EXHIBIT 99.1
MCI ANNOUNCES FIRST QUARTER 2004 RESULTS
Cash balance increases to $6.3 billion
4,500 Business Markets customer contracts signed in first quarter
valued collectively at more than $1 billion
Global roll-out of new IP-based products and solutions
Accelerated cost reduction program to eliminate an additional 7,500
positions
Ashburn, Va., May 10, 2004 – MCI, Inc. (MCIA.PK) today reported its operating results for the three-month period ended March 31, 2004, and concurrently filed its quarterly report on Form 10Q with the Securities and Exchange Commission.
MCI’s revenue declined to $6.3 billion in the first quarter of 2004, compared to $7.2 billion a year earlier, including the consolidated results of Embratel. The decline reflects the adverse industry environment, as excess capacity and new technology adoption continue to pressure pricing. Exclusive of Embratel, the impending sale of which is expected to be completed in 2004, first quarter revenue declined to $5.4 billion from $6.6 billion a year earlier.
MCI reported an operating loss of $205 million for the first quarter, compared to operating profit of $634 million in the first quarter of 2003. Excluding Embratel, the 2004 loss was $265 million, and the year-earlier operating profit was $604 million.
“Although we made significant strides in restructuring the company during the past year, overall industry conditions and an unfavorable regulatory environment affected our first quarter results,” said Michael Capellas, MCI president and chief executive officer. “In response we are accelerating our cost reduction program, ramping new product introductions and optimizing our network wherever possible.”
A net loss of $388 million was reported for the first quarter of 2004, compared to net income of $52 million in 2003. This was largely due to declining revenue, caused in part by industry pricing.
Total operating expenses were $6.5 billion in the first quarter of 2004. Excluding Embratel they were $5.7 billion, a decrease of $301 million over the first quarter of 2003. Access costs were $3.2 billion in the first quarter of 2004. Excluding Embratel they were $2.9 billion, a decrease of 5 percent from first quarter 2003, reflecting declining volume and rates, network optimization and favorable contract renegotiations. This was partially offset by higher international access costs and the impact of foreign currency exchange rates.
Selling, general and administrative (SG&A) expenses increased by approximately $46 million in the first quarter to $1.8 billion, which included approximately $150 million for accounting and legal professional services, bankruptcy-related costs and severance. Excluding Embratel, SG&A expenses remained flat at $1.6 billion.
The Company expects to lower its cost structure and return to profitability in the second half of 2004 by:
- increasing international traffic following emergence from bankruptcy;
- focusing on delivery of new IP-based products to its enterprise customers;
- further reducing its workforce by 7,500 positions in the second quarter of 2004; and
- further consolidating and optimizing its network operations.
“MCI has a great set of capabilities with our expansive IP network, loyal global customer base and history of innovation,” said Capellas. “However, we clearly have more work to do to align our cost structure with the changing industry conditions and to take our new products to market. Over time we believe that customers will migrate to IP-based products and services and look to telecommunications providers that can provide secure end-to-end delivery – which will play directly to MCI’s strengths.”
In the first quarter the Company had positive cash flow of $150 million, taking its cash balance to $6.3 billion, of which approximately $2 billion will go toward bankruptcy-related payouts. Excluding Embratel, the Company had positive cash flow of $375 million. The Company expects positive cash flow for the balance of the year, with cash balances well above operating requirements.
Sequential Comparisons
Compared to the fourth quarter of 2003, revenue declined 2 percent to $6.3 billion from $6.4 billion. Operating costs were 3 percent lower at $6.5 billion,
compared to $6.7 billion in the quarter ended December 31, 2003. MCI’s operating loss was $272 million in the fourth quarter of 2003, but narrowed to $205 million in the first quarter of 2004.
Business Markets
Business Markets revenue, which includes the Company’s large global accounts, government, wholesale, and small and medium enterprises, declined to $3.1 billion in the first quarter of 2004, compared to $3.9 billion in the first quarter of 2003. Price competition intensified, particularly in data services and the small and medium-sized business markets. Customers reconfiguring their networks for greater efficiency, product substitution and the increasing migration of dial-up customers to broadband Internet access have affected demand.
Price compression in the wholesale market, due in part to competitors offering services priced with assumed low voice over Internet Protocol (VOIP) access costs, also affected the Company’s operating results. Given recent VOIP regulatory decisions, much of the traffic that some competitors have been offering as lower-cost VOIP will now be subject to traditional access. As a result, the Company expects normalization of the industry’s voice pricing.
