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WorldCom Reportedly Sees More Restatements
Thursday, September 19, 2002
(7:51 AM ET)
TSC Staff

WorldCom (WCOEQ:Nasdaq - news - commentary - research - analysis) reportedly will disclose another $2 billion in accounting revisions, bringing to about $9 billion the total amount of bookkeeping errors the bankrupt carrier has copped to.

The new irregularities are thought to relate to asset write-downs and foreign subsidiaries that were improperly accounted for, according to The Wall Street Journal. TheStreet.com previously reported WorldCom's accounting issues could be in the $10 billion range.

WorldCom sought chapter 11 protection July 21 in the biggest-ever bankruptcy filing by a U.S. company. The action followed revelations that the company had systematically inflated its profits over a series of quarters by improperly classifying routine expenses as capital investments; it subsequently disclosed additional restatements related to bad debt reserves.

The company is also expected to take a roughly $50 billion charge related to impaired goodwill. It wasn't clear how much if any of the restatement reported Thursday might be included in that amount. According to the story, the new restatement relates in part to the company's accounting for a foreign subsidiary, and whether it improperly deconsolidated the subsidiary after it became unprofitable.

WorldCom's former chief financial officer, Scott Sullivan, and its director of general accounting, Buford Yates, recently pleaded innocent to fraud charges in the scandal, while controller David Myers was charged and may be working out a deal to cooperate with federal prosecutors, the Journal said. More restatements would come as WorldCom representatives worked to restructure the company out of bankruptcy.
(TheStreet.com News Source)
2002 © TheStreet.com, Inc.

Dan