UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------------
FORM 11-K
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-8606
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
----------------------------------
VERIZON SAVINGS AND SECURITY PLAN
FOR MID-ATLANTIC ASSOCIATES
VERIZON COMMUNICATIONS INC.
1095 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
INDEPENDENT AUDITORS' REPORT
To the Verizon Employee Benefits Committee:
We have audited the accompanying statements of net assets available for benefits
of the Verizon Savings and Security Plan for Mid-Atlantic Associates (the
"Plan") as of December 31, 2001 and 2000, and the related statement of changes
in net assets available for benefits for the year ended December 31, 2001. These
financial statements are the responsibility of the Plan's administrator. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Verizon
Savings and Security Plan for Mid-Atlantic Associates as of December 31, 2001
and 2000, and the changes in its net assets available for benefits for the year
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.
/s/ Mitchell & Titus, LLP
New York, New York
June 21, 2002
VERIZON SAVINGS AND SECURITY PLAN FOR MID-ATLANTIC ASSOCIATES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2001
(thousands of dollars)
ESOP Shares ESOP Shares
Other Fund Fund
Investments Allocated Unallocated Total
----------- ----------- ----------- ----------
ASSETS:
Investment in master trusts $1,853,645 $ 316,624 $ 21,205 $2,191,474
---------- ---------- ---------- ----------
Total assets 1,853,645 316,624 21,205 2,191,474
LIABILITIES:
Notes payable - - 11,175 11,175
---------- ---------- ---------- ----------
Total liabilities - - 11,175 11,175
---------- ---------- ---------- ----------
Net assets available for benefits $1,853,645 $ 316,624 $ 10,030 $2,180,299
========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements.
VERIZON SAVINGS AND SECURITY PLAN FOR MID-ATLANTIC ASSOCIATES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2000
(thousands of dollars)
ESOP Shares ESOP Shares
Other Fund Fund
Investments Allocated Unallocated Total
-------------- ------------- --------------- ------------
ASSETS:
Investment in Master Trust $1,882,175 $ 372,025 $ 37,362 $2,291,562
---------- ---------- ---------- ----------
Total assets 1,882,175 372,025 37,362 2,291,562
LIABILITIES:
Administrative expenses payable 619 138 - 757
Commitments - - 9,399 9,399
Notes payable - - 17,015 17,015
---------- ---------- ---------- ----------
Total liabilities 619 138 26,414 27,171
---------- ---------- ---------- ----------
Net assets available for benefits $1,881,556 $ 371,887 $ 10,948 $2,264,391
========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements.
VERIZON SAVINGS AND SECURITY PLAN FOR MID-ATLANTIC ASSOCIATES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
(thousands of dollars)
ESOP Shares ESOP Shares
Other Fund Fund
Additions: Investments Allocated Unallocated Total
----------- ----------- ----------- -----------
Contributions:
Employee 150,076 - - 150,076
Employer 80,341 - - 80,341
----------- ----------- ----------- -----------
Total additions 230,417 - - 230,417
----------- ----------- ----------- -----------
Transfer between funds 2,040 (2,458) 418 -
Deductions:
Benefits paid to participants 224,519 44,370 - 268,889
Net investment loss 24,074 5,723 301 30,098
Interest expense - - 1,009 1,009
Administrative expenses 4,471 805 26 5,302
Transfers to other plans, net 7,304 1,907 - 9,211
----------- ----------- ----------- -----------
Total deductions 260,368 52,805 1,336 314,509
----------- ----------- ----------- -----------
Net decrease (27,911) (55,263) (918) (84,092)
Net assets available for benefits:
Beginning of year 1,881,556 371,887 10,948 2,264,391
----------- ----------- ----------- -----------
End of year $ 1,853,645 $ 316,624 $ 10,030 $ 2,180,299
=========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
Verizon Savings and Security Plan for Mid-Atlantic Associates
Notes to Financial Statements
December 31, 2001 and 2000
1. Description of the Plan
The following description of the Verizon Savings and Security Plan for
Mid-Atlantic Associates (the "Plan") provides only general information.
Participants should refer to the Benefits Handbook, the Plan Document
and Prospectus for a complete description of the Plan's provisions.
General
Effective January 1, 2001, the Bell Atlantic Savings and
Security Plan for Associates of Bell Atlantic South was renamed Verizon
Savings and Security Plan for Mid-Atlantic Associates.
