August 09, 2002, 9:24 AM — WorldCom Inc.'s bankruptcy woes grew worse as the troubled telecommunications company disclosed that it had discovered an additional US$3.8 billion in accounting errors and would be forced to restate its earnings for 2000.
The company, which filed for bankruptcy protection in late July, has already announced $3.85 billion in improperly booked expenses involving its results for 2001 and the first quarter of 2002. Those accounting errors have led to federal criminal charges against WorldCom's former chief financial officer and former corporate controller. In addition, the U.S. Securities and Exchange Commission (SEC) has filed civil charges against WorldCom.
The company now says it will restate its earnings for 2000 in addition to 2001 and the first quarter of 2002. An extra $3.3 billion in improperly reported earnings before interest, taxes, depreciation and amortization (EBITDA), plus a further $501 million change in the company's non-EBITDA pre-tax adjustments, brings its total reduction in pre-tax profit since 1999 to $7.68 billion, the company said in a statement Thursday. The SEC has already been made aware of the errors reported Thursday, according to the statement.
The internal investigation into its accounting activities is still under way at WorldCom, and officials warned that it could uncover more errors before it is over.
"Creditors should be aware that additional amounts of improperly reported ... income may be discovered and announced," the statement said. "Until KPMG LLP, the company's newly appointed external auditors, is able to complete an audit of 2000, 2001 and 2002, the total impact on previously reported financial statements cannot be known."
WorldCom also said it may write off up to $50.6 billion of goodwill and other intangible assets when its restated financial figures for 2000, 2001 and 2002 are released.