OTHER CURRENT AND LONG-TERM ASSETS
(in millions)
12/31/2000
---------Other current assets
$2,179
Other long-term assets
$5,131
(a)Comprised of:
WorldCom group
Inc.
-------------Deferred tax asset
$362
Income tax receivable
230
Effect of Embratel
deconsolidation
(308)
Vendor prepayment
95
Other
14
----Change in other current
assets
$393
=====
(b)Comprised of:
WorldCom group
Inc.
-------------Vendor prepayment
$105
Equity investment in Embratel
992
Effect of Embratel
deconsolidation
(382)
Investments, other
(542)
----Change in other long-term
assets
$173
=====
12/31/2001
---------$2,481
$5,363
MCI group
---------
Change
-----$302(a)
$232(b)
WorldCom,
-------------
$(30)
--
$332
230
--(61)
----$(91)
=====
MCI group
WorldCom, Inc.
Consolidated Net Debt
(In millions)
09/30/2001
12/31/2001
---------
(308)
95
(47)
----$302
=====
WorldCom,
-------------
$ ---
$105
992
-59
-----
(382)
(483)
-----
$59
=====
$232
=====
Change
Net debt
Cash
Debt
Net debt
$2,581
$(31,270)
$(28,689)
==========
$1,416
$(30,210)
$(1,165)(a)
$1,060
$(28,794)
$(105)(b)
=======================
(a) Cash used as follows:
Maturity of floating rate notes
Pay off commercial paper
$(917)
(12)
Open market purchases of Intermedia
outstanding debt
Purchase Rhythms assets
Vendor prepayment
Other
(70)
(32)
(200)
66
$(1,165)
=======
(b) Comprised of:
Foreign currency effect on foreign denominated
debt and cash
Debt accretion on senior discount notes
Purchase Rhythms assets
Vendor prepayment
Other
$18
(10)
(32)
(200)
119
$(105)
=====
WORLDCOM GROUP
COMBINED STATEMENTS OF OPERATIONS
(Unaudited. In Millions, Except Per Share Data)
Excluding Charges and Embratel
Three Months Ended
Year Ended
December 31,
December 31,
----------------- ----------------2001
2000
2001
2000
-------- -------- -------- -------Revenues:
Voice
Data
International
Internet dedicated and other
Total revenues
$1,570
$1,708
$6,591
$7,036
2,139
1,927
8,620
7,389
768
625
2,977
2,367
824
688
3,160
2,455
-------- -------- -------- -------5,301
4,948
21,348
19,247
-------- -------- -------- --------
Operating expenses:
Line costs:
Attributed costs
1,983
1,904
8,019
7,031
26
23
101
87
Intergroup allocated
expenses
Selling, general and
administrative:
Attributed costs
Shared corporate services
775
490
838
339
3,164
1,981
2,752
1,575
Depreciation and amortization:
Attributed costs
Intergroup allocated expenses
Total
Operating income
1,350
931
4,841
3,420
(179)
(163)
(720)
(627)
-------- -------- -------- -------4,445
3,872
17,386
14,238
-------- -------- -------- -------856
1,076
3,962
5,009
Other income (expense):
Interest expense
Miscellaneous
(312)
(152) (1,029)
(502)
130
87
520
468
-------- -------- -------- --------
Income before income taxes and
minority interests
Provision for income taxes
674
1,011
3,453
4,975
263
410
1,315
2,050
-------- -------- -------- --------
Income before minority
interests
Minority interests
411
601
2,138
2,925
15
-35
--------- -------- -------- --------
Net income before distributions
on mandatorily redeemable
preferred securities
426
601
2,173
2,925
Distributions on mandatorily redeemable preferred securities and other
preferred
dividend requirements
42
16
117
65
-------- -------- -------- -------Net income
$384
$585
$2,056
$2,860
======== ======== ======== ========
PRO FORMA
Diluted earnings per
common share(1)
$0.13
$0.20
$0.70
$0.98
======== ======== ======== ========
Diluted weighted average
WorldCom group shares
outstanding(1)
2,965
2,893
2,933
2,912
======== ======== ======== ========
(1) On June 7, 2001, WorldCom, Inc. recapitalized its common shares
into two separate stocks - WorldCom group stock and MCI group stock -
and each share of WorldCom, Inc. stock was changed into one share of
WorldCom group stock and 1/25 of a share of MCI group stock. The above
pro forma information was used as the basis to compute diluted earnings
per common share and assumes the recapitalization occurred at the
beginning of 2000 and the WorldCom group stock and MCI group stock
existed for all periods presented.
