Excluding the charges, Verizon posted a net income of $2.1 billion, or 77 cents a share.
Analysts on Wall Street had expected the company to post a net income of 77 cents a share, according to Thomson Financial/First Call.
Verizon, which previously said it cut 7,000 jobs in the fourth quarter, said its fourth quarter revenue rose 1 percent to $17 billion from $16.9 billion a year ago.
"In Verizon's first full year of operation, we have repeatedly demonstrated the strength of the GTE and Bell Atlantic merger," said Co-Chief Executive Officer Charles Lee.
"We achieved solid results for the quarter and for the year despite the continuing downturn in the economy," he said.
Verizon also said it anticipates 2002 earnings of $3.20 to $3.30 a share with revenue growth of 3 percent to 5 percent.
Analysts currently expect the company to post a profit of $3.25 a share for 2002, according to Thomson Financial/First Call.
The company slashed 16,000 jobs in 2001, bringing its total headcount down to 247,000. Cost-cutting in the Domestic Telecom unit, including overtime reductions and hiring contractors, eliminated the equivalent of an additional 13,000 jobs.
Verizon reported a 59 percent increase in long-distance customers in the full year, with about 40 percent of those coming from New York, Massachusetts and Pennsylvania.
Capital expenditures are expected to be $15 billion to $16 billion.
The Domestic Telecom unit trimmed cash expenses by 4.6 percent to $6 billion in the quarter compared with a year earlier. Total operating expenses were down 2.3 percent.
Domestic Telecom decreased its adjusted cash expenses over the prior-year period. In the fourth quarter, the unit's adjusted cash expenses were down 4.6 percent to $6.0 billion from $6.3 billion in the fourth quarter 2000, and the unit's total operating expenses were down 2.3 percent to $8.4 billion from $8.6 billion.
Verizon President and Co-Chief Executive Officer Ivan Seidenberg said, "Verizon's focus is on operational execution. In 2001, we moved early and aggressively to head off the effects of the economy with cost-reduction efforts.
"At the same time, we had the management discipline and skilled workforce to respond effectively to Sept. 11, remain focused on operational metrics, and accelerate our merger integration and transition efforts," Seidenberg added. "The solid foundation we built in 2001 will lead to continued quality growth and continued customer-service improvements in 2002."