WebSite101 is saddened
by the announcement this week that Global Corporation WorldCom/MCI
intends to restate financial information that leads to the layoff
of over 17,000 employees, the sale of multiple Worldcom/MCI business
properties (that could lead to further job losses) and an unknown,
but surely awful effect on the US economy, coming so soon after
similar announcements from several major Corporations across the
country. Enron, Global Crossing, Adelphia, Tyco. No thanks to accounting
and auditing firm Arthur Andersen.
One effect of such large layoffs of employees that has a positive
net effect on the economy is that many of those thrown out of work
by Corporate shenanigans will, out of necessity, start their own
The purpose and goal of WebSite101
is to help those launching small businesses to begin rebuilding
their fortunes from the ground up by planning,
financing and expanding to the web. It is our hope that those
using these valuable tools and resources will find a way to make
their new start-up businesses thrive with the help of WebSite101.
We reproduce on this page major corporate announcements on the WorldCom/MCI
debacle in their own words from press releases distributed to major
WorldCom Announces Intention to Restate 2001 and First Quarter
2002 Financial Statements
CLINTON, Miss., June 25, 2002 Ð 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
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
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 Commission.
tutorial | Email
Tutorial | Spam
Tutorial | Cookies
Tutorial | Privacy
Tutorial | Windows
Tutorial | DreamWeaver
Tutorial | Domain
Name Tutorial | Business
Plan Tutorial | Search
Position Tutorial | Online
Advertising Tutorial | Ecommerce