WORLDCOM GROUP
COMBINED STATEMENTS OF OPERATIONS
(Unaudited. In Millions, Except Per Share Data)
Financial Reporting
Three Months Ended
Year Ended
December 31,
December 31,
----------------- ----------------2001
2000(1)
2001
2000(1)
-------- -------- -------- -------Revenues:
Voice
Data
International
Internet dedicated and other
Total revenues
$1,570
$1,708
$6,591
$7,036
2,139
1,927
8,620
7,389
768
1,538
2,977
5,875
824
688
3,160
2,455
-------- -------- -------- -------5,301
5,861
21,348
22,755
-------- -------- -------- --------
Operating expenses:
Line costs:
Attributed costs
Intergroup allocated expenses
1,983
26
2,315
23
8,019
101
8,658
87
857
490
1,144
339
4,052
2,006
3,682
2,007
Selling, general and
administrative:
Attributed costs
Shared corporate services
Depreciation and amortization:
Attributed costs
Intergroup allocated expenses
Total
Operating income
1,350
1,055
4,841
3,907
(179)
(163)
(720)
(627)
-------- -------- -------- -------4,527
4,713
18,299
17,714
-------- -------- -------- -------774
1,148
3,049
5,041
Other income (expense):
Interest expense
Miscellaneous
(312)
82
(140)
58
(1,029)
412
(458)
385
-------- -------- -------- -------Income before income taxes,
minority interests and
cumulative effect of
accounting change
Provision for income taxes
544
1,066
2,432
4,968
212
385
943
1,990
-------- -------- -------- --------
Income before minority
interests and cumulative
effect of accounting change
Minority interests
332
681
1,489
2,978
15
(80)
35
(305)
-------- -------- -------- --------
Income before cumulative effect
of accounting change
347
601
1,524
2,673
Cumulative effect of accounting
change (net of income tax of
$43 in 2000)
---(75)
-------- -------- -------- --------
Net income before distributions
on mandatorily redeemable
preferred securities
347
601
Distributions on mandatorily redeemable preferred
preferred
dividend requirements
42
16
-------- -------Net income
$305
$585
======== ========
PRO
1,524
2,598
securities and other
117
65
-------- -------$1,407
$2,533
======== ========
FORMA
Diluted earnings per
common share(2)
$0.10
$0.20
$0.48
$0.87
======== ======== ======== ========
Diluted weighted average
WorldCom group shares
outstanding(2)
2,965
2,893
2,933
2,912
======== ======== ======== ========
(1) In the second quarter of 2001, WorldCom made a strategic decision
to restructure its investment in Embratel. As a result of actions taken
in the second quarter of 2001, the accounting principles generally
accepted in the United States prohibit the continued consolidation of
Embratel's results. Accordingly, WorldCom deconsolidated this
investment as of January 1, 2001. The operating results for 2000
reflect the consolidation of Embratel and the results for 2001 reflect
the deconsolidation.
(2) On June 7, 2001, WorldCom, Inc. recapitalized its common shares
into two separate stocks - WorldCom group stock and MCI group stock and each share of WorldCom, Inc. stock was changed into one share of
WorldCom group stock and 1/25 of a share of MCI group stock. The above
pro forma information was used as the basis to compute diluted earnings
per common share and assumes the recapitalization occurred at the
beginning of 2000 and the WorldCom group stock and MCI group stock
existed for all periods presented.
WORLDCOM GROUP
CONDENSED COMBINED BALANCE SHEETS
(Unaudited. In Millions)
Dec. 31,
2001
-------
Dec. 31,
2000
-------
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net
Receivable from MCI group, net
Other current assets
$1,409
$720
3,734
4,980
900
649
2,136
1,743
------------Total current assets
8,179
8,092
------------Property and equipment, net
36,792
35,177
Goodwill and other intangibles, net
40,818
36,685
Long-term receivable from MCI group, net
976
976
Other assets
5,136
4,963
------------$91,901
$85,893
=======
=======
LIABILITIES AND ALLOCATED NET WORTH Current liabilities: Short-term
debt and current maturities of
long-term debt
$172
$7,200
Accounts payable and accrued line costs
2,751
3,584
Other current liabilities
2,992
3,429
------------Total current liabilities
5,915
14,213
------------Long-term debt
24,533
11,696
Other liabilities
3,742
3,648
Minority interests
101
2,592
Mandatorily redeemable and other preferred securities 1,993
798
Allocated net worth
55,617
52,946
------------$91,901
$85,893
=======
=======
Note: In the second quarter of 2001, WorldCom made a strategic decision
to restructure its investment in Embratel. As a result of actions taken
in the second quarter of 2001, the accounting principles generally
accepted in the United States prohibit the continued consolidation of
Embratel's results. Accordingly, WorldCom deconsolidated this
investment as of January 1, 2001. The balance sheet as of December 31,
2000 includes the effects of the Embratel consolidation.
