-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L8Rk+vw/ExagFBpT9HfAGWNwh+MntocAMRoXbi2kusqdBTnM8fo5wU2/I7sTbuh7 zmYsV1pp5wTVRzygD3w9Wg== 0000893750-03-000386.txt : 20030714 0000893750-03-000386.hdr.sgml : 20030714 20030714141756 ACCESSION NUMBER: 0000893750-03-000386 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030707 ITEM INFORMATION: Other events FILED AS OF DATE: 20030714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLDCOM INC CENTRAL INDEX KEY: 0000723527 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 581521612 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10415 FILM NUMBER: 03785168 BUSINESS ADDRESS: STREET 1: 500 CLINTON CENTER DRIVE CITY: CLINTON STATE: MS ZIP: 39056 BUSINESS PHONE: 6014605600 FORMER COMPANY: FORMER CONFORMED NAME: MCI WORLDCOM INC DATE OF NAME CHANGE: 19980914 FORMER COMPANY: FORMER CONFORMED NAME: WORLDCOM INC /GA/ DATE OF NAME CHANGE: 19970127 FORMER COMPANY: FORMER CONFORMED NAME: LDDS COMMUNICATIONS INC /GA/ DATE OF NAME CHANGE: 19930916 8-K 1 form8-k.txt FORM 8-K - ------------------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004 ---------------------- FORM 8-K ---------------------- CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): July 7, 2003 -------------- WorldCom, Inc. (Exact Name of Registrant as Specified in Charter) -------------- Georgia 0-11258 58-1521612 (State or Other Jurisdiction of (Commission File Number) (IRS Employer Incorporation) Identification No.) 22001 Loudoun County Parkway, Ashburn, Virginia 20147 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (703) 886-5600 -------------- ------------------------------------------------------------------------------ Item 5. Other Events. On July 7, 2003, WorldCom, Inc. (the "Company") issued a press release announcing the filing on that date of newly revised exhibits to the Supplement to Disclosure Statement (the "Supplement") which the Company filed on July 3, 2003 with the U.S. Bankruptcy Court for the Southern District of New York. Among other things, the exhibits to the Supplement provided revised projected financial information supporting the Company's plan of reorganization (the "Plan"). A copy of this press release is attached as Exhibit 99.1 and it is incorporated herein by reference. The Company disclosed revised financial guidance projections for 2003-2005. The revised projected earnings before interest, taxes, depreciation and amortization (EBITDA) for 2003-2005 are expected to be $2.7 billion, $3.7 billion and $4.1 billion, respectively. The projections are based on a number of assumptions made by management with respect to future performance of the Company's various lines of business. Set forth below is a reconciliation of EBITDA to net income and cash flow from operating activities:
Projected for the year ended December 31, 2003 2004 2005 (amounts in billions) Earnings before interest, taxes, depreciation and amortization $ 2.7 $ 3.7 $ 4.1 Depreciation and amortization expense (1.5) (1.7) (1.8) Interest expense (0.1) (0.4) (0.4) Reorganization items (0.5) 0.0 0.0 Income tax expense (0.1) (0.6) (0.7) Income from discontinued operations 0.0 0.1* 0.0 ---------------------------------------------- Net income 0.5 1.1 1.2 Adjustments to cash flow Restructuring charge (non-cash item) 0.5 0.0 0.0 Changes in working capital 0.4 (0.2) 0.0 Deferred taxes and other liabilities 0.3 0.4 0.2 Other 0.2 0.0 0.0 Income from discontinued operations 0.0 (0.1)* 0.0 Depreciation and amortization expense 1.5 1.7 1.8 ---------------------------------------------- Total cash flow adjustments 2.9 1.8 2.0 Cash flow from operating activities $ 3.4 $ 2.9 $ 3.2 * Minor differences due to rounding
Management of the Company believes that EBITDA is a useful measure in assessing the Company's liquidity and financial performance. Management has presented EBITDA projections for 2003 through 2005 because creditors of the Company will receive notes and/or 2 common stock upon the Company's emergence from Chapter 11 proceedings. EBITDA is not a measurement presented in accordance with generally accepted accounting principles, or GAAP, and is not intended to be used in lieu of GAAP presentations of results of operations and cash provided by operating activities. EBITDA is commonly used by debt holders as a measurement to determine the ability of an entity to meet its interest obligations. EBITDA is also useful for shareholders as a measurement to determine the performance of an entity. The Company has reconciled EBITDA to cash provided by operating activities and net income to present the GAAP measures of liquidity and financial performance. Attached as Exhibit 99.2 is a discussion of the assumptions underlying the projections set forth above. The projections should be reviewed in conjunction with a review of these assumptions. The Company does not, as a matter of course, publish its business plans and strategies or projections, anticipated financial position or results of operations. Accordingly, the Company does not anticipate that it will, and disclaims any obligation to, furnish updated business plans or projections after the confirmation date of the Plan, or to include such information in documents required to be filed with the Securities and Exchange Commission (the "SEC") or otherwise to make such information public. