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Verizon Communications has offered a voluntary severance package to all of its 74,000 non-union management employees, part of a bid to slash costs as rivals and rival technologies nibble away at the company’s core telephone business. The buyout package, offered to managers two weeks ago and confirmed on Tuesday, comes less than a month after Verizon averted a strike by its 78,000 union employees with a five-year contract that failed to produce many of the cost-saving provisions sought by the company. Verizon had mentioned employee buyouts as a cost-cutting measure last week, when the company warned investors that it would not meet profit forecasts for the remainder of 2003. Company spokeswoman Sharon Cohen-Hagar said Verizon expects “several thousand” managers to accept the package, which includes two weeks of pay for each year of employment up to 35 weeks, plus a bonus ranging from $15,000 to $30,000. A typical manager may earn $75,000 a year in salary, or about $1,400 per week. A separate buyout offer will be made to at least 12,000 retirement-eligible union technicians and call center operators upon ratification of their new contract, possibly next month. That accord brought concessions on employee health care expenses which the company estimates will save $500 million, but the deal preserved long-standing protections against layoffs and nonconsensual transfers to different cities or regions — provisions which Verizon had been determined to eliminate. In issuing last week’s profit warning, Verizon said it expects to record a charge against fourth-quarter earnings to cover severance expenses for any employees who accept a buyout. Like many traditional telephone companies, Verizon is beset by a litany of forces that are eating away at its core business of connecting voice calls to homes and businesses. In addition to technological alternatives like mobile phones, e-mail and Internet-based phone services, Verizon has lost some major battles in the regulatory arena. A recent ruling by the Federal Communications Commission ensures that rivals such as AT&T and MCI will be allowed to sell their own residential phone service by leasing local lines from Verizon and the other Bell monopolies at attractive rates set by state regulators. On Tuesday, a lawsuit by the Bells challenging the new FCC rules was transferred to the U.S. Court of Appeals for the District of Columbia, which handled a previous case on the same matter. The transfer from another federal court that had been assigned the case by lottery may benefit the Bells since the Washington court has previously ruled that the FCC has been too permissive in this area. The Bells charge that the FCC’s decision to delegate authority to state regulators violates the court’s ruling. “The odds that the Bells will win a favorable ruling on the merits just went up, as did their chances for securing more immediate relief, but what form that would take is unclear,” Legg Mason Equity Research said in an update to investors. Although Verizon has slimmed its union work force in the past with severance deals, the management buyout offer is the first of this magnitude at least since Verizon was created in 2000 through the merger of Bell Atlantic and GTE, Cohen-Hagar said. The managers will have between Oct. 1 and Nov. 14 to decide whether they want to accept the severance deal. Those who accept the offer will end their employment on Nov. 21. Copyright 2003 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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