.4% 48.0% 56.6% 41.4% 746.7% 124 TN Exhibit 2D Verizon Wireless Segment Data 725 2009 52,046 8,279 60,325 19,348 17,309 7,030 16,638 2010 55,629 7,778 63,407 19,245 18,082 7,356 18,724 2011 59,157 10,997 70,154 24,086 19,579 7,962 18,527 2012 63,733 12,135 75,868 24,490 21,650 7,960 21,768 2013 69,033 11,990 81,023 23,648 23,176 8,202 25,997 2014 72,630 15,016 87,616 28,825 23,602 8,459 26,760 126 Wireless Operating Results ($ millions) (a): 127 Service Revenue 128 Equipment & Other Revenue 129 Total Segment Revenue 130 Less: Cost of Service Revenue 131 Less: Selling, General & Administrative 132 Less: Depreciation & Amortization 133 Segment Operating Income 134 135 EBIT 736 EBITDA 137 Equipment Revenue/Total Revenue 138 139 Wireless Subscribers (000s) (b): 140 Postpaid 141 Prepaid 742 Total Wireless Subscribers 27.6% 39.2% 42.8% 29.5% 41.1% 12.3% 26.4% 37.8% 15.7% 28.7% 39.2% 16.0% 32.1% 42.2% 14.8% 30.5% 40.2% 17.1% 2009 80,495 16,000 96,495 2010 83,125 19,121 102,246 2011 87,382 20,416 107,798 2012 92,530 5,700 98,230 2013 96,752 6,047 102,799 2014 102,079 6,132 108,211 3,987 2,529 4,252 5,482 948 4,935 5,024 893 5,917 4,118 354 4,472 5,517 5,419 5,568 1.41% 1.07% 1.38% 1.02% 1.26% 0.95% 1.19% 0.91% 1.27% 0.97% 1.33% 1.04% 744 Net Wireless Additions (000s) (c): 145 Postpaid 146 Prepaid 147 Total Net Wireless Additions 148 149 Total Churn Rate 150 Postpaid Churn Rate 151 152 Average Monthly Revenue per Postpaid Account ($) 153 Postpaid Accounts (000s) 754 Postpaid Connections per Account 155 156 Postpaid Proportion 157 Average Total Subscribers (000s) 158 Total ARPU ($) NA NA NA 125.75 34,268 2.43 134.51 34,561 2.53 144.04 35,057 2.64 153.93 35,083 2.76 159.86 35,616 2.87 83.4% NA NA 81.3% 81.1% 99,371 105,022 53.17 55.67 94.2% 103,014 61.37 94.1% 100,515 67.17 94.3% 105,505 69.23 3 | B C D F G 2 TN Exhibit 1A AT&T Income Statements 4 Operating Results ($ millions): 5 Total Operating Revenue 6 Less: Cost of Services (Excluding Depreciation) 7 Less: Selling, General & Administrative 8 Less: Impairment & Other Charges 9 EBITDA 10 Less: Depreciation & Amortization 11 EBIT 12 Less: Interest Expense 13 Plus: Equity in Net Income of Affiliates 14 Plus: Other Income (a) 15 EBT 16 Less: Taxes 17 Net Income 18 Less: Income Attributable to Minority Interest 19 Net Income Attributable to AT&T Shareholders 20 21 Unlevered Free Cash Flow ($ millions): 22 EBIAT 23 Less: Change in Net Operating Assets 24 Unlevered FCF 2010 124,280 52,379 32,864 85 38,952 19,379 19,573 2,994 762 1,676 19,017 (1,162) 20,179 2011 126,723 57,374 38,844 2,910 27,595 18,377 9,218 3,535 784 249 6,716 2,532 4,184 240 3,944 2012 127,434 55,228 41,066 0 31,140 18,143 12,997 3,444 752 134 10,439 2,900 7,539 275 7,264 2013 128,752 51,464 28,414 0 48,874 18,395 30,479 3,940 642 596 27,777 9,224 18,553 2014 132,447 60,611 39,697 2,120 30,019 18,273 11,746 3,613 175 1,652 9,960 3,442 6,518 294 6,224 