Worldcom Altering Numbers AgainSep 19, 2002 | Atlanta Journal-Constitution/Wire Services
WorldCom Inc. may further revise its financial statements by about $2 billion, adding to the $7 billion in accounting errors it's already disclosed, the Wall Street Journal said, citing people close to the situation.
The second-biggest U.S. long-distance phone company may present revised figures to the Securities and Exchange Commission on Friday, the newspaper said. The new revision may relate to writedowns of assets and improper accounting, the newspaper said.
WorldCom filed for bankruptcy in July after disclosing it hid $3.85 billion in expenses to mask losses. The company, charged with fraud by U.S. authorities, revealed another $3.1 billion in misstatements last month. A federal grand jury has indicted former Chief Financial Officer Scott Sullivan in the scandal.
The company may also write off $50 billion linked to goodwill, the Journal said. WorldCom spokeswoman Rachel Richards declined to comment on the article.
The new restatement is partly due to the way WorldCom accounted for the results of foreign subsidiaries, according to the newspaper. Its handling of sales from Embratel Participacoes SA, Brazil's largest long-distance phone company, may be one of the units in question, the paper said.
WorldCom, which owns 19 percent of the Brazilian company and a majority voting interest, consolidated Embratel's results until 2001, when it posted a loss, the Journal said. At the time, WorldCom said U.S. accounting rules no longer allowed it to account for the company's results.
A WorldCom official familiar with the division said it may need to change the way it accounted for the unit, but that there was nothing fraudulent in Embratel's treatment, the Journal said.
The Clinton, Mississippi-based company last week said it will replace Chief Executive Officer John Sidgmore, who took over when Bernard Ebbers resigned in April, as the company seeks to emerge from history's biggest bankruptcy by the middle of 2003.
Ebbers quit under pressure from a tumbling stock price and ballooning debt.
WorldCom listed $41 billion of liabilities and $107 billion of assets in its July 21 bankruptcy filing. It is under scrutiny by the Securities and Exchange Commission and congressional committees.