Importantly, MCI signed 4,500 customer contracts in the first quarter that are expected to generate more than $1 billion over the next three-to-five years, including $230 million in MCI Solutions, primarily in MPLS-based managed services and Enhanced Call Routing. In February, MCI announced a major expansion – both domestically and globally – of Private IP, its MPLS-based VPN service.
MCI continues to be a leader in the enterprise space, and remains convinced that its relentless focus on reliability and quality of service, coupled with customer acquisition and retention efforts, will better support the company’s revenue in 2004.
Mass Markets
Mass Markets revenue declined to $1.4 billion in the first quarter of 2004, compared to $1.7 billion during the first quarter of 2003, in line with the Company’s expectations. A decline in long distance volume, combined with rate compression, reflected the increasing substitution of wireless phones, pre-paid telephone cards and email. Mass Markets also continued to experience the effect of Do Not Call telemarketing legislation and the entry of regional telephone companies into the long-distance market. However, local services continued to grow, reflecting strong consumer acceptance of the Company’s unlimited calling plans.
MCI expects Mass Markets to continue to be challenged by product substitution, intense price competition and regulatory issues.
International
International revenue was relatively flat in the first quarter of 2004 at $964 million, versus $970 million in 2003. Including the benefit from changes in foreign currency exchange rates that added approximately $100 million to revenue in first quarter of 2004, gains in voice revenue in international markets were matched by declines in data and internet revenue. This segment was the most heavily affected by the market impact of the Chapter 11 process.
Looking forward, new services enabled by the Company’s worldwide facilities-based network are expected to attract new, higher volume and more profitable customers, particularly in retail markets.
Cash Flow
Net cash provided by operating activities was $510 million in the first quarter of 2004, reflecting the benefit of significant non-cash expenses, including $609 million of depreciation and amortization.
Capital expenditures for the period totaled $217 million. For the full year 2004, MCI expects to commit $1.1 billion to new property, plant and equipment. Among the Company’s key investment programs is the expansion of additional MPLS nodes to accommodate more converged IP products and solutions.
Debt and Liquidity
Cash and equivalents at March 31, 2004 totaled $6.3 billion, of which approximately $2.0 billion was expected to fulfill claims following the Company’s emergence from bankruptcy on April 20, 2004. During the first quarter of 2004, consolidated cash and equivalents increased by $150 million, reflecting a $375 million increase for the Company’s businesses excluding Embratel, which more than offset a $225 million decrease in cash for Embratel. Long-term debt (including amounts due within one year) totaled $7.36 billion, of which debt associated with Embratel equaled $1.4 billion. Upon its emergence from Chapter 11 protection, MCI issued $5.7 billion of senior notes that mature in 2007, 2009 and 2014. During the quarter, the Company accrued $96 million in non-cash interest expense associated with these notes, in accordance with Fresh Start accounting, which MCI adopted on December 31, 2003.
Conference Call
MCI will host a conference call to discuss recent results and future prospects today at 5PM (EDT). Investors are invited to access a live audio feed on the Company’s website, www.mci.com.
About MCI
MCI, Inc. (MCIA.PK) is a leading global communications provider, delivering innovative, cost-effective advanced communications connectivity to businesses, governments and consumers. With the industry’s most expansive global IP backbone, based on the number of company-owned points-of-presence, and wholly-owned data networks, MCI develops the converged communications products and services that are the foundation for commerce and communications in today’s markets. For more information, go to www.mci.com.
Forward Looking Statements
This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. While management has prepared the guidance contained in this press release in good faith and believes the assumptions to be reasonable, it is important to note that the Company can provide no assurance that such assumptions will be realized. Important assumptions used in preparing the guidance include, but are not limited to: the successful completion of the sale of Embratel in 2004, the successful launch of a VOIP initiative, access to external funding sources as necessary, a generally stable economic environment with low inflation, a satisfactory commercial alternative to the unbundled network element platform can be negotiated in response to the March 2, 2004 circuit court decision on the FCC’s Triennial Review Order,and no significant change in the regulatory and competitive conditions under with the Company currently operates. Furthermore, no additional material restructuring costs are forecast for 2004. Actual results could vary materially if any of these assumptions turns out to be incorrect or other unexpected events occur. A variety of risk factors could affect the Company’s projected financial results, including: matters arising out of pending class-action and other lawsuits and internal and government investigations relating to the previously-announced restatement of financial results, economic uncertainty; the effects of vigorous competition, including price compression; the impact of technological change on our business, alternative technologies, and dependence of availability of transmission facilities; risks of international business; regulatory risks in the United States and internationally; contingent liabilities; uncertainties regarding the collectibility of receivables; risks associated with debt service requirements and our financial leverage; uncertainties associated with the success of acquisitions; and the ongoing war on terrorism. More detailed information about these risk factors is contained in the Company’s filings with the Securities and Exchange Commission.
