Tuesday, April 3, 2001

Verizon Hawaii’s
earnings decline
13.5 percent

Merger costs are blamed
for most of the drop

By Russ Lynch

Verizon Hawaii Inc.'s profits dropped 13.5 percent for 2000, mostly due to costs from the merger that created its parent, Verizon Communications Corp. , according to the company's annual report filed at the Securities and Exchange Commission.

Verizon Verizon Hawaii, which owns Hawaii's statewide regulated telephone business and operates a wide range of unregulated telecommunications services in Hawaii, said it had a net profit of $85.3 million last year, down from a net of $98.6 million in 1999.

Contributing to the decline were pre-tax expenses totaling $19.5 million charged to Verizon Hawaii as its share of the costs of the June 30 merger of Bell Atlantic and GTE Corp. that created Verizon.

Annual operating revenues were down 5.9 percent to $638.7 million, from $679.1 million in 1999.

The biggest revenue drop was from a change in the way the company accounts for revenues from the publication of telephone directories.

The change trimmed the company's "other services" revenues by 31.3 percent, to $102.2 million last year from $148.7 million in 1999.

The biggest revenue contributor, local services, showed a 4.1 percent rise, to sales of $311.3 million in 2000 from $299 million in 1999.

Network access revenues, largely from long-distance providers and other services that pay for access to Verizon Hawaii's local network, were down 6.1 percent at $168.3 million last year, from $148.7 million.

The dip was mostly because of access-fee reductions mandated by national and state authorities, the company said in its March 30 SEC filing.

Long-distance revenues were up 9.2 percent at $56.9 million, compared to $52.1 million in 1999.

The company does not break down its profit or loss from operations by segment, but it did say it decreased its annual operating expenses by $26.6 million, or 7.2 percent, largely as result of employee severance programs implemented earlier.

Since it has only one shareholder, Verizon Communications, the Hawaii business does not have publicly held shares of its own. Like other Verizon Communications subsidiaries, however, it does publicly disclose results through SEC filings.

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