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Technology Stocks : WCOM
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To: NewsTrader who wrote (3353)9/30/1998 12:45:00 PM
From: NewsTrader  Read Replies (1) of 11568
 
(NewsTraders) -- MCI WorldCom (WCOM) expects to take a $3.1 billion charge related to research and development costs inherited from MCI Communications, according to an 8K filing at the SEC late Tuesday.

The company's preliminary estimate of the one-time charge for purchased in-process R&D projects of MCI was $6 to $7 billion.

MCI WorldCom also said $26 billion will be recorded as the excess of purchase price over the fair value of MCI's identifiable net assets, also known as "goodwill." The company said it will amortize goodwill on a straight-line basis over 40 years and will finalize the allocation of the MCI purchase price prior to announcing third quarter 1998 results.

Other Notable Nuggets In the Filing:

The company established pre-merger retention bonus pools to retain executives and employees. For the three and six months ended June 30, 1998, MCI WorldCom recorded compensation costs of $32 million and $67 million, respectively, under these retention bonus programs. The company expects to recognize additional compensation costs of $60 million in the last half of 1998 and $50 million in 1999 under these programs.

MCI WorldCom also said it expects to incur approximately $350 million in expenses in the last half of 1998 and 1999 to support its Year 2000 compliance initiatives.

The company expects net capital expenditures of $3.1 billion for 1998 and expects to fund a majority of the expenditures with cash from operations.
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