Commercial Services Revenues Grow 19 Percent; Digital and International Revenue Growth of $1.1 Billion Unmatched in
Industry
CLINTON, Miss., (October 26, 2000) -WorldCom, Inc. (NASDAQ:WCOM)
today reported solid results in the third quarter ended September 30,
2000, driven by strength across the Company's digital and
international businesses.
This quarter WorldCom recognized after tax charges of $405 million
associated with specific domestic and international wholesale
accounts that are no longer deemed collectible due to bankruptcies,
litigation and settlements of contractual disputes that occurred in
the third quarter. For comparative purposes, the discussion excludes
these charges.
Financial Highlights
- Consolidated revenues for the third quarter increased 12
percent over last year's comparable quarter, reflecting
continued growth from global broadband services. - Operating income increased by $360 million or 16 percent from
the third quarter of 1999 to $2.6 billion. - WorldCom's commercial services achieved revenue growth of
19 percent over third quarter 1999. - Cash earnings (earnings before goodwill amortization) per share
increased 21 percent year-over-year to $0.57 per common share. - Net income applicable to common shareholders increased 26
percent to $1.4 billion, or $0.47 per common share, up from $0.37
per share in the third quarter of 1999.
Quarter Highlights
Results for all periods have been adjusted to reflect
classification changes for reciprocal compensation and COBRA (central
office based remote access) equipment which are now being treated as
offsets to cost of sales. Previously, WorldCom recorded these items
on a gross basis as revenue. Results for all periods have also been
adjusted to reflect the elimination of small business and consumer
PICC (primary interexchange carrier charges).
- Domestic data revenues grew $363 million or 23 percent to $2.0
billion. Sales of private line and frame relay services fueled the
revenue increase as customers expand their networks. Local voice
grade equivalents, which measure the capacity of local private line
circuits, doubled reflecting continued strong demand for bandwidth. - Dedicated and other Internet revenues increased 51 percent, or
$216 million, to $640 million, driven by robust demand for higher
bandwidth connections and advanced services. Dedicated and advanced
Internet services now represent 61 percent of total Internet
revenues as companies continue to transition more of their business
functions to the Internet. Hosting services once again posted
triple-digit gains year-over-year. - International revenues, those originating outside of the U.S.,
increased by $463 million or 42 percent to $1.6 billion for the
quarter driven by strong sales in Europe, as well as increasing
revenues in the Asia-Pacific and Latin American regions. Excluding
WorldCom's interest in Brazilian communications company
Embratel, international revenues increased by $194 million, or 44
percent, to $637 million. - During the quarter, WorldCom signed a definitive merger
agreement with Intermedia Communications, Inc. whereby it will
acquire a controlling interest in Digex, Inc., a leading provider
of managed Web and application hosting services for some of the
world's fastest growing companies. The resulting combination
will couple Digex's impressive range of managed, enterprise and
portal hosting solutions with WorldCom's worldwide
facilities-based networks and relationships with leading businesses
around the globe.
Outlook
Commenting on the outlook for WorldCom, Bernard J. Ebbers,
WorldCom president and chief executive officer, said, "With our
ability to consistently generate industry-leading incremental digital
and international revenues, we have intensified our efforts to become
a more business-focused communications company. Our planning efforts
to restructure our company into a data and Internet focused,
high-growth business and a voice-based, high cash flow business are
substantially complete. We look forward to communicating the details
of this exciting new strategy on November 1, 2000."
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 changes in global economic, business,
competitive market and regulatory factors. More detailed information
about those factors is contained in WorldCom's filings with the
Securities and Exchange Commission.
ABOUT WORLDCOM
WorldCom (NASDAQ: WCOM) is a preeminent global communications
company for the digital generation, operating in more than 65
countries. Global revenues in 1999 were $36 billion, with $15 billion
from high-growth data, Internet and international services. WorldCom
provides the innovative technologies and services that are the
foundation for business in the 21st century. For more information go
to http://www.wcom.com
WorldCom will conduct a conference call to discuss its financial
results today, Thursday, October 26 at 9:00 AM (Central Time). The
call will be available to all investors on the Internet at
http://www.wcom.com/investor_relations/.
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