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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 12b-25
NOTIFICATION OF LATE FILING
SEC File Number: 333-02115
(CHECK ONE): / /Form 10-K / /Form 20-F /x/Form 11-K / /Form 10-Q
/ /Form N-SAR / /Form N-CSR
For Period Ended: December 31, 2002
/ /Transition Report on Form 10-K
/ /Transition Report on Form 20-F
/ /Transition Report on Form 11-K
/ /Transition Report on Form 10-Q
/ /Transition Report on Form N-SAR
/ /Transition Report on Form N-CSR
For the Transition Period Ended: ___________________
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Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
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If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
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PART I
REGISTRANT INFORMATION
Full Name of Registrant: WorldCom, Inc. 401(k) Salary Savings Plan
Former Name if Applicable: Not applicable
Address of Principal Executive Office (Street and Number):
22001 Loudoun County Parkway
City, State and Zip Code: Ashburn, Virginia 20147
PART II
RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate)
(a) The reasons described in reasonable detail in Part III of this
form could not be eliminated without unreasonable effort or
expense;
(b) The subject annual report, semi-annual report, transition report
on Form 10-K, Form 20-F, Form 11-K, Form N-SAR or Form N-CSR, or
/ / portion thereof, will be filed on or before the fifteenth
calendar day following the prescribed due date; or the subject
quarterly report or transition report on Form 10-Q, or portion
thereof will be filed on or before the fifth calendar day
following the prescribed due date; and
(c) The accountant's statement or other exhibit required by Rule
12b-25(c) has been attached if applicable.
PART III
NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q,
N-SAR, N-CSR, or the transition report portion thereof, could not be filed
within the prescribed time period.
As reported in the WorldCom, Inc. (the "Company" or "WorldCom") Current
Report on Form 8-K filed with the Securities and Exchange Commission ("SEC") on
June 26, 2002, WorldCom announced that as a result of an internal audit of
WorldCom's capital expenditure accounting, it was determined that certain
transfers from line cost expenses to capital accounts in the amount of $3.9
billion during 2001 and the first quarter of 2002 were not made in accordance
with generally accepted accounting principles and that WorldCom would therefore
restate its financial statements for 2001 and the first quarter of 2002. The
Company promptly notified its
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recently engaged external auditors, KPMG LLP ("KPMG"), and has engaged KPMG
to undertake a comprehensive audit of the Company's financial statements for
2000, 2001, and 2002. The Company also notified Andersen LLP ("Andersen"),
which audited the Company's financial statements for 2001 and reviewed such
statements for first quarter 2002, promptly upon discovering these improperly
reported amounts. 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.
As reported in its Current Report on Form 8-K filed on August 9, 2002,
WorldCom announced that its ongoing internal review of its financial statements
discovered an additional $3.8 billion in improperly reported pre-tax earnings
for 1999, 2000, 2001, and the first quarter of 2002. As a result, WorldCom
intends to restate its financial statements for 2000, 2001, and the first
quarter of 2002. On November 5, 2002, WorldCom announced that it expected a
further restatement of earnings in addition to amounts previously announced and
that the overall amount of the restatements could total in excess of $9 billion.
As reported in its Current Report on Form 8-K filed on March 14, 2003,
WorldCom announced it had completed a preliminary review of its goodwill and
other intangible assets and property and equipment ("PP&E") accounts. As
announced at that time, this review has resulted in the write-off of all
existing goodwill and a substantial write-down of the carrying value of PP&E and
other intangible assets following an impairment analysis and other adjustments
in accordance with GAAP. Specifics include:
The value of goodwill reflected on the Company's last reported balance
sheet, $45 billion, is impaired and has been written off completely;
and the value of PP&E and other intangible assets reflected on the
Company's last reported balance sheet, $39.2 billion and $5.6 billion,
respectively, is impaired and has been adjusted to a value of
approximately $10 billion as of December 31, 2002.
A Special Committee of WorldCom's Board of Directors conducted an
independent investigation of these matters with the law firm of Wilmer, Cutler &
Pickering as special counsel and PricewaterhouseCoopers LLP as their financial
advisors. WorldCom's accounting practices also are under investigation by the
U.S. Attorney's Office for the Southern District of New York and the Examiner
appointed by the U.S. Bankruptcy Court for the Southern District of New York
(the "Bankruptcy Court"), Richard Thornburgh, former Attorney General of the
United States. As reported in its Current Report on Form 8-K filed on November
27, 2002, WorldCom consented to the entry of a permanent injunction that
partially resolved the claims brought in a civil lawsuit by the SEC regarding
the Company's past public financial reports. The injunction imposes certain
ongoing obligations on the Company and permits the SEC to seek a civil penalty.
