MCI Completes Restatement And 2002 Audit

Financial Filing Successfully Finalizes One of the Last Remaining Steps to Emerge from Chapter 11 ASHBURN, Va., March 12, 2004 - MCI (WCOEQ, MCWEQ) today announced it has filed its annual report on Form 10-K for the year ended December 31, 2002 with the Securities and Exchange Commission. The report contains the Company's consolidated financial statements for 2002. In addition, the report contains financial statements for 2001 and 2000 that are restatements of previously reported financial results. The restatement process included revalidation and correction of accounting records, review of the accounting for all major acquisitions dating back to 1993, reassessing the propriety and appropriateness of the application of accounting principles, and a re-audit of the financial statements. The restatements have no impact on the Company's current operations or liquidity. "This filing culminates the largest and most complex financial restatement ever undertaken," said Bob Blakely, MCI executive vice president and chief financial officer. "It is one of the last remaining milestones on our path to emerge from Chapter 11 protection. We appreciate the dedication and hard work of the MCI employees, as well as those at Deloitte & Touche, who participated in this process, and KPMG who audited the financials." The restatement process resulted in adjustments to revenues, expenses and earnings as well as write-downs of assets and adjustments to liabilities. These adjustments and write-downs resulted in a cumulative net reduction of $74.4 billion to previously reported pre-tax income for 2000 and 2001. "While these restatement adjustments are substantial they do not have any impact on our current substantial liquidity position," said Blakely. At the end of 2003, the Company's consolidated cash and cash equivalents was approximately $6 billion. The largest category of restatement adjustments is impairment charges resulting from write-offs of goodwill and write-downs in the carrying value of other intangible assets and property, plant and equipment in 2000 and 2001. The impairment charges for 2000 and 2001 total $59.8 billion. Other significant restatement adjustments are related to the Company's review of significant acquisitions as far back as 1993. As part of this review, fair value allocations and purchase price calculations were re-performed. Restatement adjustments to correct errors in the application of purchase accounting for the acquisitions totaled $5.8 billion during 2000 and 2001. The remaining restatement adjustments to 2000 and 2001 pre-tax income total $8.8 billion. Included in this amount are $4.8 billion of charges to pre-tax income to correct access costs that had been reduced either by the improper capitalization of the expenditures as additions to property, plant and equipment or by inappropriate reductions to accrual balances. As restated, consolidated revenues were $32.2 billion in 2002, $37.7 billion in 2001, and $39.3 billion in 2000. These results include the revenues of Embratel, the Company's Brazilian affiliate. The Company had a net loss of $9.2 billion in 2002, $15.6 billion in 2001, and $48.9 billion in 2000, including the restatement adjustments. The Company is continuing work on its 2003 financial statements and expects to emerge from Chapter 11 protection in April 2004. The restatement process and the resulting accounting adjustments are described in the Company's 10-K report, available at http://www.mci.com/investor. About WorldCom, Inc.
WorldCom, Inc. (WCOEQ, MCWEQ), which, together with its subsidiaries, currently conducts business under the MCI brand name, is a leading global communications provider, delivering innovative, cost-effective, advanced communications connectivity to businesses, governments and consumers. With the industry's most expansive global IP backbone, based on the number of company-owned points-of-presence (POPs), and wholly-owned data networks, WorldCom develops the converged communications products and services that are the foundation for commerce and communications in today's market. For more information, go to http://www.mci.com.