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Exhibits. Exhibit No. Description of Exhibit ----------- ---------------------- 99.1 Press Release dated July 7, 2003 99.2 Assumptions to Financial Projections Cautionary Statement Regarding Forward-Looking Statements The projections included in this report may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The projections assume that the Plan will be implemented in accordance with its stated terms. The projections are based on forecasts of key economic variables and may be significantly affected by changes in the competitive environment, by regulatory changes and future changes in technology, and a variety of other factors. Accordingly, the estimates and assumptions underlying the projections are inherently uncertain and are subject to significant business, economic and competitive 3 uncertainties. Therefore, such projections, estimates and assumptions are not necessarily indicative of current values or future performance, which may be significantly less favorable or more favorable than as set forth. Although every reasonable effort was made to be accurate, the projections are only an estimate, and actual results may vary considerably from the projections. In addition, the uncertainties that are inherent in the projections increase for later years in the projection period, due to increased difficulty associated with forecasting levels of economic activity and performance at more distant points in the future. Consequently, the projected information included herein should not be regarded as a representation by the Company, the Company's advisors or any other person that the Company will achieve the projected results. The projections were not prepared with a view towards public disclosure or compliance with generally accepted accounting principles, the published guidelines of the SEC or the American Institute of Certified Public Accountants regarding projections or forecasts. The projections have not been audited or reviewed by the Company's independent certified accountants. You are cautioned not to place undue reliance on these projections. 4 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. WORLDCOM, INC. (Registrant) By: /s/ Robert T. Blakely --------------------------------------- Name: Robert T. Blakely Title: Executive Vice President and Chief Financial Officer Dated: July 14, 2003 5 EXHIBIT INDEX Exhibit No. Description ---------- ----------- 99.1 Press Release dated July 7, 2003 99.2 Assumptions to Financial Projections 6 EX-99.1 3 exhibit99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 MCI FILES SUPPLEMENTAL DISCLOSURE STATEMENT Company Issues Revised Projected Financials ASHBURN, Va., July 7, 2003 - MCI (WCOEQ, MCWEQ) today filed new revised exhibits to the Supplement to Disclosure Statement which it filed on July 3, 2003 with the U.S. Bankruptcy Court. The Supplement, together with today's filing, includes a description of the company's previously announced amended settlement with the Securities and Exchange Commission (SEC), which was approved today by the U.S. District Court. Also included are a proposed settlement between the company and a group of financial institutions that would resolve pending litigation, as well as the revised projected financial information supporting the company's plan of reorganization. The company's revised financial guidance projects 2003-2005 revenue will be $24.5 billion, $24.6 billion and $25.0 billion respectively. This compares to previously projected 2003-2005 revenue of $24.7 billion, $25.8 billion and $27.8 billion respectively. The revenue reductions are primarily in the company's consumer and small business segments, reflecting intense pricing competition fueled by new entries of unlimited bundles, aggressive new DSL offerings and rapid adoption of national Do Not Call legislation. Collectively these impacts have reduced consumer and small business effective rates in key markets by as much as 40 percent since April 2003. Projections for the company's large and global business segments remain relatively unchanged for 2003 and 2004, reflecting continued customer loyalty. Projected earnings before interest, taxes, depreciation and amortization (EBITDA) for 2003-2005 are now expected to be $2.7 billion, $3.7 billion and $4.1 billion