Bell Atlantic Corporation Merger with GTE Corporation
On June 30, 2000, Bell Atlantic Corporation ("Bell Atlantic")
and GTE Corporation ("GTE") completed a merger under a definitive
merger agreement dated as of July 27, 1998 and began doing business as
Verizon Communications.
Under the terms of the agreement, GTE became a wholly owned
subsidiary of Bell Atlantic and GTE stockholders received 1.22 shares
of Bell Atlantic common stock for each share of GTE common stock they
owned.
On September 22, 2000, Bell Atlantic changed its name to
Verizon Communications Inc. ("Verizon").
Eligibility
The Plan is a defined contribution plan covering certain
collectively bargained, non-salaried regular associate employees of
participating subsidiaries and affiliates of Verizon ("Participating
Affiliates"). The Plan was established by Verizon to provide a
convenient way for eligible associate employees to save on a regular
and long-term basis. Covered employees are eligible to make
tax-deferred or after-tax contributions to the Plan and to receive
matching employer contributions, upon completion of enrollment in the
Plan as soon as practicable following the date of hire. A portion of
the Plan covering eligible employees of certain Participating
Affiliates is also characterized as an Employee Stock Ownership Plan
(ESOP).
Vesting and Contributions
Eligible employees may authorize basic contributions of 1% to
6% of salary, as defined, and supplementary contributions up to an
additional 10% of salary. For employees of most Participating
Affiliates, the employer matching contributions are in an amount equal
to 80% of basic contributions for Plan year 2000, up to August 5,2001.
For pay periods on or after August 5, 2001, the employer matching
contributions increased to 82% of basic contributions. Certain
participating subsidiaries have other employee contribution and
employer matching contribution arrangements. Contributions are subject
to applicable rules set forth in the Internal Revenue Code (the "Code")
and the regulations thereunder.
Employer matching contributions are invested only in the
Verizon Shares Fund and/or the ESOP until employees reach age 50 and
complete one year of service, at which point they may begin to
diversify the matching contributions.
Verizon Savings and Security Plan for Mid-Atlantic Associates
Notes to Financial Statements
(Continued)
The Plan provides for 100% vesting of employer matching
contributions upon attaining three years of service. A terminated
employee's nonvested employer matching contributions are forfeited and
offset against the participating companies' obligation to make
subsequent contributions to the Plan.
Investment Options
Participants are able to invest in any of the current
investment options as outlined in the Plan document.
Participant Loans
The Plan includes an employee loan provision authorizing
participants to borrow an amount from their vested account balances in
the Plan. Loans are generally repaid by payroll deductions. The term of
repayment for loans generally will not be less than six months nor more
than five years (fifteen years for a loan to purchase a principal
residence). Each new loan will bear interest at a rate based upon the
prime rate, as published in the Wall Street Journal, for loans up to
sixty months and prime rate plus one percent for loans from sixty-one
months to fifteen years.
Termination Priorities
Although it has not expressed any intent to do so, Verizon has
the right under the Plan to discontinue all employer matching
contributions at any time and to terminate the Plan subject to the
provisions of the Employee Retirement Income Security Act ("ERISA"), of
1974, as amended. In the event of plan termination, participants would
become 100% vested in their accounts.
Change in Trustee and Recordkeeper
For Plan Year 2000, and through December 20, 2001, the Plan
participated in the Bell Atlantic Master Trust (the "Former Master
Trust") for which Mellon Bank, N.A. was the Trustee (the "Former
Trustee"). On December 21, 2001, the assets of the Plan were
transferred to the Verizon Master Savings Trust (the "Master Trust") at
Fidelity Management Trust Company (the "Trustee").
For Plan Year 2000, and through December 20, 2001, the Unifi
Group of PricewaterhouseCoopers LLP was the Recordkeeper for the Plan.
On December 21, 2001, responsibility for the recordkeeping of the Plan
was transferred to Fidelity Institutional Retirement Services Company.
2. Accounting Policies
Value of Investments
Investments in securities traded on national and foreign
securities exchanges are valued at the last reported sale prices on the
last business day of the year or, if no sales were reported on that
date, at the last reported bid prices. Over-the-counter securities and
government obligations are valued at the bid prices or the average of
the bid and ask prices on the last business day of the year from
published
Verizon Savings and Security Plan for Mid-Atlantic Associates
Notes to Financial Statements
(Continued)
sources where available or, if not available, from other sources
considered reliable, generally broker quotes.