315 304 19,864 18,249 11,744 6,414 5,330 5,531 (9,109) 14,640 7,798 (9,886) 17,684 18,287 5,108 13,179 7,048 (2,509) 9,557 26 Unlevered Free Cash Flow Reconciliation ($ millions): 27 EBIAT 28 Plus: Depreciation 29 Less: Change in Working Capital 30 Less: Investment in Long-Term Assets 31 Less: Change in Investments in Affiliates 32 Less: Change in Deferred Taxes 33 Less: Change in Goodwill 34 Plus: Increase in Post-Retirement Benefits 35 Plus: Increase in Other Long-Term Liabilities 36 Unlevered Free Cash Flow 11,744 19,379 (1,566) 22,432 1,594 (1,609) 765 956 (483) 53,212 5,531 18,377 1,439 21,081 (797) 931 (2,987) 5,208 (49) 48,734 7,798 18,143 (2,559) 20,681 863 23 (1,249) 7,381 (1,102) 49,979 18,287 18,395 1,256 23,851 (721) 748 247 (11,446) 4,174 54,791 7,048 18,273 1,247 27,314 (3,610) (683) 779 7,133 2,223 59,724 38 Margins: 39 Revenue Growth 40 EBIT Margin 41 EBITDA Margin 42 Tax Rate 43 Net Income Margin 44 Unlevered FCF Margin 1.4% 15.7% 31.3% 40.0% 16.2% 4.3% 2.0% 7.3% 21.8% 40.0% 3.3% 11.6% 0.6% 10.2% 24.4% 40.0% 5.9% 13.9% 1.0% 23.7% 38.0% 40.0% 14.4% 10.2% 2.9% 8.9% 22.7% 40.0% 4.9% 7.2% 50 51 TN Exhibit 1B AT&T Balance Sheets 52 53 Assets ($ millions): 54 Cash & Cash Equivalents 55 Accounts Receivable 56 Prepaid Expenses 57 Deferred Taxes 58 Other Current Assets 59 Total Current Assets 1,437 13,610 3,045 13,231 2012 4,868 12,657 2013 3,339 12,918 960 3,741 14,845 1,562 1,247 3,792 25,187 2014 8,603 14,527 831 1,142 6,925 32,028 1,170 2,276 19,951 1,470 4,137 22,985 3,110 22,706 4,780 23,196 60 61 Property, Plant & Equipment 62 Licenses 63 Goodwill & Other Intangibles 64 Customer Lists 65 Investments in Affiliates 66 Other Assets 67 Total Assets 99,519 48,741 78,276 7,393 2,921 6,275 268,312 103,196 50,372 79,041 4,708 4,515 6,705 268,488 107,087 109,767 51,374 52,352 76,054 74,805 2,757 1,391 3,718 4,581 6,467 6,713 270,442 272,315 110,968 112,898 56,433 60,824 75,052 75,831 0 3,860 250 8,278 10,998 277,787 292,829 21,260 4,170 1,681 2,479 7,361 36,951 20,055 4,086 72 2,542 7,196 33,951 19,956 3,872 1,003 2,608 3,453 30,892 20,911 3,808 1,026 2,556 3,486 31,787 21,107 4,212 1,774 2,404 5,498 34,995 23,592 4,105 1,091 2,438 6,056 37,282 69 Liabilities & Owners' Equity ($ millions): 70 Accounts Payable & Accrued Liabilities 71 Prepaid Revenue & Customer Deposits 72 Deferred Taxes 73 Dividends Payable 74 Current Portion of Long-Term Debt 75 Total Current Liabilities 76 77 Long-Term Debt 78 Post-Retirement Obligations 79 Deferred Taxes 80 Other Long-Term Liabilities 81 82 Total Owners' Equity 83 Total Liabilities & Owners' Equity 84 85 Source: AT&T 2009 to 2014 10Ks and Casewriter 64,720 27,847 23,579 13,226 58,971 28,803 22,070 12,743 61,300 34,011 25,748 12,694 66,358 41,392 28,491 11,592 69,290 29,946 36,308 15,766 76,011 37,079 37,544 17,989 101,989 111,950 105,797 92,695 91,482 86,924 268,312 268,488 270,442 272,315 277,787 292,829 88 TN