WORLDCOM GROUP
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited. In Millions)
Year Ended Dec.
31,
2001
2000(1)
----------Cash flows from operating activities: Net income before distributions
on mandatorily
redeemable preferred securities
$1,524
$2,598
Adjustments to reconcile net income before distributions on mandatorily
redeemable preferred securities to net cash provided by operating
activities:
Cumulative effect of accounting change
-75
Minority interests
(35)
305
Depreciation and amortization
4,121
3,280
Provision for deferred income taxes
1,131
1,410
Change in assets and liabilities, net of effect
of business combinations:
Accounts receivable, net
104
(1,300)
Receivable from MCI group, net
(251)
(649)
Other current assets
104
(582)
Accounts payable and other current liabilities
(200)
624
All other operating activities
107
(431)
-------- -------Net cash provided by operating activities
6,605
5,330
-------- -------Cash flows from investing activities:
Capital expenditures
Acquisitions and related costs
Increase in intangible assets
Decrease in other liabilities
All other investing activities
Net cash used in investing activities
(7,619) (10,984)
(206)
(14)
(367)
(771)
(351)
(823)
(275)
(1,020)
-------- -------(8,818) (13,612)
-------- --------
Cash flows from financing activities:
Principal borrowings on debt, net
Attributed stock activity of WorldCom, Inc.
3,526
124
6,377
585
Distributions on mandatorily redeemable preferred
securities and dividends paid on preferred stock
(83)
(65)
Redemption of Series C preferred stock
Advances from (to) MCI group, net
All other financing activities
(200)
(190)
(15)
1,592
(272)
(84)
-------- -------Net cash provided by financing activities
3,080
8,215
Effect of exchange rate changes on cash
38
(19)
-------- -------Net increase (decrease) in cash and cash equivalents
905
(86)
Cash and cash equivalents at beginning of period
720
806
Deconsolidation of Embratel
(216)
--------- -------Cash and cash equivalents at end of period
$1,409
$720
======== ========
(1) In the second quarter of 2001, WorldCom made a strategic decision
to restructure its investment in Embratel. As a result of actions taken
in the second quarter of 2001, the accounting principles generally
accepted in the United States prohibit the continued consolidation of
Embratel's results. Accordingly, WorldCom deconsolidated this
investment as of January 1, 2001. The statement of cash flows for 2000
reflects the consolidation of Embratel and the statement of cash flows
for 2001 reflects the deconsolidation.
WORLDCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited. In Millions, Except Per Share Data)
Excluding Charges and Embratel
Three Months Ended
Year Ended
December 31,
December 31,
------------------ ----------------2001
2000
2001
2000
-------- -------- -------- -------Revenues:
Voice
Data
International
Internet dedicated and other
Commercial services
Consumer
Wholesale
$1,570
2,139
768
824
-------5,301
1,711
591
$1,708
$6,591
$7,036
1,927
8,620
7,389
625
2,977
2,367
688
3,160
2,455
-------- -------- -------4,948
21,348
19,247
1,888
7,227
7,778
733
2,641
3,388
531
344
-------8,478
--------
749
2,427
3,541
403
1,536
1,628
-------- -------- -------8,721
35,179
35,582
-------- -------- --------
Alternative channels and small
business
Dial-up Internet
Total revenues
Operating expenses:
Line costs
3,568
3,675
14,739
13,835
Selling, general and
administrative
Depreciation and amortization
Total
Operating income
2,461
1,614
-------7,643
-------835
2,444
9,951
8,890
1,184
5,880
4,391
-------- -------- -------7,303
30,570
27,116
-------- -------- -------1,418
4,609
8,466
Other income (expense):
Interest expense
Miscellaneous
(438)
(283) (1,533) (1,014)
130
87
520
468
-------- -------- -------- --------
Income before income taxes and
minority interests
Provision for income taxes
527
205
--------
1,222
3,596
7,920
496
1,374
3,222
-------- -------- --------
Income before minority
interests
Minority interests
322
726
2,222
4,698
15
-35
--------- -------- -------- -------Net income
337
726
2,257
4,698
Distributions on mandatorily redeemable preferred securities and other
preferred
dividend requirements
42
16
117
65
-------- -------- -------- -------Net income applicable to common
shareholders
$295
========
$710
$2,140
$4,633
======== ======== ========