Forward currency, index futures and option contracts are
accounted for as contractual commitments on a trade-date basis and are
carried at fair value derived from their respective price prevailing
on the last business day of the year. Foreign exchange rates, index
futures and option prices are readily available from published sources.
Temporary cash investments are stated at redemption value, which
approximates fair value.
Commitments
Commitments at December 31, 2000 represented the value of the
ESOP shares to be allocated to participants' accounts once the
scheduled corresponding loan payments were made in 2001.
Net Investment Gain/(Loss) from Master Trust
The statement of changes in net assets available for benefits
reflects the net investment gain/(loss) in the fair value of the Plan's
investments, which consists of the realized gains or losses and the
unrealized appreciation (depreciation) in value of those investments,
as well as interest and dividends earned. Purchases and sales of
investments are reflected as of the trade date. Realized gains and
losses on sales of investments are determined on the basis of average
cost. Dividend income is recorded on the ex-dividend date. Interest
earned on investments is recorded on the accrual basis.
Distributions
Distributions elected to be withdrawn from the Plan by
participants are recorded when paid.
Plan Expenses
The Plan pays certain administrative expenses out of assets
held in the Master Trust and out of interest income earned from the
Plan's disbursement account, as held by the Trustee, in accordance with
Plan provisions and to the extent permitted by law. Verizon pays any
expenses not paid by the Plan.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United Sates of America
requires the Plan administrator to make significant estimates and
assumptions that affect the reported amounts of net assets available
for benefits at the date of the financial statements and the changes in
net assets available for benefits during the reporting period and, when
applicable, disclosures of contingent assets and liabilities at the
date of the financial statements. Actual results could differ from
those estimates.
Risks and Uncertainties
The Plan provides for various participant investment options
in various combinations of funds, which can invest in various
combinations of stocks, bonds, fixed income securities, and other
investment securities. Investment securities are exposed to various
risks, such as interest rate, market, equity price, and credit risks.
Due to the level of risk associated with certain investment securities,
it is at least reasonably possible that changes in the values of
investment securities will occur in the near term and that such changes
could materially affect participants'
Verizon Savings and Security Plan for Mid-Atlantic Associates
Notes to Financial Statements
(Continued)
account balances and the amounts reported in the Statements of Net
Assets Available for Benefits.
Reclassifications
Certain amounts in the prior year financial statements and
footnotes have been reclassified to conform to the current year
presentation.
3. Non Participant-Directed Investments
Information about the net assets and the significant
components of the changes in net assets related to the Plan's non
participant-directed investments is as follows (in thousands):
As of December 31,
------------------
2001 2000
---- ----
Net assets:
----------
Verizon common stock $589,557 $625,940
Changes in net assets: Year ended December 31, 2001
---------------------- ----------------------------
Employer contributions $ 80,375
Net investment loss (21,163)
Benefits paid to participants (91,946)
Interest expense (1,009)
Other (2,640)
--------
Net decrease $(36,383)
========
4. Investments
Investment in Master Trusts
On December 21, 2001, the assets of the Plan and the Verizon's
Bell Atlantic Savings Plan for Salaried Employees (the "VBASP Plan")
were transferred into the Master Trust from the Former Master Trust.
However, a small percentage of the assets remained in the custody of
the Former Trustee and part of the Former Master Trust as of December
31, 2001.
At December 31, 2001, the Plan participated in the Master
Trust, and, along with the GTE Hourly Savings Plan (the "GTE Hourly
Plan") and the Verizon GTE Savings Plan (the "GTE Savings Plan"), owned
a percentage of the assets in the Master Trust. These percentages are
based on a pro rata share of the Master Trust assets. At December 31,
2001, the Plan owned approximately 14% of the assets in the Master
Trust.
