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Re: Fwd: WorldCom Investor News: WorldCom AnnouncesIntentiontoRestate 2001 and First Quarter 2002 Financial Statements

  • From: Larry Rosenman
  • Date: Wed Jun 26 13:36:48 2002

On Wed, 2002-06-26 at 10:52, Pawlukiewicz Jane wrote:
> Andy Warner wrote:
> > 
> > Neither WCOM, nor T owns Cox. Cox is independent. T recently acquired
> > Comcast which may be the source of your confusion.
> 
> I am always confused.
> 
> No, I think the source of my confusion is RoadRunner. Its all over their
> website, and that's a AT&T name. isn't it? at least it was...
RoadRunner is a Time-Warner name. 

It's on the Time-Warner Cable systems. 

LER
> 
> Jane
> > 
> > --
> > Andy Warner
> > 
> > On Wed, 26 Jun 2002, Pawlukiewicz Jane wrote:
> > 
> > > 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.
-- 
Larry Rosenman                     http://www.lerctr.org/~ler
Phone: +1 972-414-9812                 E-Mail: ler@lerctr.org
US Mail: 1905 Steamboat Springs Drive, Garland, TX 75044-6749





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