Verizon To Take $3 Billion In Charges

The local phone company changed its method for recognizing directory business revenue and expenses, resulting in an after-tax, noncash charge to earnings of about $1.6 billion, retroactive to Jan. 1, 2003.

Previously reported first-quarter 2003 revenue and operating expenses for Verizon and its Information Services business unit will increase by $321 million and $89 million, respectively, as a result of the directory accounting change. Net income will also increase by $143 million, or 5 cents per diluted share, according to the company.

The directory accounting change will result in different revenue and expense recognition because the company is adopting the amortization method of accounting in place of the publication-date method. The publication-date method recognizes revenue and expenses when directories are distributed, while the amortization accounting method recognizes revenue and expenses over the life of the directory, which is usually 12 months, the company said.

The sale of Verizon's stake in Grupo Iusacell will result in a second-quarter charge of $900 million, or 33 cents per share.

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Verizon said it also expects to take a second-quarter charge of $400 million to $500 million for severance-related expenses, early repayment of debt and a write-down of some long-lived assets resulting from the consolidation and integration of facilities.