Professional Documents
Culture Documents
Worldcom
Worldcom
This presentation is intended for use in higher education for instructional purposes only, and is not for application in practice. Permission is granted to classroom instructors to photocopy this document for classroom teaching purposes only. All other rights are reserved. Copyright 2003, 2005 by the American Institute of Certified Public Accountants, Inc., New York, New York.
WorldComs Background
Awoke the sleeping giant by leading the telecom industry into profitability in the 90s. Telecom industry faced low margins and Bernie Ebbers decided
growth=survival
Purchased over 60 firms in 2nd half of the 90s WorldCom moved into Internet and data traffic
Handled 50% of US Internet traffic Handled 50% of e-mails worldwide
2003, 2005 by the AICPA
By 2001 owned a third of the US data cables Was U.S. 2nd largest long-distance operator in 1998 and 2002
Secured loans from WorldCom to fund personal investments Netted $140 million from stock sales
including a $100 million Canada ranch, $658 million in Mississippi timberlands and a $14 million Georgia shipyard
NET INCOME
2003, 2005 by the AICPA
Internal audit about $400 million he set aside that Sullivan wanted to use to boost WorldComs income.
5.
11. June 26, 2002 - civil suit filed, stock trading halted
Post-Fraud Happenings
17,000 jobs cut to save $1 billion.
WorldCom may write off $50.6 billion in intangible
assets.
We want the bad guys exposed. We want the bad guys punished. And we want to move on with our lives at WorldCom."
Possible court-approved debt reductions Company could spin off several business units
On March 2, 2004, in a superseded indictment, Sullivan pleaded guilty to 3 federal criminal charges for fraud and conspiracy.
Faces maximum 25 years in prison. Struck plea deal with government to testify against Bernie Ebbers. Sullivan to be sentenced after Ebbers trial.
January 19, 2005 - Federal jury trial on charges of fraud to begin in which Scott Sullivan is expected to testify against him
Possible sentence: 25+ years in prison
February 28, 2005 Trial to begin against former auditors/directors who have not settled during class-action