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St. Louis Business & Technology News
www.slfp.com/SLFPBIZp.htm "When you think Saint Louis, think Saint Louis Front Page," a weekly publication covering the news and events in the greater St. Louis area. 
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WorldCom Announces 17,000 Layoffs and Restructuring to Save $2 Billion ST. LOUIS, (slfp.com), June 26, 2002 - WorldCom, Inc., a global communications provider for the digital generation, operating in more than 65 countries, announced yesterday that it intends to restate its financial statements for 2001 and the first quarter of 2002 and layoff 17,000 workers beginning this Friday. WorldCom employs nearly 6,000 workers in the St. Louis Region. The company promptly notified its recently engaged external auditors, KPMG LLP, and has asked KPMG to undertake a comprehensive audit of the company's financial statements for 2001 and 2002. The company also notified Andersen LLP, which had audited the company's financial statements for 2001 and reviewed such statements for first quarter 2002, promptly upon discovering these transfers. On June 24, 2002, Andersen advised WorldCom that in light of the inappropriate transfers of line costs, Andersen's audit report on the company's financial statements for 2001 and Andersen's review of the company's financial statements for the first quarter of 2002 could not be relied upon. The company will issue unaudited financial statements for 2001 and for the first quarter of 2002 as soon as practicable. When an audit is completed, the company will provide new audited financial statements for all required periods. Also, WorldCom is reviewing its financial guidance. The company has terminated Scott Sullivan as chief financial officer and secretary. The company has accepted the resignation of David Myers as senior vice president and controller. The expected restatement of operating results for 2001 and 2002 is not expected to have an impact on the Company's cash position and will not affect WorldCom's customers or services. WorldCom has no debt maturing during the next two quarters. "Our senior management team is shocked by these discoveries," said John Sidgmore, appointed WorldCom CEO on April 29, 2002. "We are committed to operating WorldCom in accordance with the highest ethical standards." Sidgmore said that 2003 capital expenditures will be $2.1 billion on an annual basis. WorldCom will downsize the workforce by 17,000, beginning this Friday, which is expected to save $900 million on an annual basis. This downsizing is primarily composed of discontinued operations, operations & technology functions, attrition and contractor terminations. Data, Internet and international services accounted for approximately 70 percent, or $15.8 billion, of total revenues of $22.8 billion for the WorldCom Group last year. The three business areas also accounted for more than 70 percent of the Group's incremental revenue growth in 2000. The WorldCom Group manages more than 80 percent of total company assets which includes:
Last March 2001, MCI WorldCom announced that it would layoff approximately 361 workers by May 1, 2001, at the new Weldon Spring facility, located in St. Charles County. The loss of 361 jobs with an annual payroll of $15.85 million dealt a serious blow to the St. Charles ecomony with the loss of approximately 578 jobs and $14.48 million in wages in other ancillary sectors of the local economny. An advanced analysis response of the layoffs indicated that in total, the St. Charles County would lose 939 jobs and $.30.34 million in wages due to the layoffs in 2001.David Leezer, Director of Business Development for St. Charles County, noted that it was too soon to make any statements regarding the economical impact locally. "WorldCom has not indicated how many people in this area would be affected with the announced layoffs," stated Leezer in a phone interview with St. Louis Front Page. St. Charles County has a considerable investment in new infrastructure in highway improvements to 94/40 and Technology Drive as an incentive for WorldCom to consolidate its operations in the St. Louis region and to build a new facility in Weldon Springs. "We broke ground in May 1999 and they moved into their facility about a year and a half later. They did reach their initial goal of employing 2,750 people," said Leezer. He commented that the telecommunications market has changed drastically. Leezer stated that they had been aware for some time that MCI WorldCom had been experiencing financial difficulty. "This company is not alone in feeling the negative financial impact of the market."  Leezer stated that nearly $15 million in Federal and State funds was part of the $50 to $60 million investment that WorldCom had in their Weldon Springs facility. Information for this report was compiled by St. Louis Front Page staff from press releases issued by WorldCom, Inc. and the Advanced Layoff Anaylsis Response Model issued by St. Charles County, Missouri.  Postal Debt Soars to $13 Billion, Stamp Prices Continue to Climb WASHINGTON, (PRNewswire), June 26, 2002 - Days before the US Postal Service is set to raise its rates for the third time in three years, and at the same time the Postal Service is billions of dollars in debt, a leading taxpayer watchdog group kicked off a national protest demanding a full, operational audit of the Postal Service. Speaking at an event in Washington, DC, Leslie Paige, Vice President of Citizens Against Government Waste (CAGW), said, "Our nation's Postal Service is headed for a financial train wreck and Postal officials are asleep at the switch. They need to get their financial house in order. Instead, at the expense of consumers and businesses, Postal rates continue to climb, while Postal managers continue to rack up staggering levels of debt." On June 30th, the Postal Service will raise the price of a First-Class stamp from $0.34 to $0.37. The U.S. General Accounting Office (GAO) confirms that, despite recent annual rate increases, the Postal Service is headed for its third consecutive annual deficit since fiscal year 2000. In addition, it is nearly $13 billion in debt with more than $80 billion in additional liabilities looming, and it has no debt reduction plan in place. Due to this bleak financial outlook, GAO placed the Postal Service on its "high-risk" list. To back its call for greater accountability, CAGW released a new Wirthlin Worldwide survey confirming that 85 percent of the public wants independent auditors to investigate the Postal Service's finances and make the results public, before the Postal Service is allowed to raise rates again. Paige added, "If Enron had to open its financial books to the world, doesn't the public have the right to demand the same of our debt-ridden and hopelessly mismanaged Postal Service?" Return to St. Louis Front Page 
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