$384
========
$585
$2,056
$2,860
======== ======== ========
Net income attributed to
WorldCom group
Net income (loss) attributed
to MCI group
$(89)
$125
$84
$1,773
======== ======== ======== ========
Diluted earnings (loss) per
common share:
WorldCom group stock(1)
PRO FORMA
$0.13
$0.20
$0.70
$0.98
MCI group stock(1)
======== ======== ======== ========
$(0.75)
$1.09
$0.72
$15.42
======== ======== ======== ========
Diluted weighted average
common shares outstanding:
WorldCom group stock(1)
2,965
2,893
2,933
2,912
======== ======== ======== ========
MCI group stock(1)
119
115
117
115
======== ======== ======== ========
(1) On June 7, 2001, WorldCom, Inc. recapitalized its common shares
into two separate stocks - WorldCom group stock and MCI group stock and each share of WorldCom, Inc. stock was changed into one share of
WorldCom group stock and 1/25 of a share of MCI group stock. The above
pro forma information was used as the basis to compute diluted earnings
per common share and assumes the recapitalization occurred at the
beginning of 2000 and the WorldCom group stock and MCI group stock
existed for all periods presented.
WORLDCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited. In Millions, Except Per Share Data)
Financial Reporting
Three Months Ended
Year Ended
December 31,
December 31,
----------------- ----------------2001
2000(1)
2001
2000(1)
-------- -------- -------- -------Revenues:
Voice
Data
International
Internet dedicated and other
Commercial services
Consumer
Wholesale
$1,570
$1,708
$6,591
$7,036
2,139
1,927
8,620
7,389
768
1,538
2,977
5,875
824
688
3,160
2,455
-------- -------- -------- -------5,301
5,861
21,348
22,755
1,711
1,888
7,227
7,778
591
733
2,641
3,388
Alternative channels and small
business
Dial-up Internet
Total revenues
531
749
2,427
3,541
344
403
1,536
1,628
-------- -------- -------- -------8,478
9,634
35,179
39,090
-------- -------- -------- --------
Operating expenses:
Line costs
3,568
4,086
14,739
15,462
Selling, general and
administrative
Depreciation and amortization
Total
Operating income
2,543
2,750
11,046
10,597
1,614
1,308
5,880
4,878
-------- -------- -------- -------7,725
8,144
31,665
30,937
-------- -------- -------- -------753
1,490
3,514
8,153
Other income (expense):
Interest expense
Miscellaneous
(438)
(271) (1,533)
(970)
82
58
412
385
-------- -------- -------- --------
Income before income taxes,
minority interests and
cumulative effect of
accounting change
Provision for income taxes
397
1,277
2,393
7,568
154
471
927
3,025
-------- -------- -------- --------
Income before minority
interests and cumulative
effect of accounting change
Minority interests
243
806
1,466
4,543
15
(80)
35
(305)
-------- -------- -------- --------
Income before cumulative effect
of accounting change
258
726
1,501
4,238
Cumulative effect of accounting
change (net of income tax of
$50 in 2000)
---(85)
-------- -------- -------- -------Net income
258
726
1,501
4,153
Distributions on mandatorily redeemable preferred securities and other
preferred
dividend requirements
42
16
117
65
-------- -------- -------- -------Net income applicable to common
shareholders
$216
$710
$1,384
$4,088
======== ======== ======== ========
Net income attributed to
WorldCom Group
Net income (loss) attributed
$305
$585
$1,407
$2,533
======== ======== ======== ========
to MCI Group
$(89)
$125
$(23) $1,555
======== ======== ======== ========
Diluted earnings (loss) per
common share:
PRO FORMA
WorldCom group stock(2)
MCI group stock(2)
$0.10
$0.20
$0.48
$0.87
======== ======== ======== ========
($0.75)
$1.09
$(0.20) $13.52
======== ======== ======== ========
Diluted weighted average common
shares outstanding:
WorldCom Group stock(2)
2,965
2,893
2,933
2,912
======== ======== ======== ========
MCI Group stock(2)
119
115
117
115
======== ======== ======== ========
(1) In the second quarter of 2001, WorldCom made a strategic decision
to restructure its investment in Embratel. As a result of actions taken
in the second quarter of 2001, the accounting principles generally
accepted in the United States prohibit the continued consolidation of
Embratel's results. Accordingly, WorldCom deconsolidated this
investment as of January 1, 2001. The operating results for 2000
reflect the consolidation of Embratel and the results for 2001 reflect
the deconsolidation.
