It's gone from bad to worse for WorldCom.
The bankrupt telecommunications company says it's found another three billion dollars in accounting fraud.
How will that affect the market?
Ed Crane reports.
(///// SOT /////)
[SUPER=01-Neil Chase/CBS Marketwatch;]
[OUT Q=Crane, CBS News, New York.]
IN JUNE WHEN WORLDCOM ANNOUNCED THEY HAD 3 POINT 8 BILLION DOLLARS IN
BOGUS ACCOUNTING JAWS DROPPED.... ALONG WITH THE MARKET.
NOW THE BANKRUPT TELECOMMUNICATIONS COMPANY SAYS THEY HAVE FOUND
'ANOTHER' 3 POINT 3 BILLION IN ACCOUNTING FRAUD.
BUT THIS TIME, EXPERTS SAY, THE NEWS PROBABLY WON'T HIT WALL STREET AS
(SOT -Neil Chase/CBS MARKETWATCH)
"I think people are going to be shocked, but the price of the stock has
already gone down. People already knew these guys were fudging the
books. It's just another year's worth, it's a lot of numbers, it's a
lot of money but I don't think it's going to cause a big move in the
WORLDCOM OFFICIALS SAY THE LATEST DISCOVERY WAS MADE WHEN THEY REVIEWED
BOOKS FOR 19-99 AND 2000.
A SPOKESMAN SAYS THE FIGURES HAVE ALREADY BEEN REPORTED TO THE
SECURITIES AND EXCHANGE COMMISSION AND WON'T EFFECT THE COMPANY'S
ABILITY TO KEEP OPERATING.
HOWEVER, THIS MIGHT NOT BE THE END OF WORLDCOM'S ACCOUNTING
(SOT- CHASE AGAIN)
"I think they'll find more"
IN JULY WORLDCOM FILED FOR CHAPTER 11... THE BIGGEST BANKRUPTCY FILING
IN U-S HISTORY.
AND JUST LAST WEEK FORMER CHIEF FINANCIAL OFFICER SCOTT SULLIVAN AND
FORMER CONTROLLER DAVID MYERS WERE ARRESTED.
BOTH ARE CHARGED WITH HIDING NEARLY 4 BILLION DOLLARS IN EXPENSES AND
LYING TO INVESTORS TO KEEP THE COMPANY AFLOAT.
BUT WHETHER WORLDCOM'S FORMER CHIEF EXECUTIVE, BERNARD EBBERS, HAD
KNOWLEDGE OF FRAUDULENT ACCOUNTING METHODS HASN'T BEEN DETERMINED.
(SOT - CHASE AGAIN)
"the one thing that hasn't happened yet is bernie ebbers being arrested."
BECAUSE OF THE MOST RECENT ACCOUNTING PROBLEMS, WORLDCOM SAYS IT WILL
RESTATE ITS FINANCIAL STATEMENTS FOR ALL OF 2000, 2001 AND THE FIRST
QUARTER OF 2002.
THE TOTAL IMPACT OF PROBLEMS AT THE COMPANY WON'T BE KNOWN UNTIL A
CURRENT AUDIT OF THOSE YEARS IS COMPLETED.
ED CRANE, CBS NEWS, NEW YORK.
[GRAPHIC=George W. Bush]
Today leaders of Iraqi opposition groups will meet with Bush administration officials to discuss the removal of Saddam Hussein.
A spokesman for the Iraqi National Congress says victory over Saddam would come rather easily because the dictator has almost no real support at home.
Yesterday, Saddam warned that anyone who attacks Iraq "will die in disgraceful failure."
The White House is dismissing that warning.
One official says,``We've all heard this speech before.''
The accused killer of three people at the Appalachian School of Law in January is being transferred from a jail cell to a hospital bed...
In court yesterday, a judge ruled Peter (oh-dig-uh-ZOO'-uh) Odighizuwa isn't competent to stand trial.
The 43-year-old is being ordered to a mental hospital for intensive treatment and medication.
A new hearing will be held at the end of October to decide if his competency has been restored.
(///// SOT /////)
[SOT 50:52:20 / 56:24:14]
[IN Q=WE FULLY/ WE'RE NOT]
((SHELIA TOLLIVER/COMMONWEALTH'S ATTORNEY; WE FULLY ANTICIPATE THAT WITHIN A SHORT PERIOD OF TIME HE WILL BE RESTORED TO COMPETENCY BOTH THEIR EVALUATOR AND OURS HAVE BOTH SAID THEY FEEL HE CAN BE RESTORED.))