Verizon Savings and Security Plan for Mid-Atlantic Associates
Notes to Financial Statements
(Continued)
The following schedules reflect the Master Trust net investments by
investment type as of December 31, 2001, and investment income (loss)
for the year ended December 31, 2001 (in thousands):
Net Investment Income (Loss)
in Master Trust
Year Ended December 31, 2001
----------------------------
Interest & Net Appreciation
Investments in Master Trust Dividends (Depreciation)
--------------------------- --------- --------------
Verizon common stock $ 8,111,638 $ 90,123 $(174,651)
Investment contracts 2,009,622 - 46,278
Commingled funds 1,241,379 - (77,195)
Mutual funds 1,356,184 27,379 (243,063)
Money market fund 1,255,707 12,211 -
Common stock 141,798 - -
Loans to participants 438,295 14,423 -
----------- -------- ---------
Total $14,554,623 $144,136 $(448,631)
=========== ======== =========
The Plan's share in the net investment loss in the Master Trust
of approximately $22.7 million relates to the period from December 21,
2001 to December 31, 2001.
Investment in Former Master Trust
The assets are either (1) pooled between defined benefit plans
and defined contribution plans or (2) net assets that are specific to
defined benefit plans, or (3) net assets specific to defined
contribution plans.
The total fair value of the Former Master Trust at December 31,
2001 and 2000, was approximately $54.2 billion and $52.5 billion,
respectively (of which net assets totaling approximately $39.1 billion
and $29.0 billion, respectively are specific to the defined benefit
plans, item (2) above, for which separate financial statements are
prepared).
At December 31, 2001, a small percentage of the net assets of the
Plan participated in the Former Master Trust, and, along with the
Verizon Savings and Security Plan for New York and New England
Associates (the "NYNE Plan"), the GTE Savings Plan, and the GTE Hourly
Plan, and Verizon's defined benefit plans owned a percentage of the
assets in the Former Master Trust. These percentages are based on a pro
rata share of the Former Master Trust assets.
Investments Held in Defined Contribution Plan Specific Accounts
At December 31, 2001, a small percentage of the net assets of the
Plan, along with the NYNE Plan, the GTE Savings Plan, and the GTE
Hourly Plan held certain investments in defined contribution plan
specific accounts.
Verizon Savings and Security Plan for Mid-Atlantic Associates
Notes to Financial Statements
(Continued)
Net assets held in the defined contribution plan specific
accounts of the Former Master Trust at fair value at December 31, were
as follows (in thousands):
Description 2001 2000
----------- ---- ----
Common stock $2,435,023 $ 478,463
Verizon common stock 2,222,435 8,105,225
Temporary cash investments 32,015 204,999
Investment contracts 494,501 1,792,864
Corporate debt 114,591 235,651
Loans to participants 177,201 414,369
Other 5,831 1,051
---------- ----------
5,481,597 11,232,622
Liabilities - 481,960
---------- ----------
Total net assets in defined contribution
plan specific accounts $5,481,597 $10,750,662
========== ===========
At December 31, 2001, the Plan, along with the NYNE Plan, the GTE
Savings Plan and the GTE Hourly Plan owned a percentage of the $2.4
billion investment in common stock listed above. The Plan's percentage
interest in the investment in common stock at December 31, 2001, was
5%.
The Plan's percentage interest in the total defined contribution
plan specific accounts was 2.42% and 19.10% at December 31, 2001 and
2000.
In the Master Trust, at December 31, 2001, a portion of certain
funds is invested in 62 contracts held with 23 insurance companies and
banks. Standard & Poor's, as of December 31, 2001 rated the issuers of
these contracts and the contracts' underlying securities, A or better.
The contracts are included in the financial statements at contract
value, which approximates fair value, of approximately $2.0 billion, as
reported by the insurance companies and banks.
Contract value represents contributions made under the contracts,
plus accrued interest, less withdrawals and administrative expenses.
Investment contracts are normally set at a fixed rate through
maturity, which is also the minimum crediting rate. The repayment of
principal when the contract matures is solely the general debt
obligation of the contract issuer. Included in the insurance contracts
are synthetic investment contracts, which combine investments in fixed
income securities with wrap contracts to provide a crediting rate.
There is no immediate recognition of investment gains and losses on
the fixed income securities. Instead, the gain or loss is recognized
over time by adjusting the interest rate credited under the wrap
contract. The crediting rate is typically reset quarterly and has a
floor rate of zero. The repayment of principal depends on the
creditworthiness of the underlying fixed income securities. At
December 31, 2001, the fair value and contract value of the synthetic
investment contracts was approximately $1.3 billion and $1.2 million,
respectively.