###
UNAUDITED STATEMENTS OF OPERATIONS
For the Three-Month Periods Ended March 31, 2004 and 2003
(In Millions)
Consolidated MCI | Without Embratel | |||||||||||||||||||||
Successor Company | Predecessor Company | Successor Company | Predecessor Company | |||||||||||||||||||
1Q04 | 1Q03 | 1Q04 vs. 1Q03 | 1Q04 vs. 1Q03 | 1Q04 | 1Q03 | 1Q04 vs. 1Q03 | 1Q04 vs. 1Q03 | |||||||||||||||
Revenues | $ | 6,295 | $ | 7,228 | $ | (933 | ) | -12.9 | % | $ | 5,443 | $ | 6,613 | $ | (1,170 | ) | -17.7 | % | ||||
Access costs | 3,191 | 3,292 | (101 | ) | -3.1 | % | 2,906 | 3,074 | (168 | ) | -5.5 | % | ||||||||||
Costs of services and products | 878 | 883 | (5 | ) | -0.1 | % | 671 | 749 | (78 | ) | -10.4 | % | ||||||||||
Total cost of sales | 4,069 | 4,175 | (106 | ) | -2.5 | % | 3,577 | 3,823 | (246 | ) | -6.4 | % | ||||||||||
Gross profit | 2,226 | 3,053 | (827 | ) | -27.1 | % | 1,866 | 2,790 | (924 | ) | -33.1 | % | ||||||||||
Selling, general and administrative | 1,822 | 1,776 | 46 | 2.6 | % | 1,609 | 1,612 | (3 | ) | -0.2 | % | |||||||||||
Gross profit less selling, general and administrative | 404 | 1,277 | (873 | ) | -68.4 | % | 257 | 1,178 | (921 | ) | -78.2 | % | ||||||||||
Depreciation and amortization | 609 | 643 | (34 | ) | -5.3 | % | 522 | 574 | (52 | ) | -9.1 | % | ||||||||||
Operating (loss) income | (205 | ) | 634 | (839 | ) | -132.3 | % | (265 | ) | 604 | (869 | ) | -143.9 | % | ||||||||
Other income (expense), net: | ||||||||||||||||||||||
Interest expense | (123 | ) | (54 | ) | 69 | 127.8 | % | (100 | ) | (43 | ) | 57 | 132.6 | % | ||||||||
Reorganization items, net | - | (206 | ) | (206 | ) | -100.0 | % | - | (206 | ) | (206 | ) | -100.0 | % | ||||||||
Miscellaneous (expense) income, net | (5 | ) | 48 | (53 | ) | -110.4 | % | 7 | 1 | 6 | 600.0 | % | ||||||||||
(Loss) income from continuing operations before income taxes, minorityinterests and cumulative effect of a change in accounting principle | (333 | ) | 422 | (755 | ) | -178.9 | % | (358 | ) | 356 | (714 | ) | -200.6 | % | ||||||||
Income tax expense | 36 | 110 | (74 | ) | -67.3 | % | 24 | 87 | (63 | ) | -72.4 | % | ||||||||||
Minority interests, net of tax | 14 | 46 | (32 | ) | -69.6 | % | - | (7 | ) | 7 | 100.0 | % | ||||||||||
(Loss) income from continuing operations before cumulative effect of achange in accounting principle | (383 | ) | 266 | (649 | ) | -244.0 | % | (382 | ) | 276 | (658 | ) | -238.4 | % | ||||||||
Net (loss) income from discontinued operations | (5 | ) | 1 | (6 | ) | -600.0 | % | (5 | ) | 1 | (6 | ) | -600.0 | % | ||||||||
(Loss) income before cumulative effect of a change in accounting principle | (388 | ) | 267 | (655 | ) | -245.3 | % | (387 | ) | 277 | (664 | ) | -239.7 | % | ||||||||
Cumulative effect of a change in accounting principle | - | (215 | ) | (215 | ) | -100.0 | % | - | (215 | ) | (215 | ) | -100.0 | % | ||||||||
Net (loss) income | $ | (388 | ) | $ | 52 | $ | (440 | ) | -846.2 | % | $ | (387 | ) | $ | 62 | $ | (449 | ) | -724.2 | % | ||
UNAUDITED STATEMENTS OF OPERATIONS
For the Three-Month Periods Ended March 31, 2004 and December 31, 2003
(In Millions)
Consolidated MCI | Without Embratel | |||||||||||||||||||||
Successor Company | Predecessor Company | Successor Company | Predecessor Company | |||||||||||||||||||