(2) On June 7, 2001, WorldCom, Inc. recapitalized its common shares
into two separate stocks - WorldCom group stock and MCI group stock and each share of WorldCom, Inc. stock was changed into one share of
WorldCom group stock and 1/25 of a share of MCI group stock. The above
pro forma information was used as the basis to compute diluted earnings
per common share and assumes the recapitalization occurred at the
beginning of 2000 and the WorldCom group stock and MCI group stock
existed for all periods presented.
WORLDCOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited. In Millions)
Dec. 31, Dec. 31,
2001
2000
-------- -------ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net
Other current assets
Total current assets
$1,416
$761
5,308
6,815
2,481
2,179
-------- -------9,205
9,755
-------38,809
50,537
5,363
-------$103,914
========
LIABILITIES AND SHAREHOLDERS' INVESTMENT Current liabilities:
term debt and current maturities of
long-term debt
$172
Accounts payable and accrued line costs
4,844
Other current liabilities
4,194
-------Total current liabilities
9,210
-------Long-term debt
30,038
Other liabilities
4,642
Minority interests
101
Mandatorily redeemable and other preferred securities
1,993
Total shareholders' investment
57,930
-------$103,914
========
Property and equipment, net
Goodwill and other intangibles, net
Other assets
-------37,423
46,594
5,131
-------$98,903
========
Short$7,200
6,022
4,451
-------17,673
-------17,696
4,735
2,592
798
55,409
-------$98,903
========
Note: In the second quarter of 2001, WorldCom made a strategic decision
to restructure its investment in Embratel. As a result of actions taken
in the second quarter of 2001, the accounting principles generally
accepted in the United States prohibit the continued consolidation of
Embratel's results. Accordingly, WorldCom deconsolidated this
investment as of January 1, 2001. The balance sheet as of December 31,
2000 includes the effects of the Embratel consolidation.
WORLDCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited. In Millions)
Year Ended Dec. 31,
2001
2000(1)
-------- -------Cash flows from operating activities:
Net income
$1,501
$4,153
Adjustments to reconcile net income to net cash provided by operating
activities:
Cumulative effect of accounting change
-85
Minority interests
(35)
305
Depreciation and amortization
5,880
4,878
Provision for deferred income taxes
1,104
1,649
Change in assets and liabilities, net of effect
of business combinations:
Accounts receivable, net
281
(1,126)
Other current assets
164
(797)
Accounts payable and other current liabilities
(1,154) (1,050)
All other operating activities
253
(431)
-------- -------Net cash provided by operating activities
7,994
7,666
-------- -------Cash flows from investing activities:
Capital expenditures
Acquisitions and related costs
Increase in intangible assets
Decrease in other liabilities
All other investing activities
Net cash used in investing activities
(7,886) (11,484)
(206)
(14)
(694)
(938)
(480)
(839)
(424) (1,110)
-------- -------(9,690) (14,385)
-------- --------
Cash flows from financing activities:
Principal borrowings on debt, net
Common stock issuance
3,031
124
6,377
585
Distributions on mandatorily redeemable preferred
securities and dividends paid on preferred stock
Redemption of preferred stock
All other financing activities
(154)
(65)
(200)
(190)
(272)
(84)
-------- -------Net cash provided by financing activities
2,529
6,623
Effect of exchange rate changes on cash
38
(19)
-------- -------Net increase (decrease) in cash and cash equivalents
871
(115)
Cash and cash equivalents at beginning of period
761
876
Deconsolidation of Embratel
(216)
--------- -------Cash and cash equivalents at end of period
$1,416
$761
======== ========
(1) In the second quarter of 2001, WorldCom made a strategic decision
to restructure its investment in Embratel. As a result of actions taken
in the second quarter of 2001, the accounting principles generally
accepted in the United States prohibit the continued consolidation of
Embratel's results. Accordingly, WorldCom deconsolidated this
investment as of January 1, 2001. The statement of cash flows for 2000
reflects the consolidation of Embratel and the statement of cash flows
for 2001 reflects the deconsolidation.