Worldcom CEO's email to employees.
0
From: John Sidgmore
Sent: Wednesday, June 26, 2002 3:32 AM
Subject: Message from John Sidgmore
Less than two months ago, I became chief executive officer of WorldCom. At that time, I pledged to restore your trust, as well as public and investor confidence, in this great company, a company with highly skilled people, a comprehensive global network, and a broad range of services serving both consumers and mission-critical business applications.
Part of restoring that confidence means being forthright about communicating problems when we discover them and proactive in correcting them. This is the only way we will affirm our credibility in the market.
To that end, we announced yesterday our intention to restate operating results for 2001 and the first quarter of 2002. As a result of a routine internal audit of the company's capital expenditure accounting, we determined that certain transfers from line cost expenses to capital accounts during this period were not made in accordance with generally accepted accounting principles.
The amounts of these transfers were $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 the first quarter of 2002.
I want to be clear that there is absolutely no impact to our company's cash position for 2001 and 2002. We continue to have significant cash on hand.
Upon learning of these facts, we immediately and proactively alerted our external auditors, KPMG, and we have asked KPMG to undertake a comprehensive audit of the company's financial statements for 2001 and 2002.
While we await the results of KPMG's audits, the company will issue unaudited financial statements for 2001 and for the first quarter 2002 as soon as practicable.
I'd like you to know several other actions the company has taken in light of these very serious matters.
-- The company has terminated Scott Sullivan as chief financial officer and secretary. We also have accepted the resignation of David Myers as senior vice president and controller.
-- Furthermore, WorldCom has notified the Securities and Exchange Commission of these events, and the Audit Committee of the Board of Directors has retained William R. McLucas, former Chief of the Enforcement Division of the SEC, to conduct a rigorous, independent investigation of the matter.
-- Finally, we have notified our lead bank lenders.
Most importantly, our customers can count on WorldCom to meet their communications needs today and tomorrow. Our dedication to them is unwavering.
I want to assure you that we will continue to be proactive in reviewing our operations and reporting our findings. This company is absolutely committed to operating in accordance with the highest ethical standards.
Of course, I am shocked about these developments – as I’m sure you are. We have worked hard to build this company through the years, and we’re proud of our accomplishments. It is difficult to see our company experience such significant problems. But, I still remain optimistic about WorldCom’s future, and am wholly committed to the company, our customers, investors and, especially, to you, our employees. While this is a difficult time for the company, it is our culture as entrepreneurs, and our commitment to delivering innovative and quality services to our customers, that will be our lifeline for the future.
To support us in these efforts, we are continuing with our strategic plan to streamline and refocus the company. Our most critical task is to work diligently to retain our customers, while continuing to attract new ones. Ron Beaumont and I will continue to reach out to our customers to help them understand these latest events. We will also ensure that you are equipped to communicate with them and the other constituencies you work with on a regular basis. It is imperative that we communicate our confidence in WorldCom to them now, and often. Our customers – their loyalty and satisfaction – are critical to our plans for continued growth.
With your help, we can get these issues behind us sooner rather than later. Let’s learn from the past, but focus on the future. I know I can count on you to be with me, and I promise to be there with you. I want to personally thank you for your continued support.
John Sidgmore
----
WorldCom, Inc. Corporate Employee Communications
Reply With Quote
