Operating income increases $306 million sequentially
SG&A reduced 18 percent sequentially
Cash on hand totals $5.4 billion
Board declares $2.2 billion of excess cash and initiates return of capital through a quarterly dividend of $0.40 per share
2Q04 Statement of Operations (For the 3 and 6-Month Period Ended June 30, 2004 and 2003)
2Q04 Statement of Operations (For the 3-Month Periods Ended June 30, 2004 and March 31, 2004)
2Q04 Segment Results (For the 3-Month Periods Ended June 30, 2004 and 2003 and March 31, 2004)
2Q04 Segment Results (For the 6-Month Periods Ended June 30, 2004 and 2003)
Ashburn, Va., August 5, 2004 - MCI, Inc. (NASDAQ: MCIP) today reported its operating results for the three-month period ended June 30, 2004 (second quarter).
Revenues in the second quarter were $5.2 billion, a decline of 4 percent sequentially and 15 percent from the same period last year.
MCI's sales, general and administrative (SG&A) expenses were $1.3 billion in the second quarter, an improvement of 18 percent sequentially and 17 percent versus second quarter 2003. The Company realized operating income of $41 million versus a $265 million loss in first quarter 2004 and operating income of $324 million in second quarter 2003. Reported operating income also included depreciation and amortization of $569 million in second quarter 2004.
MCI's net loss for the period was $71 million or ($0.22) per share versus a net loss of $388 million or ($1.19) per share in first quarter 2004 and net income of $8 million in second quarter 2003.
"We did what we said we would do. By executing against our business plan, we produced second quarter results that reflect solid, measurable progress and significant financial improvements," said Michael D. Capellas, MCI president and chief executive officer. "To remain competitive we will continue to drive operational improvements, deliver unparalleled customer service and introduce new IP-based products and services to the marketplace."
The results of Embratel, a Brazilian affiliate, were classified as discontinued operations in the second quarter and, therefore, are excluded from continuing operations. MCI reached an agreement in March to sell its 19 percent stake in Embratel for $400 million to Telmex, $50 million of which was received prior to June 30, 2004. The sale was completed on July 23, 2004 and the Company received the remaining balance of $350 million.
With these results the Company has initiated segment reporting by its three business segments. These are:
- Enterprise Markets, which incorporates its largest global corporate and government customers, MCI Solutions and Conferencing;
- U.S. Sales and Service, which incorporates national accounts, and small and medium businesses that comprise its Commercial business, as well as its Mass Markets business; and
- International and Wholesale, two separate businesses utilizing its voice telecommunications, data services, Internet and managed network services.
Liquidity
On March 31, 2004, MCI's cash and cash equivalents totaled $5.9 billion, excluding Embratel. During the second quarter the Company paid approximately $1 billion of bankruptcy claims. On June 30, 2004, cash and cash equivalents totaled $5.4 billion excluding Embratel, which has been classified as an asset held for sale.
Total debt of $6 billion included approximately $295 million of capitalized leases. MCI issued $5.7 billion of Senior Notes on April 20, 2004, which have not yet been rated by credit rating agencies. The Company has initiated discussions with the rating agencies and presently expects the process to be completed by the end of 2004.
On May 19, 2004, MCI announced that its Board of Directors had initiated a study of the Company's liquidity requirements with a view toward identifying any excess cash as defined in Section 5.07 of the Plan of Reorganization. Today the Board declared excess cash of $2.2 billion and initiated a return of capital in the form of a quarterly cash dividend of $0.40 per share. The first dividend will be paid September 15, 2004 to shareholders of record on September 1, 2004.
Conference Call
Management will host a conference call to discuss today's results at 5 PM (EDT). Investors are invited to access a live audio feed at the company's website, www.mci.com . An audio archive of the call will be available at the website for 30 days.
About MCI
MCI, Inc. (NASDAQ: MCIP) 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 market. 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. Actual results may differ materially from these expectations. Factors that may cause actual results to differ materially from management's expectations include economic uncertainty; the effects of vigorous competition, including price compression; the impact of technological change on our business, alternative technologies, and dependence on availability of transmission facilities; risks of international business; regulatory risks in the United States and internationally; contingent liabilities; uncertainties regarding the collectability 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 those factors is contained in the Company's filings with the Securities and Exchange Commission, including its 10-K under "Risk Factors."
| Area: | Global |
| Name: | Brad Burns |
| Tel: | 800-644-NEWS |
