WorldCom Restatement Hovers Around $11 Billion

The nation’s second-largest telecommunications company is about to close its darkest chapter after rebuilding its books from scratch and restating its financial reports to the tune of about $11 billion. These actions, to be contained in a filing expected by the Securities and Exchange Commission this week, open the door to MCI’s planned emergency from bankruptcy next month.

On Friday, the company formerly known as WorldCom, reported combined pre-tax profit for 2000 and 2001 would decline by $74.4 billion from what was previously reported, the Associated Press said in an article published by USA Today.

The company also issued 2002 earnings report for the first time, showing a net loss of $9.2 billion on revenue of $32.2 billion. Operating losses for the year were $4.2 billion.

"I am confident this is the most complex restatement that's ever been done," Chief Financial Officer Robert Blakely said in an interview in January, and reported by Dow Jones. "Literally hundreds of thousands of entries had to be redone."

In another key development in the case, the state of Oklahoma agreed on Friday to settle its criminal fraud case against MCI, state Attorney General Drew Edmondson told the AP.

Under terms of the agreement, MCI would create 1,600 jobs in Oklahoma over the next 10 years and has pledged to assist the state in its prosecution of former executives of the company formerly known as WorldCom, he said.

"Since WorldCom's collapse a new company has emerged from the rubble. It was never our intention to put the company out of business, and MCI has taken significant steps to clean its own house," Edmondson said, and the AP reported.

"MCI has purged itself of bad actors, appointed new executives and an entirely new board of directors it has developed an extensive training program on business ethics and accounting rules and appointed an outside auditor."

Last week former Chief Financial Officer Scott Sullivan ended his persistent claims of innocence and agreed to help the government build its case against former Chief Executive Bernard Ebbers who was indicted last week on charges of securities fraud, conspiracy to commit securities fraud and making false filings with regulators. Ebbers denies the charges.

You may like these other stories...

Savvy tax planning is about more than knowing what to write off. Just as essential is knowing when to take deductions. Choosing to stuff deductions into one tax year as opposed to another bears directly on how much winds up...
Tesco says it overstated profit forecastStanley Reed of the New York Times reported that Tesco, the large British grocery retailer, disclosed on Monday that it had overstated its expected half-year profit by about $400...
The IRS has announced the special per diem rates for 2014-15 that taxpayers can use for substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home. The new per diem rates...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.