WorldCom Group Second Quarter 2001 Revenues Up 12 Percent

Second Quarter Cash EPS 28 Cents

Note to editors and investors: Please see discussion of non-recurring items at the end of this release.

CLINTON, Miss., - July 26, 2001 - WorldCom, Inc. today announced the financial results of the WorldCom group (NASDAQ:WCOM) for the quarter ended June 30, 2001. WorldCom, Inc. is comprised of two groups, each with its own separately traded tracking stock: the WorldCom group consists of WorldComís data, Internet, international and commercial voice businesses and MCI group (NASDAQ:MCIT), which released results separately, consists of WorldCom's consumer, small business, wholesale long distance, wireless messaging and dial-up Internet access businesses.

WORLDCOM GROUP SECOND QUARTER RESULTS

Internal cash flows at the WorldCom group improved over $600 million during the quarter and were achieved through increased cash from operations as well as less cash used in investing activities.

WorldCom group reported revenues of $5.4 billion, a 12 percent increase from the same period in 2000. This strong result was driven by 22 percent year-over-year revenue growth in data and Internet services.

Data and Internet services accounted for approximately $3.0 billion or 55 percent of WorldCom groupís revenues, up from 51 percent of revenues in the second quarter of 2000. Revenue growth in these fast-growing services continues to lead the industry and accounts for 92 percent of WorldCom group's incremental revenue growth since the year-ago quarter.

International services increased 26 percent and represented 14 percent of WorldCom groupís revenues during the quarter, up from 12 percent of revenues in the year ago period.

Business voice revenues declined 6 percent from the year-ago period, representing 31 percent of WorldCom groupís revenues compared to 37 percent in the second quarter of 2000.

WorldCom group EBITDA (earnings before interest, taxes, depreciation and amortization) was $2.0 billion, an $82 million sequential increase and up $32 million from the same period last year. WorldCom group EBITDA margin was 38 percent and includes the continued impact of previously announced spending on growth initiatives, such as managed web hosting and Internet-based virtual private networks.

The group reported cash earnings (earnings before goodwill amortization) of $805 million or 28 cents per share. WorldCom group net income, after goodwill amortization, was $574 million or 20 cents per share in the quarter.

CONSOLIDATED WORLDCOM, INC. RESULTS

Second quarter 2001 consolidated revenues were $8.9 billion. Consolidated EBITDA was $2.7 billion, representing an EBITDA margin of 30 percent.

Second quarter 2001 cash earnings were $917 million. Consolidated net income, after goodwill amortization, was $623 million.

MANAGEMENT'S COMMENTS

"The growth in our data and Internet revenues this quarter again demonstrates the value of enterprise customers as we continue to see our customersí requirements for more bandwidth," said Bernard J. Ebbers, president and CEO of WorldCom, Inc.

"I'm also extremely pleased with the results of our heightened focus on cash flow. The $600 million sequential improvement in internally generated cash flow this quarter is a result of good business fundamentals: solid growth, more stable pricing, efficient cost control and effective balance sheet management."

MANAGEMENT'S OUTLOOK

The following outlook contains forward-looking statements that are based on WorldCom management's best judgment at this time. Actual results could differ materially and are subject to various risks and uncertainties, many of which, such as economic factors, market demand and competitive pressures, are beyond the Company's control. In spite of the uncertain global economic environment, at this point the Company expects full-year 2001 WorldCom group revenue growth of between 12 and 15 percent and expects WorldCom group EBITDA to be between $7.8 and $8.3 billion. WorldCom group's cash earnings are expected to be between $1.05 and $1.10 per share for the year.

FORWARD-LOOKING STATEMENTS

This document 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 due to the effects of vigorous competition; the impact of technological change on our business, new entrants and alternative technologies, and dependence on availability of transmission facilities; uncertainties associated with the success of acquisitions; risks of international business; regulatory risks in the United States and internationally; contingent liabilities; risks associated with Euro conversion efforts; uncertainties regarding the collectibility of receivables; risks associated with debt service requirements and interest rate fluctuations; and our financial leverage. More detailed information about those factors is contained in WorldCom's filings with the Securities and Exchange Commission.

ABOUT WORLDCOM GROUP

WorldCom group (NASDAQ: WCOM) is a preeminent global communications provider for the digital generation, operating in more than 65 countries with annualized revenues of over $20 billion. WorldCom provides the innovative technologies and services that are the foundation for business in the 21st century. For more information go to http://www.worldcom.com.

CONFERENCE CALL INFORMATION

WorldCom will conduct a conference call to discuss WorldCom group financial results today, Thursday, July 26 at 7:30 AM (Central Time). The call will be available to all investors on the Internet at http://www.worldcom.com/investor/.

DISCUSSION OF NON-RECURRING ITEMS

WorldCom's reported results for the three and six-month periods ended June 30, 2001 and 2000 have been impacted by events as described more fully below. For comparative purposes, the discussion of results excludes these non-recurring items.

1. Deconsolidation of Embratel: In the second quarter of 2001, WorldCom made a strategic decision to permanently reduce its investment in Brazil and took steps to restructure its investment in Embratel (allocated to the WorldCom group). As a result of actions taken in the second quarter of 2001, WorldCom determined that it could no longer exercise control over Embratel and therefore deconsolidated this investment as of January 1, 2001. WorldCom's equity in Embratel's earnings for all periods is now reported in miscellaneous income.
2. Investments in certain publicly traded and privately held companies: As a result of events which occurred during the second quarter of 2001, WorldCom recorded after-tax charges of $528 million ($457 million at WorldCom group and $71 million at MCI group) in the second quarter of 2001, related to the write-off of investments in certain publicly traded and privately held companies.
3. Costs associated with tracking stock recapitalization: In the second quarter of 2001, WorldCom recorded an after-tax charge of $14 million ($7 million at WorldCom group and $7 million at MCI group) as a result of the costs associated with the tracking stock recapitalization.
4. Costs associated with workforce reductions: In the first quarter of 2001, WorldCom recognized after-tax charges of $76 million ($47 million at WorldCom group and $29 million at MCI group) associated with domestic severance packages and other costs related to WorldCom's February 2001 workforce reductions.
5. Impact of foreign currency exchange: In the first quarter of 2001, WorldCom incurred after-tax charges of $59 million (at the WorldCom group) associated with the impact of foreign currency exchange on Embratel.
6. Cumulative effect of accounting change: During the fourth quarter of 2000, WorldCom implemented SAB 101, which requires certain activation and installation fee revenues to be amortized over the average life of the related service rather than be recognized immediately. Costs directly related to these revenues may also be deferred and amortized over the customer contract life. As required by SAB 101, WorldCom retroactively adopted this accounting effective January 1, 2000, which resulted in a one-time, after-tax expense of $85 million ($75 million at WorldCom group and $10 million at MCI group).
7. Sprint Merger costs: In the second quarter of 2000, WorldCom recorded a $55 million after-tax charge (allocated to the WorldCom group) associated with the termination of the Sprint merger agreement, including regulatory, legal, accounting and investment banking fees and other costs.