What was the primary driver of the significant decrease in net income compared to the previous year?

The significant decrease in net income was primarily driven by a combination of factors including a substantial pretax loss of $3.913 billion recognized on marketable securities in June 2001, the absence of large gains from asset sales that were recorded in the prior year, and extraordinary items. For instance, the nine-month net income available to common shareholders decreased from $9.877 billion in 2000 to $2.426 billion in 2001.

How did the September 11th terrorist attacks impact Verizon's financial results?

The September 11th terrorist attacks resulted in an estimated $290 million in losses and costs for service restoration, primarily affecting Verizon's infrastructure in the New York and Washington D.C. areas. After accounting for an accrued insurance recovery of $150 million, the net impact was $140 million recorded in operations and support expense. Management anticipates a similar impact in the fourth quarter of 2001.

What is the current status of Verizon's wireless business, Verizon Wireless?

Verizon Wireless continues to be a strong performer, showing significant revenue growth of 12.0% in the third quarter and 27.6% year-to-date. The customer base expanded to 28.7 million by the end of Q3 2001. The company is also actively pursuing strategic acquisitions, such as the planned purchase of Dobson Communications wireless operations, and has made substantial investments in spectrum licenses from the FCC, although these licenses are subject to ongoing litigation.

How is the company managing its debt and what is its liquidity position?

Verizon's total debt increased, with a debt-to-equity ratio of 64.7% at September 30, 2001. The company reported a healthy increase in cash and cash equivalents to $1.365 billion. While current liabilities exceeded current assets, management stated that sources of funds, including operations and available financing, are sufficient to meet ongoing requirements. The company also has significant unused lines of credit.

VZ 10-Q Quarterly Report Q3 FY2001 — Revenue, Net Income, EPS

Summary

Verizon Communications Inc. (VZ) reported its third quarter and nine-month results for the period ending September 29, 2001. The company experienced a significant decrease in net income compared to the prior year, primarily due to extraordinary items and accounting adjustments. Operating revenues showed an increase year-over-year, driven by growth in the Domestic Wireless and Information Services segments, partially offset by declines in Domestic Telecom and International segments. A notable event impacting the quarter was the September 11th terrorist attacks, which resulted in an estimated $290 million loss, with $150 million being an accrued insurance recovery, leading to a net impact of $140 million recorded in operating expenses. The company also continued to address integration costs from the Bell Atlantic-GTE merger and significant investments in wireless spectrum auctions, which led to a reassessment of its credit rating outlook.

Key Highlights

1Net income available to common shareholders significantly declined to $1.875 billion for Q3 2001 from $3.466 billion in Q3 2000, and to $2.426 billion for the nine months ended September 30, 2001, from $9.877 billion in the prior year, largely due to extraordinary items and a substantial loss on marketable securities.
2Operating revenues increased to $17.004 billion for Q3 2001 from $16.533 billion in Q3 2000, and to $50.179 billion for the nine months ended September 30, 2001, from $47.834 billion in the prior year, driven by growth in the Domestic Wireless segment.
3The company incurred an estimated $140 million net cost (after insurance recovery) due to the September 11th terrorist attacks, impacting operating expenses, with potential for similar impacts in Q4.
4Verizon Wireless continues to show strong growth, with wireless services revenue increasing by 12.0% in Q3 and 27.6% year-to-date, and customer base growing to 28.7 million.
5Significant gains on asset sales were recorded in the prior year ($1.227 billion pretax in Q3 2000 and $3.780 billion pretax year-to-date 2000), which are absent in the current year's results, contributing to the year-over-year net income decline.
6The company recognized a pretax loss of $3.913 billion ($2.926 billion after-tax) on marketable securities investments in June 2001, deemed other than temporary, significantly impacting the nine-month results.
7Total assets increased to $169.503 billion at September 30, 2001, from $164.735 billion at December 31, 2000, with a notable increase in cash and cash equivalents to $1.365 billion from $757 million.

VERIZON COMMUNICATIONS INC Quarterly Report for Q3 Ended Sep 30, 2001

Summary

Key Highlights

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