((JIMMY TURK/DEFENSE ATTORNEY; WE'RE NOT DEALING WITH A NORMAL AVERAGE PERSON HERE WE'RE DEALING WITH SOMEONE WHO'S EXTREMELY MENTALLY ILL AND HAS BEEN FOR A VERY VERY VERY LONG TIME.))
[SUPER=01-Shelia Tolliver/Commonwealth's Attorney; :00]
[SUPER=01-Jimmy Turk/Defense Attorney; :11]
[OUT Q=LONG TIME.]
Turk says he's not sure his client will ever be able to stand trial.
(oh-dig-uh-ZOO'-uh) Odighizuwa rambled in court proceedings yesterday ... saying he's being harassed and sabotaged.
The defense says it's part of his severe mental illness.
Odighizuwa is facing capital murder charges and the death penalty.
A 26 year old is recovering after he was hit by a car while on his bike.
The accident happened just after eight o-clock last night on Route 460 East across from Rowe Furniture in Elliston.
State Police say the victim was hit by a 1995 dodge driven by Stanley Hodgdon.
(///// SOT /////)
[IN Q=What it looks like]
((MIKE KEEN/VIRGINIA STATE POLICE: WHAT IT LOOKS LIKE THE BICYCLE WAS PROBABLY SOMEWHERE CLOSE TO THE WHITE LINE AND OF COURSE THE RED CAR CAME ALONG AND THE DRIVER TOLD ME HE JUST DIDN'T SEE THE BICYCLE AND OF COURSE HE STRUCK THE BICYCLE FROM BEHIND.))
[SUPER=01-Mike Keen/Virginia State Police]
[OUT Q=from behind]
The victim 26 year old Jeffrey Johnson of Charlottesville was wearing a helmet and was conscious.
He was taken to Roanoke Memorial Hospital with non-life threatening injuries.
State Police plan to consult with the Commonwealth Attorney's Office before deciding whether to file any charges.
In business news, Some positive news for one struggling company.
U-S Airways pilots ratified a concessions package yesterday.
In return they'll get a stake in the financially struggling airline.
The pilots voted in favor of a plan that would give U-S Airways
465-million dollars in wage and benefits concessions in exchange for a 20 percent stake in the company.
That leaves only the unions representing mechanics and ticket
agents as holdouts in negotiations with the company.
The struggling airline is seeking the concessions as part of a restructuring plan to keep it out of bankruptcy.
In other business news, Another winning day on Wall Street.
The Dow has netted nearly 670 points in three sessions.
Alexis Christoforous has that story and more in this morning's Marketwatch.
[SUPER=01-Alexis Christoforous/Reporting; :00]
[OUT Q=your local stocks]
((WALL STREET WILL TRY TO MAKE IT FOUR UP DAYS IN A ROW...
STOCKS RALLIED YESTERDAY AS BANK STOCKS GOT A BOOST ON WORD THE
INTERNATIONAL MONETARY FUND WAS GIVING BRAZIL A 30-BILLION DOLLAR BAILOUT
PLAN SO THE COUNTRY WOULDN'T DEFAULT ON ITS LOANS.
THE DOW ROCKETED 255 POINTS, IN THE LAST THREE DAYS, ITS GAINED 650 POINTS
THE NASDAQ CLIMBED 35 LED BY MICROSOFT AND ORACLE.
MICROSOFT HAS SETTLED WITH REGULATORS OVER COMPLAINTS THAT ITS PASSPORT
INTERNET SIGN ON SYSTEM DID NOT PROTECT CUSTOMERS PRIVACY... INCLUDING EMAIL
ADDRESSES AND CREDIT CARD NUMBERS. Microsoft agreed to improve security and
submit to audits every two years.
MORTGAGE LOAN APPLICATIONS HIT A RECORD HIGH LAST WEEK.
The Mortgage Bankers Association of America said its applications index
increased 6.2 percent. interest rates slipped and homeowners lined up to
lock in record-low rates.
TRACK ALL THE PRE-MARKET ACTION AT CBS.MW.COM ...
AT THE NASDAQ I'M ALEXIS CHRISTOFOROUS IN NY.))
(tape tosses to stocks)
Three nurses were killed in a grenade attack this morning on a Christian hospital in Pakistan.
One of the attackers was also killed.
At least 15 other people were injured.
This is the second assault against Christian or Western interests
in Pakistan this week.
On Monday, gunmen burst through the gates of a school
near Islamabad, killing six people.
The victims of both attacks all were Pakistanis.
Come fall, smokers in the City of Salem may find it costing more to light up.
The City needs to make improvements to Andrew Lewis Middle School and is hoping a proposed cigarette tax will help foot the bill.
(///// SOT /////)
[IN Q=We did a study and went to different localities...]