Exhibit 1C AT&T Reorganized Balance Sheets 2014 14,527 831 90 Operating Assets ($ millions): 91 Accounts Receivable 92 Prepaid Expenses 93 Deferred Taxes 94 Other Current Assets 95 Property, Plant & Equipment 96 Licenses 97 Goodwill & Other Intangibles 98 Customer Lists 99 Investments in Affiliates 00 Other Assets 01 Total Operating Assets 02 03 Operating Liabilities ($ millions): 04 Accounts Payable & Accrued Liabilities 05 Prepaid Revenue & Customer Deposits 06 Deferred Taxes 07 Post-Retirement Obligations 08 Deferred Taxes 09 Other Long-Term Liabilities 10 Total Operating Liabilities 2009 2010 14,845 13,610 1,562 1,458 1,247 1,170 3,792 2,276 99,519 103,196 48,741 50,372 78,276 79,041 7,393 4,708 2,921 4,515 6,275 6,705 264,571 267,051 2011 13,231 1,102 1,470 4,137 107,087 51,374 76,054 2,757 3,718 6,467 267,397 2012 2013 12,657 12,918 1,035 960 1,036 1,199 3,110 4,780 109,767 110,968 52,352 56,433 74,805 75,052 1,391 0 4,581 3,860 6,713 8,278 267,447 274,448 6,925 112,898 60,824 75,831 0 250 10,998 284,226 21,107 4,212 23,592 4,105 21,260 4,170 1,681 27,847 23,579 13,226 91,763 20,055 4,086 72 28,803 22,070 12,743 87,829 19,956 3,872 1,003 34,011 25,748 12,694 97,284 20,911 3,808 1,026 41,392 28,491 11,592 107,220 29,946 36,308 15,766 109,113 37,079 37,544 17,989 121,400 12 Net Operating Assets 13 Change 172,808 NA 179,222 6,414 170,113 (9,109) 160,227 (9,886) 165,335 5,108 162,826 (2,509) 2,479 7,361 15 AT&T Net Financial Obligations ($ millions): 16 Dividends Payable 17 Current Portion of Long-Term Debt 18 Long-Term Debt 19 Total Financial Obligations 20 Less: Cash & Cash Equivalents 21 Net Financial Obligations 2,542 7,196 58,971 68,709 1,437 67,272 2,608 3,453 61,300 67,361 3,045 64,316 2,556 3,486 66,358 72,400 4,868 67,532 2,404 5,498 69,290 77,192 3,339 73,853 2,438 6,056 76,011 84,505 8,603 75,902 74,560 3,741 70,819 23 Total Owners' Equity 24 D/E 101,989 69.4% 111,950 60.1% 105,797 60.8% 92,695 72.9% 91,482 80.7% 86,924 87.3% 728 TN Exhibit ID AT&T Wireless Segment Data 2009 48,563 4,941 53,504 33,631 6,043 13,830 2010 53,510 4,990 58,500 36,746 6,497 15,257 2011 56,726 6,486 63,212 41,581 6,324 15,307 (29) 15,278 2012 59,186 7,577 66,763 43,296 6,873 16,594 (62) 16,532 2013 61,552 8,347 69,899 44,508 7,468 17,923 (75) 17,848 2014 61,032 12,960 73,992 48,924 7,941 17,127 (112) 17,015 13,839 15,266 25.8% 37.1% 9.2% 62.9% 26.1% 37.2% 8.5% 62.8% 24.2% 34.2% 10.3% 65.8% 24.9% 35.1% 11.3% 64.9% 25.6% 36.3% 11.9% 63.7% 23.1% 33.9% 17.5% 66.1% | 130 Wireless Operating Results ($ millions) (a): 131 Service Revenue 132 Equipment Revenue 133 Total Operating Revenue 134 Less: Operations & Support Expense 135 Less: Depreciation & Amortization 136 Wireless Operating Income 137 Plus: Net Income (Loss) in Affiliates 138 Segment Income 139 140 EBIT Margin 141 EBITDA Margin 142 Equipment Revenue/Total Revenue 143 Operations & Support/Total Operating Revenue 144 