WorldCom Details Cost-Cutting Plan

Cost structure to be reduced by $2.5B via network integration, contract renegotiation, facility consolidation, and 5,000 layoffs

February 3, 2003

2 Min Read

CLINTON, Miss. -- WorldCom, Inc. (WCOEQ, MCWEQ) today announced it has achieved a key milestone in its 100-Day Plan announced three weeks ago. As promised, the company laid out its cost reduction plan that will reduce line costs by an additional 12.5 percent and sales, general and administrative (SG&A) expense by 13 percent. Once completed, these actions will bring annualized cost savings to $2.5 billion. The plan ensures customers will continue to experience the same level of "best in class" service they have come to expect. "This plan is an important milestone in our efforts to restructure WorldCom, file our plan of reorganization in April and emerge from Chapter 11 protection later this year," said Michael Capellas, WorldCom chairman and CEO. "The steps we are taking will not only produce significant savings for the company but will benefit our customers by optimizing network performance and eliminating redundancies. We continue to have the best service levels in the industry." Highlights of WorldCom's 2003 cost reduction plan include:

  • Line cost savings of $1.5 billion, primarily generated through network integration and efficiencies, improved technologies, and the renegotiation of more than 2,600 supplier contracts.

  • Facility consolidation, reducing total square footage by 8.7 million square feet -- a 26 percent reduction. The company will maintain a major presence in Alpharetta, Ga.; Ashburn, Va.; Cary, NC; Clinton, Miss.; Denver and Colorado Springs, Co.; Hong Kong; Reading, UK; Richardson, Tex.; and Tulsa, Okla., and continue to have a significant presence throughout the world.

  • Workforce reduction of 5,000 positions, primarily from corporate and administrative functions. The reduction does not affect the company's quota-bearing sales force or essential Operations & Technology functions.

"While we are moving aggressively and responsibly to reduce our line costs and consolidate facilities, it is also necessary for us to reduce our workforce to meet the difficult demands of our industry and the global economy as a whole," said Capellas. "A workforce reduction is always a difficult decision, but we are confident that our overall cost reduction plan will help us emerge from Chapter 11 and make us more competitive in the marketplace in the long run." WorldCom Inc.

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