10-K/APeriod: FY2001

VERIZON COMMUNICATIONS INC Annual Report (Amendment), Year Ended Dec 31, 2001

Filed June 3, 2002For Securities:VZ

Summary

Verizon Communications Inc. reported significant revenue growth for the year ended December 31, 2001, with operating revenues reaching $67.19 billion, an increase from the previous year. However, net income available to common shareholders saw a substantial decrease, falling to $389 million from $11.79 billion in 2000. This decline was heavily influenced by "special items," including substantial losses on investments in companies like Genuity, Cable & Wireless, and NTL, along with significant merger transition costs and severance charges. The Domestic Wireless segment demonstrated strong revenue growth, driven by customer additions. Conversely, the Domestic Telecom segment experienced a slight revenue decline due to economic pressures and mandated price reductions, although data transport and long-distance services showed resilience. The company's financial position shows total assets of $170.8 billion and long-term debt of $45.7 billion.

Key Highlights

  • 1Operating revenues increased by 3.8% to $67.19 billion in 2001.
  • 2Net income available to common shareholders significantly decreased to $389 million in 2001, down from $11.79 billion in 2000.
  • 3Domestic Wireless segment revenue grew by 22.2% in 2001, driven by a nearly 10% increase in its customer base.
  • 4Domestic Telecom segment revenues saw a slight decrease of 0.6% in 2001, impacted by economic slowdown and regulatory price reductions.
  • 5The company incurred substantial special charges in 2001, including $4.69 billion in losses on investments and $1.6 billion in severance and pension enhancement costs.
  • 6Total assets grew to $170.8 billion, while long-term debt increased to $45.7 billion at the end of 2001.
  • 7Cash flow from operating activities increased to $19.77 billion in 2001.

Frequently Asked Questions

The substantial decrease in net income from $11.79 billion in 2000 to $389 million in 2001 was primarily due to significant 'special items.' These included large impairment losses on investments in companies like Genuity, Cable & Wireless, and NTL, totaling $4.69 billion. Additionally, the company incurred substantial merger transition costs ($1.04 billion) and severance and pension enhancement charges ($1.6 billion).

The Domestic Wireless segment showed strong performance with a 22.2% revenue increase, fueled by customer growth. The Information Services segment also saw revenue growth of 4.1%. However, the Domestic Telecom segment experienced a slight revenue decline of 0.6%, impacted by economic conditions and regulatory price cuts, though its data and long-distance services remained strong. The International segment reported revenue growth of 18.3%, driven by wireless operations.

Verizon Communications had total assets of $170.8 billion at the end of 2001. Long-term debt stood at $45.7 billion, an increase from $42.5 billion in 2000. The debt-to-equity ratio was 66.4% at year-end 2001. The company has access to significant unused lines of credit.

The September 11th terrorist attacks resulted in costs of $285 million pretax ($172 million after-tax) primarily related to service restoration efforts in New York City. The company accrued an estimated insurance recovery of approximately $400 million in 2001, of which $130 million had been received by year-end.