Re: Fwd: WorldCom Investor News: WorldCom Announces Intention toRestate 2001 and First Quarter 2002 Financial Statements

["Pawlukiewicz Jane" <pawlukiewicz_jane () bah com>]

Hey,

dumb question. Does WCOM own Cox? Or is that AT&T?

Just curious.

Jane

blitz wrote:
>  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.

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