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WorldCom warns of restatement; SEC expands charges

By Stephen Lawson and Joris Evers, IDG News Service
November 06, 2002 08:57 AM ET

IDG News Service - Bankrupt telecommunication service provider WorldCom expects to make an additional restatement of its past financial results that might bring the total of all its adjustments to more than $9 billion, the company warned in a statement Tuesday.

On the same day, the U.S. Security and Exchange Commission expanded its civil complaint against WorldCom, adding charges and expanding the scope of the alleged fraud, the SEC said in a statement.

WorldCom has restated past results twice already this year, making adjustments that reduced its pretax profit by about $7.68 billion for periods in the years 2000, 2001 and 2002. The Clinton, Miss. company faces criminal investigations and civil suits.

WorldCom informed the SEC during settlement discussions about the probable additional restatement, according to the WorldCom statement. It was based on "very preliminary reviews of past accounting," the company said. Once WorldCom's review is complete it will make the final information public, it said. The company said restatements of past earnings won't affect its ability to continue providing services or to emerge from bankruptcy in mid-2003.

According to a news report Tuesday, WorldCom and the SEC have presented to the federal judge overseeing the case a plan for settlement of the SEC's charges against the company. A deal might be announced within a week or two, the report said. The SEC has since denied that a settlement could mean it will ask the court to dismiss the fraud charges, according to reports in the online editions of The Wall Street Journal and The New York Times on Wednesday.

The SEC filed civil charges against WorldCom on June 26, the day after WorldCom announced it would restate its results for 2001 and the first quarter of 2002. WorldCom has since expanded the restatement amount and period. The amended SEC complaint alleges WorldCom misled investors from 1999 through the first quarter of 2002 and overstated its income by about $9 billion.

 

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