Verizon Savings and Security Plan for Mid-Atlantic Associates
Notes to Financial Statements
(Continued)
In the Master Trust and the Former Master Trust, the contracts
had average yields of 6.6% and 6.1% for the year ended December 31,
2001 and 2000, respectively. The crediting interest rates ranged from
5.1% to 7.5% at December 31, 2001, and 5.1% to 7.9% at December 31,
2000. The contracts have scheduled maturities from January 2, 2002 to
July 5, 2006. No valuation reserve was recorded at December 31, 2001
and 2000, to adjust contract amounts.
Investments Held in Pooled Accounts
The Plan had assets in the pooled investments of the Former
Master Trust only until December 21, 2001.
The pooled investments of the Former Master Trust are unitized
and aggregated with a carrying value of $12.9 billion at December 31,
2000. Because the pooled accounts include interests of the defined
contribution plans and the defined benefit plans, the totals in each
respective statement do not equal the carrying value or net investment
income in the Master Trust pooled accounts in this footnote.
Net assets held in the Former Master Trust pooled accounts at
December 31, 2000 were as follows (in thousands):
Description
Receivables $ 1,165,169
Common stock 11,627,100
Verizon common stock 65,105
Preferred stock 58,441
U.S. government securities 102,186
Corporate debt 161,373
Temporary cash investments 412,240
Other investments 461,293
-----------
14,052,907
Liabilities 1,144,753
-----------
Total pooled net assets $12,908,154
===========
The Plan's percentage in pooled accounts was 1.6% at December 31,
2000.
The Plan's interests in the Master Trust and the Former Master
Trust carrying value and related investment loss are reported as the
"Investments in Master Trust" in the statements of net assets
available for benefits and "net investment loss" in the statement of
changes in net assets available for benefits.
5. Investment Income (Loss)
Investment income (loss) is allocated to the Plan daily in
accordance with its daily percentage of interest in the Former Master
Trust and Master Trust's accounts. Percentage of interest is based on
the daily ratio of units owned by the Plan to the
Verizon Savings and Security Plan for Mid-Atlantic Associates
Notes to Financial Statements
(Continued)
total units in the Former Master Trust pooled accounts. Investment income
(loss) related to the investments held in the Master Trust and in the
defined contribution plan specific accounts of the Former Master Trust is
allocated to the Plan daily in accordance with its percentage of interest.
The net investment loss in pooled accounts and the defined
contribution plan specific accounts for the year ended December 31, 2001,
consists of the following (in thousands):
Interest Net Appreciation
& Dividends (Depreciation)
----------- ------------
Description
-----------
Common and preferred stock $200,046 $(986,525)
U.S. government securities 12,526 -
Corporate debt 31,839 -
Temporary cash investments 16,464 -
Other 88,453 4,041
-------- ---------
Total $349,328 $(982,484)
======== =========
The Plan's share in the allocated net investment loss in the Former
Master Trust of approximately $7.4 million relates to the period from
January 1, 2001 to December 21, 2001.
For the year ended December 31, 2001, the allocated net investment
loss from the Master Trust and the Former Master Trust to the Plan was
$30.1 million.
6. Derivative Financial Instruments - Master Trust and Former Master Trust
Derivative financial instruments are used in the trust's pooled
accounts primarily to rebalance fixed income/equity allocations, to
efficiently gain exposure to a specific underlying market, and to offset
the currency risk associated with foreign investments. Leveraging of the
Plan's assets and speculation are prohibited as stated in the Plan
documents. Offsetting currency positions are not permitted to exceed the
level of exposure in the Plan's foreign asset base.
All derivative activity is allocated to the Plan in accordance with
the Plan's fund options' respective percentage of interest. Derivative
instruments relate primarily to futures and forward/option contracts. The
Plan's interest in funds, which utilized such financial instruments, is not
considered material to the Plan's financial statements.
7. Tax Determination
On November 13, 1997, the Internal Revenue Service issued a ruling
that the Plan meets the requirements of Section 401(a) of the Code and is
exempt from Federal income taxes under Section 501(a) of the Code and that
the ESOP portion of the Plan qualifies as an employee stock ownership plan
within the meaning of Section 4975(e)(7) of the Code. The Plan has been
amended since receiving the determination letter. However, the Plan's
administrator and the Plan's counsel believe that the Plan is designed and
is currently being operated in compliance with the applicable requirements
of the Code.