1Q04 | 1Q03 | 1Q04 vs. 1Q03 | 1Q04 vs. 1Q03 | 1Q04 | 1Q03 | 1Q04 vs. 1Q03 | 1Q04 vs. 1Q03 | |||||||||||||||
Revenues | $ | 6,295 | $ | 6,407 | $ | (112 | ) | -1.7% | $ | 5,443 | $ | 5,571 | $ | (128 | ) | -2.3 | % | |||||
Access costs | 3,191 | 3,229 | (38 | ) | -1.2 | % | 2,906 | 2,934 | (28 | ) | -1.0 | % | ||||||||||
Costs of services and products | 878 | 897 | (19 | ) | -2.1 | % | 671 | 695 | (24 | ) | -3.5 | % | ||||||||||
Total cost of sales | 4,069 | 4,126 | (57 | ) | -1.4 | % | 3,577 | 3,629 | (52 | ) | -1.4 | % | ||||||||||
Gross profit | 2,226 | 2,281 | (55 | ) | -2.4 | % | 1,866 | 1,942 | (76 | ) | -3.9 | % | ||||||||||
Selling, general and administrative | 1,822 | 1,860 | (38 | ) | -2.0 | % | 1,609 | 1,670 | (61 | ) | -3.7 | % | ||||||||||
Gross profit less selling, general and administrative | 404 | 421 | (17 | ) | -4.0 | % | 257 | 272 | (15 | ) | -5.5 | % | ||||||||||
Depreciation and amortization | 609 | 693 | (84 | ) | -12.1 | % | 522 | 605 | (83 | ) | -13.7 | % | ||||||||||
Operating (loss) income | (205 | ) | (272 | ) | 67 | 24.6 | % | (265 | ) | (333 | ) | 68 | 20.4 | % | ||||||||
Other income (expense), net: | ||||||||||||||||||||||
Interest expense | (123 | ) | (56 | ) | 67 | 119.6 | % | (100 | ) | (24 | ) | 76 | 316.7 | % | ||||||||
Reorganization items, net | - | 22,554 | (22,554 | ) | -100.0 | % | - | 22,554 | (22,554 | ) | -100.0 | % | ||||||||||
Miscellaneous (expense) income, net | (5 | ) | 93 | (98 | ) | -105.4 | % | 7 | 87 | (80 | ) | -92.0 | % | |||||||||
(Loss) income from continuing operations before income taxes andminority interests | (333 | ) | 22,319 | (22,652 | ) | -101.5 | % | (358 | ) | 22,284 | (22,642 | ) | -101.6 | % | ||||||||
Income tax expense | 36 | 77 | (41 | ) | -53.2 | % | 24 | 65 | (41 | ) | -63.1 | % | ||||||||||
Minority interests, net of tax | 14 | 29 | (15 | ) | -51.7 | % | - | 6 | (6 | ) | -100.0 | % | ||||||||||
(Loss) income from continuing operations | (383 | ) | 22,213 | (22,596 | ) | -101.7 | % | (382 | ) | 22,213 | (22,595 | ) | -101.7 | % | ||||||||
Net (loss) from discontinued operations | (5 | ) | (7 | ) | 2 | 28.6 | % | (5 | ) | (7 | ) | 2 | 28.6 | % | ||||||||
Net (loss) income | $ | (388 | ) | $ | 22,206 | $ | (22,594 | ) | -101.7 | % | $ | (387 | ) | $ | 22,206 | $ | (22,593 | ) | -101.7 | % | ||
UNAUDITED STATEMENTS OF OPERATIONS
For the Three-Month Periods Ended March 31, 2004 and 2003 and December 31, 2003(In Millions)
Successor Company | Predecessor Company | |||||||||||||||||
Three-Month Period Ended March 31, 2004 | Three-Month Period Ended March 31, 2003 | |||||||||||||||||
Without Embratel | Embratel | Consolidated MCI | Without Embratel | Embratel | Consolidated MCI | |||||||||||||
Revenues | $ | 5,443 | $ | 852 | $ | 6,295 | $ | 6,613 | $ | 615 | $ | 7,228 | ||||||
Operating expenses: | ||||||||||||||||||
Access costs | 2,906 | 285 | 3,191 | 3,074 | 218 | 3,292 | ||||||||||||
Costs of services and products | 671 | 207 | 878 | 749 | 134 | 883 | ||||||||||||
Selling, general and administrative | 1,609 | 213 | 1,822 | 1,612 | 164 | 1,776 | ||||||||||||
Depreciation and amortization | 522 | 87 | 609 | 574 | 69 | 643 | ||||||||||||
Total | 5,708 | 792 | 6,500 | 6,009 | 585 | 6,594 | ||||||||||||