145 146 Wireless Subscribers (000s): 147 Postpaid 148 Prepaid 149 Resellers 150 Connected Devices 151 Total Wireless Subscribers 152 153 Net Wireless Additions (000s): 154 Postpaid 155 Prepaid 156 Reseller 157 Connected Devices 158 Total Net Wireless Additions 159 160 Total Churn Rate 161 Postpaid Churn Rate 162 163 Average Total Customers (000s) 164 Average Postpaid Customers (000s) 165 ARPU Total Customers (S) 2009 64,627 5,350 10,439 4,704 85,120 2010 68,041 6,524 11,645 9,326 95,536 2011 69,309 7,225 13,644 13,069 103,247 2012 70,497 7,328 14,875 14,257 106,957 2013 72,638 7,384 14,028 16,326 110,376 2014 75,931 10,986 13,855 19,782 120,554 4,199 1,438 (801) 1,429 674 1,874 128 2,153 952 1,140 4,608 8,853 1,803 2,077 7,278 1,776 (13) (1,074) 2,032 2,721 1,027 1,171 3,764 3,290 (775) (346) 3,439 5,608 3,722 7,699 1.47% 1.13% 1.31% 1.09% 1.37% 1.18% 1.35% 1.09% 1.37% 1.06% 1.45% 1.04% 90,328 94,634 97,715 100,247 103,632 N/A N/A N/A 12.77 13.44 13.03 13.74 14.35 1 TN Exhibit 2A Verizon Income Statements 3 Operating Results ($ millions): 4 Total Operating Revenue 5 Less: Cost of Services (Excluding Depreciation) 6 Less: Selling, General & Administrative 7 EBITDA 8 Less: Depreciation & Amortization 9 EBIT 10 Less: Interest Expense 11 Plus: Equity in Net Income of Affiliates 12 Plus: Other Income (Expense) 13 EBT 14 Less: Taxes 15 Net Income 16 Less: Income Attributable to Non-Controlling Interest 17 Net Income Attributable to Verizon Shareholders 2010 2011 106,565 110,875 44,149 45,875 31,366 35,624 31,050 29,376 16,405 16,496 14,645 12,880 2,523 2,827 508 (14) 12,684 10,483 2,467 285 10,217 10,198 7,668 7,794 2,549 2,404 2012 115,846 46,275 39,951 29,620 16,460 13,160 2,571 2013 120,550 44,887 27,089 48,574 16,606 31,968 2,667 2014 127,079 49,931 41,016 36,132 16,533 19,599 4,915 (1,016) 9,897 (660) 10,557 9,682 875 (166) 29,277 5,730 23,547 12,050 11,497 (1,194) 15,270 3,314 11,956 2,331 9,625 19 Unlevered Free Cash Flow ($ millions): 20 EBIAT 21 Less: Change in Net Operating Assets 22 Unlevered Free Cash Flow 8,787 (11,407) 20,194 7,728 (5,387) 13,115 7,896 6,861 1,035 19,181 911 18,270 11,759 (19,084) 30,843 11,759 16,533 24 Unlevered Free Cash Flow Reconciliation ($ millions): 25 EBIAT 26 Plus: Depreciation 27 Less: Change in Working Capital 28 Less: Investment in Long-Term Assets 29 Less: Change in Investments in Affiliates 30 Less: Change in Goodwill 31 Plus: Change in Deferred Tax Liabilities B2 Plus: Increase in Post-Retirement Benefits 33 Plus: Increase in Other Long-Term Liabilities 34 Unlevered Free Cash Flow 8,787 16,405 (5,235) 9,939 379 (1,418) 3,628 (4,458) (503) 20,194 7,728 16,496 (1,007) 16,993 (49) 1,417 2,242 4,793 (790) 13,115 7,896 16,460 4,012 20,135 (47) 837 (383) 1,389 620 1,045 19,181 16,606 (1,337) 15,330 31 362 3,962 (6,664) (439) 18,260 19,211 (2,630) (67) 12,939 5,598 (79) 30,843 36 Margins: 37 Revenue Growth 38 EBIT Margin 