Verizon Communications

Lawrence R. Whitman
Senior Vice President-Controller
1095 Avenue of the Americas, Room 3914
New York, NY 10036
Tel: 212/395-1552
Fax: 212/597-2589
larry.whitman@verizon.com

March 30, 2001

Mr. Jonathan G. Katz
Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Re: File No. S7-04-01

Dear Mr. Katz:

Verizon Communications, as a preparer and user of financial information, is interested in the SEC's proposed rules relating to the clarification and expansion of existing disclosures about equity compensation plans. In general, our perspective regarding this proposal, as drafted, is that the additional financial statement disclosure requirements would not provide significantly more beneficial information to financial statement users than disclosures required by Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, and other related statements and stock exchange rules. Furthermore, the proposed additional disclosures could potentially contribute to current preparer and user concerns over the constantly expanding financial statement disclosure requirements (i.e., disclosure overload), as well as confusion over where disclosures are located (i.e., proxy or Form 10-K) and what they are intended to represent.

The provisions of SFAS No. 123 and SFAS No. 128, Earnings per Share, require pro forma disclosure of the dilutive impact of common stock equivalents in the financial statements and footnotes. The proposal describes one of the purposes of this rule as a way for investors and other users to measure potential dilution. The proposal appears to create some level of confusion about which disclosure to use to understand potential dilution.

In addition, other accounting pronouncements and stock exchange rules require significant disclosures about all plans, on an aggregated basis, including weighted average exercise prices and option awards during the period. The proposal would repeat this information, included in the financial statement footnotes (on an aggregate basis). We believe specific plan information does not provide sufficient benefit to justify this repetition. We also believe that aggregation of information pertaining to similar instruments or transactions is consistent with several other accounting rules, including SFAS No. 107, Disclosures about the Fair Value of Financial Instruments, SFAS No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits and SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.

The concept of disclosure overload has been discussed by the accounting profession for many years, and has led to efforts to simplify financial reporting. These efforts have resulted in several rule changes, including SFAS No. 132 and reporting amendments initiated by the SEC in an effort to reduce duplication or eliminate extraneous disclosure, including the reduction of required Regulation S-X, Article 12 schedules. This proposal does not seem consistent with those efforts. Furthermore, if the proposed rules become effective, a financial statement reader would need to look in several places to find equity-related information, including the proxy, Part III of Form 10-K and Part IV of Form 10-K. This does not seem consistent with the SEC's efforts to streamline financial and non-financial disclosure and simplify the understanding of that information by investors and other users.

In short, we believe that the SEC should not pursue these proposed rules since they do not provide significantly more information to users than current disclosures, they would not be consistent with disclosure streamlining efforts as well as potentially adding to confusion over what the proposed disclosures are intended to represent.

We appreciate the opportunity to provide comments to the SEC on matters of accounting standards.

Very truly yours,

Lawrence R. Whitman
Senior Vice President and Controller