Fwd: WorldCom Investor News: WorldCom Announces Intention to Restate 2001 and First Quarter 2002 Financial Statements

Wed Jun 26 05:10:20 UTC 2002

 From their own press report:


>WorldCom Announces Intention to Restate 2001 and First Quarter 2002 
>Financial Statements
>
>CLINTON, Miss., June 25, 2002 - WorldCom, Inc. (Nasdaq: WCOM, MCIT) today 
>announced it intends to restate its financial statements for 2001 and the 
>first quarter of 2002. As a result of an internal audit of the company's 
>capital expenditure accounting, it was determined that certain transfers 
>from line cost expenses to capital accounts during this period were not 
>made in accordance with generally accepted accounting principles (GAAP). 
>The amount of these transfers was $3.055 billion for 2001 and $797 million 
>for first quarter 2002. Without these transfers, the company's reported 
>EBITDA would be reduced to $6.339 billion for 2001 and $1.368 billion for 
>first quarter 2002, and the company would have reported a net loss for 
>2001 and for the first quarter of 2002.
>
>The company promptly notified its recently engaged external auditors, KPMG 
>LLP, and has asked KPMG to undertake a comprehensive audit of the 
>company's financial statements for 2001 and 2002. The company also 
>notified Andersen LLP, which had audited the company's financial 
>statements for 2001 and reviewed such statements for first quarter 2002, 
>promptly upon discovering these transfers. On June 24, 2002, Andersen 
>advised WorldCom that in light of the inappropriate transfers of line 
>costs, Andersen's audit report on the company's financial statements for 
>2001 and Andersen's review of the company's financial statements for the 
>first quarter of 2002 could not be relied upon.
>
>The company will issue unaudited financial statements for 2001 and for the 
>first quarter of 2002 as soon as practicable. When an audit is completed, 
>the company will provide new audited financial statements for all required 
>periods. Also, WorldCom is reviewing its financial guidance.
>
>The company has terminated Scott Sullivan as chief financial officer and 
>secretary. The company has accepted the resignation of David Myers as 
>senior vice president and controller.
>
>WorldCom has notified the Securities and Exchange Commission (SEC) of 
>these events. The Audit Committee of the Board of Directors has retained 
>William R. McLucas, of the law firm of Wilmer, Cutler & Pickering, former 
>Chief of the Enforcement Division of the SEC, to conduct an independent 
>investigation of the matter. This evening, WorldCom also notified its lead 
>bank lenders of these events.
>
>The expected restatement of operating results for 2001 and 2002 is not 
>expected to have an impact on the Company's cash position and will not 
>affect WorldCom's customers or services. WorldCom has no debt maturing 
>during the next two quarters.
>
>"Our senior management team is shocked by these discoveries," said John 
>Sidgmore, appointed WorldCom CEO on April 29, 2002. "We are committed to 
>operating WorldCom in accordance with the highest ethical standards."
>
>"I want to assure our customers and employees that the company remains 
>viable and committed to a long-term future. Our services are in no way 
>affected by this matter, and our dedication to meeting customer needs 
>remains unwavering," added Sidgmore. "I have made a commitment to driving 
>fundamental change at WorldCom, and this matter will not deter the new 
>management team from fulfilling our plans."
>
>Actions to Improve Liquidity and Operational Performance
>
>As Sidgmore previously announced, WorldCom will continue its efforts to 
>restructure the company to better position itself for future growth. These 
>efforts include:
>
>Cutting capital expenditures significantly in 2002. We intend 2003 capital 
>expenditures will be $2.1 billion on an annual basis.
>
>Downsizing our workforce by 17,000, beginning this Friday, which is 
>expected to save $900 million on an annual basis. This downsizing is 
>primarily composed of discontinued operations, operations & technology 
>functions, attrition and contractor terminations.
>
>Selling a series of non-core businesses, including exiting the wireless 
>resale business, which alone will save $700 million annually. The company 
>is also exploring the sale of other wireless assets and certain South 
>American assets. These sales will reduce losses associated with these 
>operations and allow the company to focus on its core businesses.
>
>Paying Series D, E and F preferred stock dividends in common stock rather 
>than cash, deferring dividends on MCI QUIPS, and discontinuing the MCI 
>tracker dividend, saving approximately $375 million annually.
>
>Continuing discussions with our bank lenders.
>
>Creating a new position of Chief Service and Quality Officer to keep an 
>eye focused on our customer services during this restructuring.
>
>"We intend to create $2 billion a year in cash savings in addition to any 
>cash generated from our business operations," said Sidgmore. "By focusing 
>on these steps, I am convinced WorldCom will emerge a stronger, more 
>competitive player."
>
>About WorldCom, Inc.
>WorldCom, Inc. (NASDAQ: WCOM, MCIT) is a pre-eminent global communications 
>provider for the digital generation, operating in more than 65 countries. 
>With one of the most expansive, wholly-owned IP networks in the world, 
>WorldCom provides innovative data and Internet services for businesses to 
>communicate in today's market. In April 2002, WorldCom launched The 
>Neighborhood built by MCI - the industry's first truly any-distance, 
>all-inclusive local and long-distance offering to consumers for one fixed 
>monthly price. Effective as of the close of regular trading on July 12, 
>2002, WorldCom will eliminate its tracking stock structure and have one 
>class of common stock with the NASDAQ ticker symbol WCOM. For more 
>information, go to http://www.worldcom.com.
>
>Forward-Looking Statements
>This document includes certain "forward-looking statements" within the 
>meaning of the Private Securities Litigation Reform Act of 1995. These 
>statements are based on management's current expectations and are subject 
>to uncertainty and changes in circumstances. Actual results may differ 
>materially from these expectations due to economic uncertainty; the 
>effects of vigorous competition; the impact of technological change on our 
>business, alternative technologies, and dependence on availability of 
>transmission facilities; risks of international business; regulatory risks 
>in the United States and internationally; contingent liabilities; 
>uncertainties regarding the collectibility of receivables; risks 
>associated with debt service requirements and; our financial leverage; 
>uncertainties associated with the success of acquisitions; and the ongoing 
>war on terrorism. More detailed information about those factors is 
>contained in WorldCom's filings with the Securities and Exchange Commi!
>ssion.