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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: September 4, 2003
(Date of earliest event reported)
VERIZON COMMUNICATIONS INC.
(Exact name of registrant as specified in its charter)
Delaware 1-8606 23-2259884
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation)
1095 Avenue of the Americas,
New York, New York 10036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 395-2121
Not applicable
(Former name or former address, if changed since last report)
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Item 9. Regulation FD Disclosure.
Set forth below is a press release issued by Verizon Communications Inc. on
September 4, 2003 announcing the agreement between Verizon Communications Inc.
and two labor unions in the Northeast on new contracts.
(VERIZON LOGO)
NEWS RELEASE
FOR IMMEDIATE RELEASE MEDIA CONTACTS:
September 4, 2003 PETER THONIS
212-395-2355
peter.thonis@verizon.com
ERIC RABE
212-395-6233
eric.rabe@verizon.com
VERIZON AND TWO UNIONS IN NORTHEAST REACH LANDMARK
FIVE-YEAR AGREEMENT ON NEW CONTRACTS
COMPANY ACHIEVES SIGNIFICANT CHANGE TO CONTAIN COSTS AND IMPROVE
COMPETITIVENESS WHILE PROVIDING STRONG WAGE AND BENEFIT PACKAGE FOR
EMPLOYEES
WASHINGTON-- Verizon Communications announced today a tentative
agreement on five-year contracts with the Communications Workers of America
(CWA) and the International Brotherhood of Electrical Workers (IBEW) covering
nearly 79,000 employees in 13 Northeastern and mid-Atlantic states.
"This landmark agreement is fair for employees and at the same time
helps Verizon remain competitive in these very challenging times," said Lawrence
T. Babbio, vice chairman and president, Verizon Communications. "It achieves a
creative solution to all major economic
Verizon News Release, page 2
issues so that employees continue to receive industry-leading benefits and
wages, and Verizon can better control its costs, especially when compared with
past contracts. This five-year agreement, which is unprecedented, provides
stability and certainty for both the company and our employees. In addition, the
agreement maps out an annual process to balance increased wages against the
company's need to manage the size of the workforce."
The Federal Mediation and Conciliation Service has been working with
company and union leaders since July 29 to reconcile issues that were important
to both parties. The tentative agreement will be presented to the union members
as part of the ratification process, which is expected to take several weeks.
CONTRACT STRUCTURE
By achieving a longer-term contract, Verizon has created stability and
certainty for its employees, customers and investors. The agreement also gives
Verizon cost savings and enables the company to significantly slow the growth
rate of employee-related expenses over the life of the contract. While it
preserves the existing job-security language and movement-of-work provisions in
the former contract, the new agreement outlines the right to conduct structured
discussions annually on job security and wages. This allows the parties to
mutually assess changes in the economy and the competitive environment and to
balance any basic wage increase above 2 percent against the needs of the company
to reduce the size of the workforce. If the parties do not agree to alter the
contract, the terms of the five-year agreement remain in force.
Verizon News Release, page 3
ECONOMIC PACKAGE
The agreement provides an immediate 3 percent lump-sum payment to
union-represented employees in lieu of a base wage increase in the first year of
the contract. Beginning in the second year, base wages will increase 2 percent
annually, for a total of 8 percent over the five year term of the contract. The
company also agreed to cost-of-living increases if the Consumer Price Index for
Urban Wage Earners rises above certain levels in years four and five of the
contract. The wage package represents significant savings for Verizon when
compared with previous contracts. In addition, there will be a pension-band
increase of 2 percent effective Oct. 1, 2004, and 3 percent increases annually
for the remainder of the contract, for a total of 11 percent - also a
historically lower increase. A separate 5 percent pension-band increase will be
available only for union-represented employees who retire in the fourth quarter
of 2003.
