Verizon Communications Inc. reported second-quarter 2005 earnings of $2.1 billion, or 75 cents per diluted share.

Second-quarter earnings included $336 million, or 12 cents per share, from the sale of wireline and directory operations in Hawaii, as well as tax benefits of $242 million recognized on prior-year investment losses, partially offset by net tax expense of $232 million for the repatriation of foreign earnings.

Earnings before these special items were $1.8 billion, or 63 cents per share. This compares with $1.8 billion, or 64 cents per share, in earnings before special items in the second quarter 2004.

The tax on repatriated foreign earnings relates primarily to the more than $2 billion that Verizon expects to receive in 2005 from share buybacks initiated by Italian wireless provider Vodafone Omnitel. Verizon received $1.2 billion in proceeds in the second quarter 2005 and anticipates receiving the final amount in the second half of 2005.

Consolidated operating revenues of $18.6 billion in second quarter 2005 set a company record, increasing 4.6% compared with the second quarter 2004. Consolidated operating revenues on a comparable basis were $18.5 billion in the second quarter 2005. This is an increase of 5.1%, or $0.9 billion, compared with second quarter 2004.

Second-quarter total revenues at Verizon Wireless increased 14.6%, or $1.0 billion, to $7.8 billion when compared with second quarter 2004, marking the 12th consecutive quarter of more than 10% year-over-year increases.

In second quarter 2005, consolidated operating expenses increased 3.0% to $14.5 billion, compared with second-quarter 2004 operating expenses of $14.1 billion.

Verizon Wireless added 1.9 million net new customers. Wireless has added 6.9 million net new customers during the past 12 months and now has a total of 47.4 million customers nationwide.

Customer turnover reached record-low levels for the third consecutive quarter. The total churn rate, a key measure of customer loyalty, was 1.2% for second quarter 2005, down from 1.4% in second quarter 2004.

In wireline, quarterly operating revenues were supported by 0.7% year-over-year revenue growth in the consumer business, reversing a trend that had been negative since the company began reporting wireline revenue by line of business in 2002. The consumer business generated $3.8 billion in second-quarter 2005 revenues, driven by continued solid growth from sales of broadband and long-distance services.

In second quarter 2005, Verizon added a net of 278,000 wireline broadband connections, which represents the total number of DSL and Fios lines put in service. Fios is Verizon’s recently introduced next-generation, fiber-optic-based service. Verizon has a total of 4.1 million wireline broadband connections, a growth rate of 43.7% from second quarter 2004 on a comparable basis.

Verizon anticipates that 2005 capital spending will increase approximately 15% over 2004 expenditures of $13.3 billion. This revises its previous guidance of an increase of approximately 10%. The increase is attributable to the strong growth at Verizon Wireless and increased spending for the deployment of Fios video services.

Verizon’s total debt at the end of the second quarter 2005 was $41.8 billion, compared with $41.9 billion at the end of the second quarter 2004.

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