Lockridge Grindal Nauen P.L.L.P. Files Class Action Suit Against WorldCom, Inc., Bernard J. Ebbers, Scott D. Sullivan, and Arthur Anderson, LLP

Business Wire, July 3, 2002

Business Editors & Legal Writers

Lockridge Grindal Nauen P.L.L.P. commenced a class action on behalf of a class (the "Class") of all persons who purchased or otherwise acquired the common stock of WorldCom, Inc. ("WorldCom" or the "Company") (Nasdaq:WCOM) between April 26, 2001 and June 25, 2002 (the "Class Period"), in the United States District Court for the Southern District of Mississippi at Jackson. The action seeks remedies under the Securities Exchange Act of 1934 ("1934 Act") and names as defendants WorldCom, Bernard J. Ebbers, Scott D. Sullivan and WorldCom's auditor, Arthur Anderson, LLP.

The complaint alleges that during the Class Period, WorldCom, the nation's second-largest long-distance carrier, overstated its cash flow by $3.8 billion during the last five quarters. As detailed in the complaint, instead of the $1.4 billion in profits the Company reported in 2001 and $130 million so far this year, the Company now admits it lost money during those periods but does not know how much. As further detailed in the complaint, the Company, under the guidance of Messrs. Ebbers and Sullivan, booked basic operating costs, such as basic network maintenance, as capital investments, a fictitious practice that hid expenses, inflated cash flow and allowed the Company to falsely report profits instead of losses. This practice boosted cash flow because it improperly treated costs as an asset that could be written down over time, not immediately - - a blatant violation of Generally Accepted Accounting Principles and Generally Accepted Accounting Standards. Absent this improper accounting practice, the Company would have reported a net loss for 2001, as well as the first quarter of 2002. Instead, WorldCom reported false profits of $1.4 billion for 2001 and $130 million for the first quarter of 2002.

The complaint also alleges that Arthur Andersen also knew that this type of accounting practice was improper and, according to published reports, Andersen's audit reports "could not be relied upon for at least" the five quarters in question. As an experienced auditor charged with the responsibility of preparing disclosures to be filed with the SEC, Andersen knew the line cost transfers did not comport with GAAP and GAAS, but either intentionally or recklessly disregarded this pervasive fraud to the detriment of the Class. Anderson, however, issued a March 7, 2002, "Report Of Independent Public Accountants" that was included in the Company's false 2001 Form 10-K that was filed with the SEC on March 13, 2002. Anderson's opinion letter falsely stated that it had properly audited the Company's 2001 balance sheet and that in Anderson's opinion "(w)e believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WorldCom, Inc. and subsidiaries as of December 31, 2000 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States."

Plaintiffs are represented by the law firm of Lockridge Grindal Nauen P.L.L.P. The firm has considerable experience in prosecuting securities class actions, and has offices in Minneapolis, Minnesota and Washington, D.C.

Any member of the proposed Class who desires to be appointed lead plaintiff in this action must file a motion with the Court no later than August 26, 2002. If you have questions or information regarding this action, or if you are interested in serving as a lead plaintiff in this action, you may call or write:

Karen M. Hanson
Lockridge Grindal Nauen P.L.L.P.
100 Washington Avenue South
Suite 2200
Minneapolis, MN 55401
(612) 339-6900

kmhanson@locklaw.com