[SUPER=01-Alex Brown/Salem Vice-Mayor;]
[SUPER=01-Glenn Bowe/Layman Candy Co.;]
[SUPER=01-Mindi Worrell/Salem Resident;]
[SUPER=01-Addie Crawley/Salem Shopper;]
[OUT Q=Shannon Young News 7.]
[IN Q=We did a study and went to different localities...]
((ALEX BROWN/SALEM VICE-MAYOR: WE DID A STUDY AND WENT TO DIFFERENT LOCALITIES AND PRICED CIGARETTES AND THERE SEEMED TO BE VERY LITTLE DIFFERENCE IN TAXED OR NON-TAXED COMMUNITIES SO WE DON'T THINK IT'S GONNA HAVE MUCH EFFECT.))
[OUT Q=gonna have much effect.]
Vice-Mayor Alex Brown is a supporter of the proposed 15-cent per pack cigarette tax, even though he describes himself as a "closet smoker".
He hopes cigarettes, along with an increase in the lodging tax and a proposed cell phone tax, will help the community pay for an estimated 14-million dollars worth of renovations to Andrew Lewis Middle School.
Opponents of the plan say the City may wind up doing just the opposite.
[IN Q=What we find is that peopel who have a tax...]
((GLENN BOWE/LAYMAN CANDY CO.: WHAT WE FIND IS THAT PEOPLE WHO HAVE A TAX, THAT BUSINESS GOES TO THE COUNTY AND I THINK THAT'S WHAT'S GONNA HURT THE MERCHANTS IN SALEM IF THEY PUT TOO MUCH TAX ON 'EM.))
[OUT Q=they put too much tax on 'em.]
Glenn Bowe of the Layman Candy Company distributes cigarettes to nine southwestern Virginia communities with a similar tax.
He says Salem sells about 10-thousand packs a week which COULD translate into 70 to 80-thousand dollars a year in tax revenue.
But that's IF smokers continue to buy in Salem.
[IN Q=I don think it would cause...]
((MINDI WORRELL/SALEM RESIDENT/NON-SMOKER: I DO THINK IT WOULD CAUSE PEOPLE TO GO ELSEWHERE TO BUY CIGARETTES AND I HATE THAT.))
[OUT Q=and I hate that.]
[BUTT BUTT BUTT]
[IN Q=Yes, that is true.]
((ADDIE CRAWLEY/SALEM SHOPPER/SMOKER: YES, THAT IS TRUE. I WOULDN'T. I'LL GO SOMEWHERE ELSE TO BUY CIGARETTES.))
[OUT Q=somewhere else to buy cigarettes.]
Or, some say you could always go cold turkey to avoid paying the extra pennies.
[IN Q=Stop. Because they're not good for you...]
((BETTY CREECH/SMOKER: STOP. BECAUSE THEY'RE NOT GOOD FOR YOU. YOU'RE PAYING TO KILL YOURSELF IN THE LONG RUN.))
[OUT Q=to kill yourself in the long run.]
Which is exactly what opponents fear Salem may do if it goes ahead with the cigarette tax.))
Salem City Council will vote on the proposed tax ordinance Monday.
If it passes, Vice-Mayor Brown expects the tax to go into effect in October.
(Kim toss to bump)
In business news this morning, A new discovery at WorldCom.
And, U-S Airways pilots have ratified a six year deal.
Here's Barton Eckert with a look at the morning's top business stories..
[SUPER=01-Barton Eckert/Reporting; :00]
[OUT Q=in Washington.]
(( GOOD MORNING THIS FRIDAY THE 9TH OF AUGUST.
HERE'S WHAT'S HAPPENING THIS MORNING.
FROM BAD TO WORSE.... WORLDCOM HAS FOUND BILLIONS MORE IN
THE BANKRUPT TELECOM BEHEMOTH HAS UNCOVERED ANOTHER 3 1-3 BILLION
DOLLARS... MISSTATED FOR THE 1999 - 2000 FISCAL YEARS, MOSTLY IN
THAT'S ON TOP OF THE ALMOST FOUR BILLION DOLLARS FRAUD WORLDCOM
REVEALED IN JUNE.
AS A RESULT, WORLDCOM NOW SAYS IT WILL RESTATE ITS 2000 FINANCIAL
STATEMENTS.. STARTING NEXT WEDNESDAY ALL COMPANIES, HAVE TO CERTIFY
THEIR FINANCIALS, OR RE-STATE THEM, OR C-E-O'S WHO WILL BE REQUIRED TO
SAY THEY ARE THE GOSPEL TRUTH.. COULD GO TO JAIL..
MICROSOFT AND THE F-T-C HAVE REACHED A SETTLEMENT INVOLVING THE
SECURITY OF ITS MSN.COM PASSPORT LOGIN SYSTEM.... SYSTEM.