respectively, reflecting the lower revenue projections partially offset by lower sales, general and administrative expenses. This compares with previously projected EBITDA of $2.8 billion, $4.1 billion and $5.4 billion respectively. "While we have been meeting our plan, we believe these adjustments better reflect the changing market conditions," said Bob Blakely, MCI chief financial officer. "Our cash position remains strong and customer loyalty in our large and global customer base remains solid. Moving forward, we remain on track to emerge from Chapter 11 protection later this fall." Under the revised financial projections the return to WorldCom bondholders remains virtually unchanged, with lower EBITDA being offset by a projected improved cash position. "We have reviewed the company's revised financial projections and continue to remain fully supportive of MCI's Plan of Reorganization," said Mark Neporent, Managing director and chief operating officer of Cerberus Capital Management, L.P. and co-chair of MCI's Unsecured Creditors Committee. "MCI's management team has made tremendous progress on the company's reorganization efforts in a very short amount of time. We look forward to their continued success in bringing the company out of Chapter 11 protection and driving future stakeholder value." About WorldCom, Inc. WorldCom, Inc. (WCOEQ, MCWEQ), which 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 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. Forward-Looking Statements This press release 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 the company's bankruptcy proceedings and matters arising out of pending class-action and other lawsuits and ongoing internal and government investigations relating to the previously announced restatement of its financial results. Other factors that may cause actual results to differ materially from management's expectations include economic uncertainty; the effects of vigorous competition, including price compression; 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 the company's filings with the Securities and Exchange Commission. We will continue to file documents with the Securities and Exchange Commission under the WorldCom, Inc. name until the effective date of the Plan of Reorganization. The effective date will not occur until after the Bankruptcy Court confirms the Plan of Reorganization ### 2 EX-99.2 4 exhibit99_2.txt EXHIBIT 99.2 EXHIBIT 99.2 ASSUMPTIONS TO FINANCIAL PROJECTIONS While management has prepared the projections in good faith and believes the assumptions to be reasonable, it is important to note that the Company can provide no assurance that such assumptions will be realized. As outlined in Article XI and Section IX.B of the Disclosure Statement (filed with the U.S. Bankruptcy Court for the Southern District of New York), a variety of risk factors could affect the Company's financial results and must be considered. The following summarizes the underlying assumptions behind the projections. Interest Expense. Interest expense reflects interest imputed on capital leases and the $5.5 billion of new notes issued pursuant to the Plan at an assumed interest rate of 8.0%. These amounts are offset by interest income equal to 1.5% per annum based on projected monthly cash balances. Restructuring Costs. Restructuring costs of $651 million in 2003 consist of $65 million of professional fees, $418 million of non-cash charges related to contract rejections, $87 million of severance and other payments, $107 million of non-cash charges related to PP&E writedowns associated with lease rejections, less $26 million of interest income prior to emergence. The $2.25 billion charge related to the SEC settlement will be booked retroactively in fiscal 2002. No additional restructuring costs are forecast for 2004 and 2005 due to the Company's assumed emergence from bankruptcy in late 2003. Income Taxes. For fiscal year 2003, the projections assume an income tax provision for the three-month period following the assumed effective date of the Plan. The projections assume that NOLs are eliminated as of the effective date as a result of the discharge of indebtedness (applied on a consolidated basis for the purposes of these projections). As a result, it is assumed that the reorganized company will not have the benefit of any NOL carryforwards and that income will be taxed at an effective rate of 37.6% for GAAP purposes. The projections also assume that the reorganized company will not recognize a material reduction in the tax basis of the Company's long-term assets as a result of the forgiveness of indebtedness. The increase in deferred tax assets results primarily from book/tax timing differences resulting from the Company's recent asset impairment charges. -----END PRIVACY-ENHANCED MESSAGE-----