Operating (loss) income | (265 | ) | 60 | (205 | ) | 604 | 30 | 634 | ||||||||||
Other income (expense), net: | ||||||||||||||||||
Interest expense | (100 | ) | (23 | ) | (123 | ) | (43 | ) | (11 | ) | (54 | ) | ||||||
Miscellaneous income (expense), net | 7 | (12 | ) | (5 | ) | 1 | 47 | 48 | ||||||||||
Reorganization items, net | — | — | — | (206 | ) | — | (206 | ) | ||||||||||
(Loss) income from continuing operations before income taxes, minority interests and cumulative effect of a change in accounting principle | (358 | ) | 25 | (333 | ) | 356 | 66 | 422 | ||||||||||
Income tax expense | 24 | 12 | 36 | 87 | 23 | 110 | ||||||||||||
Minority interests, net of tax | — | 14 | 14 | (7 | ) | 53 | 46 | |||||||||||
(Loss) income from continuing operations before cumulative effect of a change inaccounting principle | (382 | ) | (1 | ) | (383 | ) | 276 | (10 | ) | 266 | ||||||||
Net (loss) income from discontinued operations | (5 | ) | — | (5 | ) | 1 | — | 1 | ||||||||||
(Loss) income before cumulative effect of a change in accounting principle | (387 | ) | (1 | ) | (388 | ) | 277 | (10 | ) | 267 | ||||||||
Cumulative effect of a change in accounting principle | — | — | — | (215 | ) | — | (215 | ) | ||||||||||
Net (loss) income | $ | (387 | ) | $ | (1 | ) | $ | (388 | ) | $ | 62 | $ | (10 | ) | $ | 52 | ||
Predecessor Company | |||||||||
Three-Month Period Ended December 31, 2003 | |||||||||
Without Embratel | Embratel | Consolidated MCI | |||||||
Revenues | $ | 5,571 | $ | 836 | $ | 6,407 | |||
Operating expenses: | |||||||||
Access costs | 2,934 | 295 | 3,229 | ||||||
Costs of services and products | 695 | 202 | 897 | ||||||
Selling, general and administrative | 1,670 | 190 | 1,860 | ||||||
Depreciation and amortization | 605 | 88 | 693 | ||||||
Total | 5,904 | 775 | 6,679 | ||||||
Operating (loss) income | (333 | ) | 61 | (272 | ) | ||||
Other income (expense), net: | |||||||||
Interest expense | (24 | ) | (32 | ) | (56 | ) | |||
Miscellaneous income, net | 87 | 6 | 93 | ||||||
Reorganization items, net | 22,554 | — | 22,554 | ||||||
Income from continuing operations before income taxes and minority interests | 22,284 | 35 | 22,319 | ||||||
Income tax expense | 65 | 12 | 77 | ||||||
Minority interests, net of tax | 6 | 23 | 29 | ||||||
Income from continuing operations | 22,213 | — | 22,213 | ||||||
Net loss from discontinued operations | (7 | ) | — | (7 | ) | ||||
Net income | $ | 22,206 | $ | — | $ | 22,206 | |||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2004 and December 31, 2003
(In Millions, Except Share Data)
Successor Company | ||||||
As of March 31, 2004 | As of December 31, 2004 | |||||
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 6,328 | $ | 6,178 | ||
Accounts receivable, net of allowance for doubtful accounts of $1,755 for 2004 and $1,762 for 2003 | 3,649 | 4,082 | ||||
Deferred taxes | 1,007 | 990 | ||||
Other current assets | 923 | 836 | ||||
Assets held for sale | 106 | 176 | ||||
Total current assets | 12,013 | 12,262 | ||||
Property, plant and equipment, net | 11,292 | 11,758 | ||||
Intangible assets, net | 2,047 | 2,135 | ||||
Deferred taxes | 586 | 608 | ||||
Other assets | 718 | 713 | ||||
$ | 26,656 | $ | 27,476 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities | ||||||