On May 19, 2003, WorldCom announced a proposed settlement with the SEC
regarding a civil penalty. Pursuant to the proposed settlement, WorldCom is
liable for a civil penalty of $1.51 billion, to be satisfied by payment of $500
million upon the effective date of WorldCom's emergence from Chapter 11
protection. The proposed settlement must be approved by both the U.S. District
Court for the Southern District of New York and the Bankruptcy Court. The
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proposed settlement provides that the funds paid by WorldCom in satisfaction of
the SEC's judgment will be distributed pursuant to the Fair Funds provisions of
the Sarbanes-Oxley Act of 2002. The SEC has proposed a plan for distribution of
the funds, which is subject to court approval. On May 19, 2003, the District
Court entered an order which, among other things, established a procedure
inviting interested parties to submit comments on the proposed settlement on or
before June 6, 2003. On June 11, 2003, the District Court held a status
conference with the parties and deferred a decision on the approval of the
proposed settlement. The District Court stated that additional proceedings
regarding approval of the proposed settlement would be scheduled in the near
future. WorldCom also consented to the entry of two orders dealing with internal
controls and corporate governance issues that modified certain of the ongoing
obligations imposed in the permanent injunction entered on November 26, 2002.
WorldCom has terminated or accepted the resignations of various
financial and accounting personnel, including its chief financial officer and
its corporate controller, and is continuing the process of investigating and
restating its financial results for the years 2000-2002. Earlier years also are
impacted. Investors and creditors should be aware that additional amounts of
improperly reported pre-tax earnings may be discovered and announced. Until the
Company has completed its final review and KPMG is able to complete an audit of
2000, 2001, and 2002, the total impact on previously reported financial
statements cannot be known. The Company intends to announce changes to
previously reported financial statements once its review is complete.
As reported in its Current Report on Form 8-K filed on July 22, 2002,
the Company and certain of its direct and indirect U.S. subsidiaries have filed
voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in
the Bankruptcy Court (Case No. 02-13533). By order dated July 22, 2002, the
debtors' Chapter 11 cases have been consolidated for procedural purposes only
and are being jointly administered. As reported in its Current Report on Form
8-K filed on November 12, 2002, the Company filed additional bankruptcy
petitions for 43 of its subsidiaries, most of which were effectively inactive
and none of which had significant debt. The debtors continue to operate their
businesses and manage their properties as debtors-in-possession pursuant to
sections 1107(a) and 1108 of the Bankruptcy Code. Accordingly, pursuant to
section 362 of the Bankruptcy Code, most of the litigation against the Company
has been stayed. As reported in its Current Report on Form 8-K filed on April
15, 2003, the Company and certain of its direct and indirect subsidiaries filed
their joint plan of reorganization and related disclosure statement with the
U.S. Bankruptcy Court for the Southern District of New York.
Based upon the foregoing, WorldCom has been unable to complete and file
its consolidated financial statements for the fiscal year ended December 31,
2002. The preparation of the Form 11-K for the WorldCom, Inc. 401(k) Salary
Savings Plan for the fiscal year ended December 31, 2002 depends on receiving
data from WorldCom regarding funds payable to the WorldCom, Inc. 401(k) Salary
Savings Plan, which amounts are being adjusted in connection with the audit of
WorldCom's financial statements described above. After completing these
adjustments, an audit must be performed on the WorldCom, Inc. 401(k) Salary
Savings Plan. For these reasons, the WorldCom, Inc. 401(k) Salary Savings Plan
has been unable to complete and file the Form 11-K for that period by the date
required without unreasonable effort or expense.
PART IV
OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
Paul Eskildsen (703) 886-4051
(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of
1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If answer is no,
identify report(s). / /Yes /X/No
Quarterly Report on Form 10-Q of WorldCom, Inc. for the quarterly
period ended June 30, 2002.
Quarterly Report on Form 10-Q of WorldCom, Inc. for the quarterly
period ended September 30, 2002.
Annual Report on Form 10-K of WorldCom, Inc. for the year ended
December 31, 2002.
Quarterly Report on Form 10-Q of WorldCom, Inc. for the quarterly
period ended March 31, 2003.
(3) Is it anticipated that any significant change in results of operations from
the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?
/X/Yes / /No
If so, attach an explanation of the anticipated change, both narratively and
quantitatively, and, if appropriate, state the reasons why a reasonable estimate
of the results cannot be made.
The financial statements for the WorldCom, Inc. 401(k) Salary
Savings Plan will change significantly because investments by plan
participants in WorldCom, Inc. securities represented a substantial
portion of the investments in the plan, and the value of those
investments has declined significantly since the last fiscal year.
At December 31, 2001, WorldCom group stock and MCI group stock
comprised approximately $682 million of plan assets, or
approximately 35% of total plan assets of approximately $1,974
million. The decline in value from December 31, 2001 to December 31,
2002 of the WorldCom group stock and MCI group stock held by the
plan was approximately $675 million. The decline in value of the
WorlCom group stock and MCI group stock from December 31, 2001 to
December 31, 2002 will be reflected in Net Depreciation in Fair
Value of Investments on the WorldCom, Inc. 401(k) Salary Savings
Plan 2002 Statement of Changes in Net Assets Available for Benefits.
WorldCom, Inc. 401(k) Salary Savings Plan
(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: July 1, 2003
By: /s/ Stephen R. Mooney
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Name: Stephen R. Mooney
Title: Vice President, Treasury and Risk
Management