By Associated Press ,

NEW YORK (AP) — Following in the footsteps of rival AT&T Inc., Verizon (News - Alert) Communications Inc. on Friday said it is changing its accounting in a way that effectively moves $20.2 billion worth of future losses into the past.





The New York phone company said it will recognize losses and gains in its plans that fund pensions and other retirement benefits, like the health care, in the same year they occur rather than amortizing them over time, as is standard practice.

That allows Verizon to reduce previous years' results by $20.2 billion, an amount that will then not weigh on future results.

AT&T (News - Alert) Inc. last week became the first company to announce similar accounting changes. Analysts expect the maneuver will be copied by other companies seeking to put the effect on their pension plans of the 2008 financial crash behind them, and out of future financial statements.

"We believe this change results in a better way to account for the impact of benefit plans on our results. It's more straightforward, aligns with fair–value accounting concepts, and it's more transparent," said Francis Shammo (News - Alert) , Verizon's chief financial officer.

The adjustments mean that Verizon lost $8.6 billion in 2008, rather than the reported net income of $6.4 billion, as the financial meltdown hammered the value of pension–plan assets like stocks. On the other hand, the 2009 result improved, to $5.1 billion from $3.7 billion.

For 2010, Verizon will recognize a charge of $600 million when it reports fourth–quarter results on Tuesday.

The accounting change does not affect Verizon cash flow or pension funding requirements. Its pension and post–retirement benefit obligations totaled $59 billion at the end of 2009, the latest figure reported. The plan assets are $27 billion less. The accounting change means that some of that shortfall won't weigh on future results, though Verizon will still have to contribute cash to pay for benefits.

Verizon shares rose 21 cents to $34.82 when the market opened.