Accounts payable | $ | 1,303 | $ | 1,722 | ||
Accrued access costs | 2,566 | 2,349 | ||||
Current portion of long-term debt | 383 | 330 | ||||
Accrued interest | 25 | 25 | ||||
Other current liabilities | 4,261 | 4,361 | ||||
Liabilities of assets held for sale | 11 | 23 | ||||
Total current liabilities | 8,549 | 8,810 | ||||
Long-term debt, excluding current portion | 6,981 | 7,117 | ||||
Deferred taxes | 1,212 | 1,213 | ||||
Other liabilities | 717 | 714 | ||||
Commitments and contingencies | ||||||
Minority interests | 1,126 | 1,150 | ||||
Shareholders’ equity: | ||||||
MCI common stock, par value $0.01 per share; authorized: 3,000,000,000; issued and outstanding 314,856,250 as of March 31, | ||||||
2004 and December 31, 2003 | 3 | 3 | ||||
Additional paid-in capital | 8,469 | 8,469 | ||||
Accumulated deficit | (388 | ) | - | |||
Accumulated other comprehensive loss | (13 | ) | - | |||
Total shareholders’ equity | 8,071 | 8,472 | ||||
$ | 26,656 | $ | 27,476 | |||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three-Month Periods Ended March 31, 2004 and 2003
(In Millions)
Successor Company | Predecessor Company | |||||
Three-Month Period Ended March 31, 2003 | ||||||
2004 | 2003 | |||||
OPERATING ACTIVITIES | ||||||
Net (loss) income | $ | (388 | ) | $ | 52 | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 609 | 643 | ||||
Cumulative effect of a change in accounting principle | - | 215 | ||||
Minority interests, net of tax | 14 | 46 | ||||
Bad debt provision | 240 | 326 | ||||
Gain on sale of property, plant and equipment | (2 | ) | (3 | ) | ||
Deferred tax provision | 4 | (52 | ) | |||
Non-cash reorganization charges | - | 166 | ||||
Amortization of debt discount | 96 | - | ||||
Other | (2 | ) | 13 | |||
Changes in assets and liabilities: | ||||||
Accounts receivable | 148 | (428 | ) | |||
Other current assets | (79 | ) | (132 | ) | ||
Non current assets | (9 | ) | 34 | |||
Accounts payable and accrued access costs | (157 | ) | (376 | ) | ||
Other liabilities | 36 | 394 | ||||
Net cash provided by operating activities | 510 | 898 | ||||
INVESTING ACTIVITIES | ||||||
Additions to property, plant and equipment | (217 | ) | (94 | ) | ||
Deposit on the pending sale of Embratel | 20 | - | ||||
Proceeds from sale of property, plant and equipment | 2 | 11 | ||||
Proceeds from the sale of investments | 1 | - | ||||
Proceeds from the sale of asset held for sale | 35 | - | ||||
Net cash used in investing activities | (159 | ) | (83 | ) | ||
FINANCING ACTIVITIES | ||||||
Principal borrowings on debt | 56 | 58 | ||||
Principal repayments on debt | (253 | ) | (182 | ) | ||
Net cash used in financing activities | (197 | ) | (124 | ) | ||
Effect of exchange rate changes on cash | (4 | ) | 10 | |||
Net change in cash and cash equivalents | 150 | 701 | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 6,178 | 2,820 | ||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 6,328 | $ | 3,521 | ||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||
Cash paid (refunds received) for taxes, net | $ | 1 | $ | (4 | ) | |
Cash paid for interest, net of amounts capitalized | 32 | 36 | ||||
Cash paid for reorganization items | - | 40 | ||||
Non cash items: | ||||||
Conversion of preferred stock to common stock | - | 58 |