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The improperly booked revenues were discovered during the company's internal review of financial statements from 1999 through the first quarter of 2002. The firm discovered that it had set aside large sums for bad debts and legal fees, which were then improperly booked as revenues.
WorldCom also announced that all existing goodwill and other intangible assets, currently valued at USD50.6 billion, are to be written off and the business also plans to re-evaluate the worth of its existing property, plant and equipment.
The news follows an announcement in June by the Mississippi-based telecom which revealed that it had improperly booked USD3.85 billion in expenses as capital expenditure in order to spread those cost over a longer period. Subsequently, on 22 July the company filed for bankruptcy in the US and its former CFO and controller were arrested on fraud charges relating to WorldCom's finances.
In a statement on Thursday, the company said that "additional amounts of improperly reported EBIDTA and pre-tax income may be discovered and announced" as the company made clear its intentions to publicise the discrepancies as they are found.
Following the firm's high profile bankruptcy, it continues to trade while management attempts to resolve the company's financial difficulties, under the supervision of the courts. The telecommunications giant currently employs more than 60,000 people in 65 countries and serves over 20 million residential and business customers. It also operates the world's largest Internet network.
WorldCom International, which includes its Irish operation, continues to trade normally because US bankruptcy protection laws do not apply outside of the US. But according to Elma Peters, corporate communications executive at WorldCom International, the firm's latest adjustments will also apply to WorldCom International.
Peters said that WorldCom International EMEA (Europe, Middle East and Africa) is EBIDTA positive in for the first half of 2002 and that the restatement of past EBIDTA figures will not have an impact on its trading position. However, the value of WorldCom International to potential investors could also be reduced by the USD50 billion in assets that have been written off.
WorldCom International employed 180 people in Ireland until early July, although it is currently in the process of laying off 10 percent of its workforce. "We find that our customers are very supportive and we haven't lost any major customer and morale is surprisingly good," said Peters, speaking to ElectricNews.Net. "People are just getting on with the job."
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