S&P: Verizon Communications unaffected by news

Standard & Poor's said Wednesday that Verizon Communications Inc.'s (A+/stable/--) announcement that it would take an estimated after-tax charge of about $2.8 billion in the fourth quarter of 2003 and a noncash $700 million to $900 million after-tax charge in the first quarter of 2004 for pension settlements has no impact on the rating or outlook on the company.

While $1.1 billion of the $2.8 billion amount is a cash charge (related to severance payments and related costs associated with the voluntary separation program), the voluntary separation program is expected to result in $1 billion of annual pretax cash savings.

S&P said given the company's estimated $5 billion discretionary cash flow for 2003 and its debt reduction strategy, net debt to EBITDA (adjusted for operating leases, as well as net unfunded pension and other post-retirement benefit requirements) is not affected by this announcement and remains in the 2.2x area, as expected by S&P.

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