39 EBITDA Margin 40 Tax Rate 41 Net Income Margin 42 Unlevered FCF Margin NA 13.7% 29.1% 40.0% 9.6% 18.9% 4.0% 11.6% 26.5% 40.0% 9.2% 11.8% 11.4% 25.6% 40.0% 9.1% 0.9% 26.5% 40.3% 40.0% 19.5% 15.2% 5.4% 15.4% 28.4% 40.0% 9.4% 24.3% 2010 6,668 2011 13,362 48 TN Exhibit 2B Verizon Balance Sheets 49 50 Assets ($ millions): 51 Cash & Cash Equivalents 52 Short-Term Investments 53 Accounts Receivable 54 Inventory 55 Prepaid Expenses & Other Current Assets 56 Total Current Assets 2009 2,009 490 12,573 2012 3,093 470 12,576 1,075 4,021 21,235 2013 53,528 601 12,439 1,020 3,406 70,994 2014 10,598 555 13,993 1,153 3,324 29,623 5,247 21,745 2,223 22,348 940 4,269 30,939 57 58 Property, Plant & Equipment 59 Wireless Licenses 60 Goodwill & Other Intangibles 61 Investments in Unconsolidated Businesses 62 Other Assets 63 Total Assets 91,985 72,067 29,236 3,118 8,756 226,907 87,711 72,996 27,818 3,497 5,635 220,005 88,434 88,642 73,250 77,744 29,235 30,072 3,448 3,401 5,155 4,128 230,461 225,222 88,956 75,747 30,434 3,432 4,535 274,098 89,947 75,341 30,367 802 6,628 232,708 65 Liabilities & Owners' Equity ($ millions): 66 Accounts Payable & Accrued Liabilities 67 Other Current Liabilities 68 Current Portion of Long-Term Debt 69 Total Curent Liabilities 15,223 6,708 7,205 29,136 15,702 7,353 7,542 30,597 14,689 11,223 4,849 30,761 16,182 6,405 4,369 26,956 16,453 6,664 3,933 27,050 16,680 8,649 2,735 28,064 70 55,051 32,622 19,190 6,765 45,252 28,164 22,818 6,262 50,303 32,957 25,060 5,472 47,618 34,346 24,677 6,092 89,658 27,682 28,639 5,653 110,536 33,280 41,578 5,574 71 Long-Term Debt 72 Post-Retirement Obligations 73 Deferred Taxes 74 Other Long-Term Liabilities 75 76 Total Equity Attributable to Shareholders 77 Plus: Non-Controlling Interest 78 Total Owners' Equity 79 80 Total Liabilities & Owners' Equity 81 Source: Verizon 2009 to 2014 10-Ks. 41,382 38,569 35,970 49,938 85,908 33,157 52,376 85,533 38,836 56,580 95,416 12,298 1,378 13,676 84,143 86,912 226,907 220,005 230,461 225,222 274,098 232,708 3 TN Exhibit 2C Verizon Reorganized Balance Sheets -5 Operating Assets ($ millions): -6 Accounts Receivable -7 Inventory 8 Prepaid Expenses & Other Current Assets -9 Property, Plant & Equipment 0 Wireless Licenses 1 Goodwill & Other Intangibles 2 Investments in Unconsolidated Businesses 3 Other Assets 4 Total Operating Assets 2009 2010 2011 2012 2013 2014 12,573 11,781 11,776 12,576 12,439 13,993 1,426 1,131 940 1,075 1,020 1,153 5,247 2,223 4,269 4,021 3,406 3,324 91,985 87,711 88,434 88,642 88,956 89,947 72,067 72,996 73,250 77,744 75,747 75,341 29,236 27,818 29,235 30,072 30,434 30,367 3,118 3,497 3,448 3,401 3,432 802 8,756 5,635 5,155 4,128 4,535 224,408 212,792 216,507 221,659 219,969 221,555 6 Operating Liabilities ($ millions): 7 Accounts Payable & Accrued Liabilities 8 Other Current Liabilities 9 Post-Retirement Obligations DO Deferred Taxes 01 Other Long-Term