Filed by WorldCom, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: WorldCom, Inc.
Commission File No. 0-11258
November 1, 2000
The following statements are "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934, as amended,
including statements concerning future operating performance, share of new
and existing markets, and revenue and earnings growth rates. Such
forward-looking statements, which are not a guarantee of performance, are
subject to a number of uncertainties and other factors, that could cause
actual results to differ materially from such statements, including vigorous
competition; the ability to establish a significant market presence in new
geographic service markets, and the success and market acceptance of new
products and services. For a more detailed description of the factors that
could cause such a difference, please see WorldCom, Inc.'s filings with the
Securities and Exchange Commission. The Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
We urge investors and security holders to read WorldCom, Inc.'s Registration
Statement on Form S-4, including the prospectus and proxy statement, when
they become available, because they will contain important information. When
these and other documents relating to the transaction are filed with the U.S.
Securities and Exchange Commission, they may be obtained without charge from
the SEC's website at http://www.sec.gov. Holders of WorldCom, Inc. stock may
also obtain each of these documents (when they become available) for free by
directing your request to WorldCom, Inc., c/o Investor Relations Department,
500 Clinton Center Drive, Clinton, Mississippi 39056. This communication
shall not constitute an offer to sell or the solicitation of an offer to buy,
nor shall there be any sale of securities in any state in which the offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state. No offering of securities shall
be made except by means of a prospectus meeting the requirements of Section
10 of the Securities Act.
WorldCom, Inc. and certain other persons referred to below may be deemed to
be participants in the solicitation of proxies of shareholders to adopt the
proposals which will be set forth in the proxy statement contained in
WorldCom, Inc.'s Registration Statement on Form S-4. The participants in
this solicitation may include the directors and executive officers of
WorldCom, Inc., who may have an interest in the transaction including as a
result of holding shares of common stock and/or options to acquire the same.
A detailed list of the names and interests of WorldCom, Inc.'s directors and
executive officers is contained in the Company's proxy statement for its 2000
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annual meeting, which may be obtained without charge at the SEC's Internet
Website at http://www.sec.gov.
THE FOLLOWING IS A PRESS RELEASE ISSUED BY WORLDCOM, INC.ON
NOVEMBER 1, 2000
CLINTON, Miss. - November 1, 2000 -- WorldCom, Inc. (NASDAQ: WCOM) today
announced performance expectations for the fourth quarter of 2000 and
full-year 2001 based on results to date. The Company issued new financial
guidance due to continuing competitive pressures in the telecommunications
industry, increased spending to support the Company's growth initiatives and
other economic factors. Today WorldCom, Inc. also announced a plan to
separate its businesses into two publicly traded tracking stocks: WorldCom,
which will reflect the performance of the Company's core high-growth data,
Internet, hosting and international businesses, and MCI, which will reflect
the performance of its high cash flow consumer, small business, wholesale
long-distance voice and dial-up internet access operations.
REVENUE GUIDANCE
Consolidated WorldCom, Inc. fourth quarter year-over-year revenue growth is
expected to be in the 7 to 9 percent range. The Company currently expects
fourth quarter revenue growth of approximately 12 to 14 percent for the
WorldCom businesses and essentially flat for the MCI businesses.
Consolidated WorldCom, Inc. revenue growth is expected to be in the 7 to 9
percent range for full year 2001. Full year 2001 revenue growth is expected
to be between 12 and 15 percent for WorldCom and flat to negative 2 percent
for MCI. WorldCom is expecting a compound annualized revenue growth rate of
14 to 16 percent through the 2005 time frame. Intense pricing pressures,
unfavorable foreign exchange rates and the shift of consumer voice to
wireless technologies are negatively affecting revenue growth.
Current Revenue Growth Guidance: New Reporting Format
<TABLE>
<CAPTION>
4Q00 2001
---- ----
<S> <C> <C>
Data 23 to 26% 20 to 23%
International 25 to 30% 20 to 25%
Internet-dedicated and other 40 to 50% 40 to 50%
Voice (5) to (7%) (6) to (8%)
----------- -----------
WorldCom 12 to 14% 12 to 15%
MCI (1) to 0% (2) to 0%
----------- -----------
WorldCom, Inc. 7 to 9% 7 to 9%
</TABLE>
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EARNINGS GUIDANCE
WorldCom, Inc. currently expects fourth quarter consolidated cash earnings
(earnings before goodwill amortization) per share to be between $0.34 and
$0.37 per share, with WorldCom between $0.27 and $0.30 and MCI in the area of
$0.07 on a pro forma basis for the tracking stock transaction. The Company
expects full-year 2001 consolidated cash earnings per share (including impact
of Intermedia/Digex transaction) to be between $1.55 and $1.65 per share,
with WorldCom earnings of between $1.25 and $1.35 and MCI between $0.25 and
$0.30 on a pro forma basis for the tracking stock transaction.
WorldCom, Inc. cash earnings expectations for the fourth quarter of 2000 and
full-year 2001 are being affected by increased spending on generation d
growth initiatives, such as web hosting and Internet based virtual private
networks, lower revenue growth expectations, and increased employee spending.