THE F-T-C SAYS PASSPORT DECEIVED ITS 200 MILLION USERS BY FAILING
TO LIVE UP TO PROMISES OF KEEPING EMAIL ADDRESSES AND CREDIT CARD
MICROSOFT HAS AGREED TO IMPROVE SECURITY TO HELP BLOCK ONLINE
INTRUDERS AND WILL SUBMIT TO AUDITS EVERY OTHER YEAR FOR 20 YEARS.
ON WALL STREET TODAY MARKET REACTION TO SECOND QUARTER
PRELIMINARY "PRODUCTIVITY" NUMBERS AND THE PRELIMINARY "AUGUST" CHECK
OF CONSUMER SENTIMENT FROM THE UNIVERSITY OF MICHIGAN.
U-S AIRWAYS PILOTS HAVE RATIFIED A NEW 6 YEAR DEAL THAT SHOULD
HELP KEEP THE CARRIER FLYING. PILOTS WILL GIVE 465 MILLION
DOLLARS IN CONCESSIONS - AND THE AIRLINE GIVES THEM A 20 PERCENT
STAKE IN THE COMPANY.
AND THAT'S YOUR FIRST BUSINESS CHECK ON THE MORNING'S TOP
I'M BARTON ECKERT IN WASHINGTON.))
(tape tosses to stocks)
Just after four this morning, an apartment house caught fire in Southeast Roanoke--
The blaze started in an un- occupied unit on the first floor of this Jamison Avenue apartment house.
Authorities say the building was occupied at time of the blaze, but no one was injured.
Prior to the fire, officials had declared the structure unsafe to live in.
Jamison Avenue will be closed this morning between seventh and ninth streets for an un- determined amount of time.
Authorities aren't sure when it'll re- open.
Cigarettes may soon cost a bit more in Salem- that is if city council okays a new tax.
The tax would add 15 cents to each pack of cigarettes- on top of the of the state's two and a half percent tax.
The money would be used to help pay for improvements planned for Andrew Lewis Middle School.
Vice-Mayor Alex Brown describes himself as a "closet smoker."
He says the price increase may be a shock at first but that smokers will eventually get used to it.
Others disagree- though and don't want the tax.
(///// SOT at :25 /////)
[IN Q=I'm happy to pay the fifteen cents...]
((ALEX BROWN/SALEM VICE-MAYOR: I'M HAPPY TO PAY THE FIFTEEN CENTS. I NEVER COMPLAIN ABOUT TAXES ESPECIALLY WHEN THEY GO TO BENEFIT SALEM.))
((MINDI WORRELL/SALEM RESIDENT/NON-SMOKER: ALOT OF PEOPLE THAT SMOKE, YOU KNOW, THEY DON'T HAVE CHILDREN SO FOR THEM TO HAVE TO PAY FOR OUR KIDS TO GO TO SCHOOL, THAT COULD BE A PROBLEM.))
[SUPER=01-Alex Brown/Salem Vice-Mayor; :00 QUICK!]
[SUPER=01-Mindi Worrell/Salem Resident; :05]
[OUT Q=that could be a problem.]
[VO NAT :17]
A Salem cigarette distributor says, historically, local communities that impose taxes on cigarettes often lose business to *counties* whose charters prevent them from following suit.
If the ordinance passes, Vice-Mayor Brown says he expects the tax to go into effect in October.
If you have a lead foot, you may see a new sight in your rear-view mirror...
[VO-NAT - :18.5]
The Virginia State Police bought seven Chevrolet Camaros, and one will be used in our area.
It's all an effort to test high-performance cars in law enforcement.
Trooper Eric Ellison will be the only one driving the Camaro in our region, and before he hit the road he had to go through three days of intensive training.
[SOT - 10:18]
[INQ=We had braking...]
((ERIC ELLISON/VIRGINIA STATE POLICE; WE HAD BRAKING COURSES, TO SHOW HOW THE CAR WILL REACT UNDER HEAVY, SEVERE BRAKING, LANE CHANGES UNDER HIGH SPEEDS, ACCIDENT AVOIDANCE UNDER HIGH SPEEDS, MOST EVERYTHING THAT WE DID WAS TRYING TO PUSH THE CAR TO ITS LIMITS, SEE HOW IT WOULD REACT UNDER CERTAIN CIRCUMSTANCES.))
[SUPER=01-Eric Ellison/Virginia State Police;]
[OUTQ=would react under certain circumstances.]
[VO-NAT - :09+]
The car can go from zero to 100-miles an-hour in about 13 seconds.
If the program is successful, you may see more high-performance cruisers in the future.