Liabilities 2 Total Operating Liabilities 15,223 6,708 32,622 19,190 6,765 80,508 15,702 7,353 28,164 22,818 6,262 80,299 14,689 11,223 32,957 25,060 5,472 89,401 16,182 6,405 34,346 24,667 6,092 87,692 16,453 6,664 27,682 28,639 5,653 85,091 16,680 8,649 33,280 41,578 5,574 105,761 04 Net Operating Assets 5 change 143,900 132,493 NA (11,407) 127,106 (5,387) 133,967 6,861 134,878 911 115,794 (19,084) 7 Verizon Net Financial Obligations ($ millions): 08 Current Portion of Long-Term Debt 09 Long-Term Debt 10 Total Financial Obligations 11 Less: Cash & Cash Equivalents 12 Less: Short-Term Investments 13 Net Financial Obligations 7,205 55,051 62,256 2,009 490 59,757 7,542 45,252 52,794 6,668 545 45,581 4,849 50,303 55,152 13,362 592 41,198 4,369 47,618 51,987 3,093 470 48,424 3,933 2,735 89,658 110,536 93,591 113,271 53,528 10,598 601 555 39,462 102,118 15 Total Equity Attibutable to Shareholders 16 Plus: Non-Controlling Interest 17 Total Owners' Equity 41,382 42,761 84,143 38,569 48,343 86,912 35,970 49,938 85,908 33,157 52,376 85,533 38,836 56,580 95,416 1,378 13,676 19 D/E 71.0% 52.4% 48.0% 56.6% 41.4% 746.7% 124 TN Exhibit 2D Verizon Wireless Segment Data 725 2009 52,046 8,279 60,325 19,348 17,309 7,030 16,638 2010 55,629 7,778 63,407 19,245 18,082 7,356 18,724 2011 59,157 10,997 70,154 24,086 19,579 7,962 18,527 2012 63,733 12,135 75,868 24,490 21,650 7,960 21,768 2013 69,033 11,990 81,023 23,648 23,176 8,202 25,997 2014 72,630 15,016 87,616 28,825 23,602 8,459 26,760 126 Wireless Operating Results ($ millions) (a): 127 Service Revenue 128 Equipment & Other Revenue 129 Total Segment Revenue 130 Less: Cost of Service Revenue 131 Less: Selling, General & Administrative 132 Less: Depreciation & Amortization 133 Segment Operating Income 134 135 EBIT 736 EBITDA 137 Equipment Revenue/Total Revenue 138 139 Wireless Subscribers (000s) (b): 140 Postpaid 141 Prepaid 742 Total Wireless Subscribers 27.6% 39.2% 42.8% 29.5% 41.1% 12.3% 26.4% 37.8% 15.7% 28.7% 39.2% 16.0% 32.1% 42.2% 14.8% 30.5% 40.2% 17.1% 2009 80,495 16,000 96,495 2010 83,125 19,121 102,246 2011 87,382 20,416 107,798 2012 92,530 5,700 98,230 2013 96,752 6,047 102,799 2014 102,079 6,132 108,211 3,987 2,529 4,252 5,482 948 4,935 5,024 893 5,917 4,118 354 4,472 5,517 5,419 5,568 1.41% 1.07% 1.38% 1.02% 1.26% 0.95% 1.19% 0.91% 1.27% 0.97% 1.33% 1.04% 744 Net Wireless Additions (000s) (c): 145 Postpaid 146 Prepaid 147 Total Net Wireless Additions 148 149 Total Churn Rate 150 Postpaid Churn Rate 151 152 Average Monthly Revenue per Postpaid Account ($) 153 Postpaid Accounts (000s) 754 Postpaid Connections per Account 155 156 Postpaid Proportion 157 Average Total Subscribers (000s) 158 Total ARPU ($) NA NA NA 125.75 34,268 2.43 134.51 34,561 2.53 144.04 35,057 2.64 153.93 35,083 2.76 159.86 35,616 2.87 83.4% NA NA 81.3% 81.1% 99,371 105,022 53.17 55.67 94.2% 103,014 61.37 94.1% 100,515 67.17 94.3% 105,505 69.23 3