WORLDCOM'S ACCOUNTING WOES

WorldCom said that accounting irregularities involving expenses
misrecorded as capital expenditures had inflated its cash flow and that
otherwise it would have reported a net loss for 2001 and the first
quarter of 2002.

The accounting irregularities, which did not conform to Generally
Accepted Accounting Principles, included transfers between internal
accounts of $3.06 billion in 2001 and $797 million in the first quarter of
2002.

Those expenses should have been recorded on its income statement but
were instead booked as capital expenditures, artificially boosting cash
flow, the company said.

"Our senior management team is shocked by these discoveries," said
John Sidgmore, WorldCom's CEO for less than two months. He previous
served as the company's vice chairman.

WorldCom said it had notified the SEC and asked its new accounting
firm, KPMG, to review of its financial statements for 2001 and 2002. The
audit committee of WorldCom's board retained William R. McLucas, of
the law firm of Wilmer, Cutler & Pickering, former Chief of the
Enforcement Division of the SEC, to conduct an independent
investigation of the matter.

"The CFO didn't do this alone. Bernie didn't do this alone. But when
something like this is uncovered, you go for the throat," Dzubeck said.

In addition to firing Sullivan, WorldCom also accepted the resignation of
David Myers as senior vice president and controller.

"They are going to take a hit on this one, but it won't be fatal," said Jeff
Kagan, an independent telecommunications analyst, noting that the
company has"real revenues and customers and networks and assets."

Restating the results was not expected to hurt WorldCom's cash
position, the company said. WorldCom has $30 billion in total debt, but
no debt payments due in the next two quarters.

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