<TABLE>
<CAPTION>
WorldCom, Inc. Cash EPS Guidance 4Q00 FY2001
---- ------
<S> <C> <C>
Midpoint of previous "Street" estimate $0.58 $2.60
Intermedia/Digex impact (0.20)
----- -----
0.58 $2.40
WorldCom
Investment for growth (0.10) (0.35)
FX effect (0.02) (0.05)
Global & Major accounts pricing (0.04) (0.10)
----- -----
(0.16) (0.50)
MCI
Consumer & Wholesale pricing (0.06) (0.22)
Dial-up Internet traffic mix (0.02) (0.08)
----- -----
(0.08) (0.30)
Midpoint of WorldCom, Inc. guidance $0.34 - 0.35 $1.60
</TABLE>
WorldCom, Inc is scheduled to hold a meeting today from 9:00 a.m. to 12:30
p.m. EST to announce its plan to create the two publicly traded tracking
stocks. The Company does not intend to provide any additional communication
regarding performance for the quarter until the meeting and does not
undertake any obligation to update forward-looking statements.
At the meeting, management will discuss strategic initiatives as well as
answer questions from the investment community. Interested investors and
media are encouraged to attend via a live web conference at
http://www.wcom.com/investor/. A rebroadcast will be available on the
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<PAGE>
WorldCom website following the completion of the meeting on Wednesday,
November 1, 2000.
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 jttp://www.wcom.com.
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<PAGE>
WorldCom, Inc.
Selected Financial Information - Before Charges
(Unaudited. In Millions, Except Per Share Data)
<TABLE>
<CAPTION>
1Q 99 2Q 99 3Q 99 4Q 99 1Q 00 2Q 00 3Q 00
----- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Voice $1,876 $1,891 $1,823 $1,843 $1,824 $ 1,773 $ 1,731
Data 1,335 1,413 1,514 1,568 1,727 1,834 1,913
International 1,022 1,075 1,107 1,192 1,346 1,423 1,570
302 349 418 485 538 600 639
Internet dedicated and other ------ ------ ------ ------ ------ ------ ------
Commercial services 4,535 4,728 4,862 5,088 5,435 5,630 5,853
Wholesale and consumer 2,790 2,827 2,942 2,974 2,891 2,820 2,837
Alternative channels and small
business 769 734 807 832 876 962 954
Internet - dial 320 364 385 428 417 405 403
Communications services 8,414 8,653 8,996 9,322 9,619 9,817 10,047
Other 403 120 -- -- -- -- --
Total $8,817 $8,773 $8,996 $9,322 $9,619 $ 9,817 $10,047
EBITDA $2,611 $2,868 $3,278 $3,500 $,3587 $ 3,692 $ 3,796
Operating income 1,510 1,782 2,199 2,412 2,440 2,506 2,559
Net income 712 865 1,079 1,221 1,284 1,330 1,356
Cash earnings 995 1,152 1,367 1,517 1,581 1,625 1,651
Cash earnings per share $ 0.34 $ 0.39 $ 0.47 $ 0.52 $ 0.54 $ 0.56 $ 0.57
Diluted shares outstanding 2,907 2,930 2,931 2,931 2,921 2,922 2,914
</TABLE>
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<PAGE>
WorldCom, Inc.
Selected Financial Information - Before Charges
(Unaudited. In Millions, Except Per Share Data)
<TABLE>
<CAPTION>
1Q 99 2Q 99 3Q 99 4Q 99 1Q 00 2Q 00 3Q 00
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Voice $1,876 $1,891 $1,823 $1,843 $1,824 $ 1,773 $1,731
Data 1,335 1,413 1,514 1,568 1,727 1,834 1,913
International 1,022 1,075 1,107 1,192 1,346 1,423 1,570
302 349 418 485 538 600 639
Internet dedicated and other ------ ------ ------ ------ ------ ------ ------
Commercial services 4,535 4,728 4,862 5,088 5,435 5,630 5,853
403 120 -- -- -- -- --
Other ------ ------ ------ ------ ------ ------ ------
$4,938 $4,848 $4,862 $5,088 $5,435 $5,630 $5,853
Total ====== ====== ====== ====== ====== ====== ======
Operating information as a percentage
of revenues:
EBITDA 28%-30% 34%-36% 41%-43% 44%-46% 43%-45% 42%-44% 43%-45%
Operating income 12%-14% 18%-20% 25%-27% 28%-30% 27%-29% 26%-28% 26%-28%
Net income 4%-6% 8%-10% 11%-13% 14%-16% 14%-16% 14%-16% 14%-16%
Cash earnings 10%-12% 14%-16% 17%-19% 20%-22% 19%-21% 19%-21% 19%-21%
Diluted shares outstanding 2,907 2,930 2,931 2,931 2,921 2,922 2,914
</TABLE>
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<PAGE>
MCI
Selected Financial Information - Before Charges
(Unaudited. In Millions, Except Per Share Data)
<TABLE>
<CAPTION>
1Q 99 2Q 99 3Q 99 4Q 99 1Q 00 2Q 00 3Q 00
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Wholesale and consumer $2,790 $2,827 $2,942 $2,974 $2,891 $2,820 $2,837
Alternative channels and small
business 769 734 807 832 8,76 962 954
320 364 385 428 417 405 403
Internet - dial ------ ------ ------ ------ ------ ------ ------
$3,879 $3,925 $4,134 $4,234 $4,184 $4,187 $4,194
Total ====== ====== ====== ====== ====== ====== ======
Operating information as a percentage
of revenues:
EBITDA 28%-30% 27%-36% 28%-30% 26%-28% 27%-29% 28%-30% 27%-29%
Operating income 21%-23% 20%-22% 21%-23% 19%-21% 20%-22% 21%-23% 21%-23%
Net income 9%-11% 9%-11% 9%-11% 9%-11% 10%-12% 10%-12% 10%-12%
Diluted shares outstanding 2,907 2,930 2,931 2,931 2,921 2,922 2,914
(1) Based on WorldCom, Inc. shares outstanding
</TABLE>
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