Verizon Savings and Security Plan for Mid-Atlantic Associates
Notes to Financial Statements
(Continued)
8. Employee Stock Ownership Plan
The Leveraged ESOP ("LESOP") is a leveraged fund that invests in
Verizon common stock. The LESOP component of the Plan, initially founded in
1989, is a stock bonus plan intended to qualify under Sections 401(a)(4)
and 4975(e)(7) of the Code. It is used to match the employee's Basic
Pre-Tax Contributions and After-Tax Contributions. The LESOP will generate
a portion of the shares acquired for employer matching contributions but
not more than the amount required for those contributions. In the event of
a shortfall, Verizon and its participating subsidiaries make additional
employer matching contributions to the Plan.
Any surplus is allocated in equal amounts to the Plan accounts of
participants who, as of the last day of the year, are active employees of
Verizon and its Participating Affiliates, and have account balances under
the Plan. The employee may not withdraw or transfer funds out of the LESOP
fund except for hardship withdrawals and those participants over age 50
with more than one year of participation in the Plan.
The LESOP notes payable originally bore an 8.17% interest rate subject
to adjustment due to changes in the Federal income tax rate or changes in
the federal law regarding the alternative minimum tax. Portions of the
LESOP notes were refinanced on two separate occasions. In 1998, $11 million
was refinanced at 5.5%, and in 1999, $11 million at 4.64%. Interest and
principal payments are guaranteed by Verizon and are due on January 1 and
July 1 of each year.
The following table displays the principal maturities under the notes with
the final payment due July 1, 2005 (in thousands):
2002 $ 3,384
2003 3,557
2004 2,320
2005 1,914
-------
$11,175
=======
9. Related Party Transactions
Verizon Investment Management Corp. ("VIMCO"), a wholly owned subsidiary of
Verizon, is the investment advisor for certain investment funds and
therefore qualifies as a party-in-interest. VIMCO received no compensation
from the Plan other than reimbursement of certain expenses directly
attributable to its investment advisory and investment management services
rendered to the Plan.
10. Concentrations of Credit Risk
Financial instruments that potentially subject the Plan to
concentrations of credit risk consist principally of investment contracts
with insurance companies and other financial institutions.
The Plan places its investment contracts with high-credit quality
insurance companies and financial institutions in order to limit credit
exposure. The Plan regularly monitors the financial stability of the
financial institutions and insurance companies.
Verizon Savings and Security Plan for Mid-Atlantic Associates
Notes to Financial Statements
(Continued)
11. Reconciliation of Financial Statements to Form 5500
The Department of Labor requires that amounts allocated to
accounts of persons who have elected to withdraw from the Plan but have
not yet been paid be reported as liabilities on the Plan's 5500. In
accordance with the relevant American Institute of Certified Public
Accountants audit and accounting guide, benefits should not be accrued
as liabilities of the Plan.
The following is a reconciliation of net assets available for benefits
per the financial statements to the amounts reported in Form 5500 (in
thousands):
2001 2000
---- ----
Net assets available for benefits presented
in the Statements of Net Assets Available
for Benefits $ 2,180,299 $ 2,264,391
Less: Benefit claims payable presented
in the Asset and Liability
Statements in Form 5500 - 710
----------- -----------
Net assets available for benefits presented in
the Asset and Liability Statements in Form 5500 $ 2,180,299 $ 2,263,681
=========== ===========
The following is a reconciliation of benefits paid to participants per
the financial statements to the amounts reported in Form 5500 (in
thousands):
2001
----
Benefits paid to participants
per the Statement of Changes in
Net Assets Available for Benefits $ 268,889
Less: Prior year benefit claims payable
per the Asset and Liability
Statements on Form 5500 710
-----------
Benefits paid to participants and beneficiaries
Per the Form 5500 $ 268,179
===========
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Verizon
Employee Benefits Committee has duly caused this annual report to be signed by
the undersigned thereunto duly authorized.
Verizon Savings and Security Plan for
Mid-Atlantic Associates
By: /s/ Ezra D. Singer
------------------------
Ezra D. Singer
(Chairman, Verizon Employee Benefits Committee)
Date: June 24, 2002