HEALTH CARE
The agreement allows Verizon to significantly offset rapidly rising
medical costs without diminishing the quality or range of services offered to
employees, or unduly shifting costs. The bulk of the savings will come from
Verizon's greater ability to negotiate directly with health care vendors, giving
the company more leverage and flexibility in designing health plan offerings to
manage costs overall. In addition, the company can now offer features such as a
preferred provider network and better discounts for prescription drugs, with
incentives for employees to choose less costly options. The agreement also calls
for some increases in employees' co-pays and deductibles. In total, the changes
agreed to, which are primarily related to active employees, represent
approximately half a billion dollars in savings to Verizon over the life of the
contract. This will enable the company to continue to offer no-premium health
care coverage for employees for the next five years.
Verizon News Release, page 4
For associate retirees, Verizon will continue to offer no-premium
health care for the term of the contract. Other than modest increases in co-pays
and deductibles, retiree benefits will remain essentially unchanged.
JOB SECURITY
Current job security protections will remain but will not apply to
union-represented employees hired after the contract takes effect. In addition,
the existing rules regarding the company's ability to move work will remain
unchanged for the duration of the five-year agreement. To assist in reducing the
workforce, the company will enhance voluntary separation incentives. The
agreement will establish a window for union-represented employees who retire in
the fourth quarter of 2003 to receive the 5 percent pension band increase and to
take their pension as a lump sum, if they wish. Since the lump sum is calculated
on today's low interest rates, the company expects significant numbers of
employees to take advantage of this short-term opportunity. Under the terms of
the new contract, the ability to take a lump sum pension payment will not be
available again until the fourth quarter of 2004 and pensions for the following
12 months will be increased by only 2 percent at that time.
ABSENTEEISM
The agreement calls for joint CWA/IBEW/Verizon committees to be
established to address incidental absence. The committees will be established on
a geographic basis and will develop plans to reduce absence and improve
administration, with particular attention to those employees with a record of
excessive incidental absences.
Verizon News Release, page 5
Babbio said, "The involvement of Peter Hurtgen as chief mediator was
extremely helpful as Verizon and the unions worked to resolve key issues. From
the beginning, Mr. Hurtgen recognized that the issues facing us are complex and
interconnected. We appreciate his insightful approach to these negotiations."
A Fortune 10 company, Verizon Communications (NYSE:VZ) is one of the
world's leading providers of communications services, with approximately $67
billion in revenues and 221,000 employees. Verizon companies are the largest
providers of wireline and wireless communications in the United States, with
137.6 million access line equivalents and 34.6 million Verizon Wireless
customers. Verizon is the third largest long-distance carrier for U.S.
consumers, with 14.6 million long-distance lines. The company is also the
largest directory publisher in the world, as measured by directory titles and
circulation. Verizon's international presence includes wireline and wireless
communications operations and investments, primarily in the Americas and Europe.
For more information, visit www.verizon.com.
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VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches and
biographies, media contacts and other information are available at Verizon's
News Center on the World Wide Web at www.verizon.com/news. To receive news
releases by e-mail, visit the News Center and register for customized automatic
delivery of Verizon news releases.
NOTE: This press release contains statements about expected future events and
financial results that are forward-looking and subject to risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. The following important factors could affect future results
and could cause those results to differ materially from those expressed in the
forward-looking statements: the duration and extent of the current economic
downturn; materially adverse changes in economic or labor conditions, including
labor negotiations and any resulting financial and/or operational impact, in the
markets served by us or by companies in which we have substantial investments;
material changes in available technology; technology substitution; an adverse
change in the ratings afforded our debt securities by nationally accredited
ratings organizations; the final results of federal and state regulatory
proceedings concerning our provision of retail and wholesale services and
judicial review of those results; the effects of competition in our markets; our
ability to satisfy regulatory merger conditions; the ability of Verizon Wireless
to continue to obtain sufficient spectrum resources; our ability to recover
insurance proceeds relating to equipment losses and other adverse financial
impacts resulting from the terrorist attacks on Sept. 11, 2001; and changes in
our accounting assumptions that regulatory agencies, including the SEC, may
require or that result from changes in the accounting rules or their
application, which could result in an impact on earnings.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Verizon Communications Inc.
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(Registrant)
Date: September 4, 2003 /s/ David H. Benson
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Davis H. Benson
Senior Vice President and Controller