Release Date: Monday, July 22, 2002

TERRY COLLEGE OF BUSINESS PROFESSOR DENNIS BERESFORD ELECTED TO WORLDCOM BOARD OF DIRECTORS AS PART OF CHAPTER 11 REORGANIZING

ATHENS, Ga. — University of Georgia accounting professor Dennis Beresford has been elected to the board of directors of telecommunications corporation WorldCom, which announced the move July 21 in the wake of its Chapter 11 bankruptcy filing.

Beresford, a member of the faculty at UGA's Terry College of Business and a two-term chairman of the Financial Accounting Standards Board, was elected by WorldCom's current board of directors, along with former U.S. attorney general and undersecretary of state, Nicholas Katzenbach.

Beresford served two five-year terms (1987 to 1997) as chairman of the FASB, the body responsible for setting the accounting standards U.S. corporations follow when issuing financial statements to the public. Prior to the FASB, Beresford spent 26 years with Ernst and Young, where he served as national director for accounting standards.

He joined the Terry College of Business as an executive professor in July 1997. He is a member of the Financial Executives Institute and a national board member for the Institute of Management Accountants.

In February 2002, Beresford provided expert testimony before the Senate Banking Committee on how accounting practices and federal regulations might be changed to prevent a recurrence of the questionable accounting practices that contributed to the collapse of Enron and Arthur Andersen.

Beresford said he doesn't know any more about WorldCom's situation than what he's seen and read in the media, but he thinks that's one of the reasons the board elected him and Katzenbach. "There's not much I can say... we're brand new with a clean slate," he said. "They wanted people of integrity to take a look at things and get started on the right foot going forward."

Another obvious reason for their election is to send the message that financial reporting at WorldCom from now on will be "by the book," he said. "Financial reporting issues is what got WorldCom where it is today," said Beresford. "That's why I was brought in."

WorldCom, the nation's second-largest long-distance carrier, filed for Chapter 11 protection July 21 in U.S. Bankruptcy Court in Manhattan, listing over 1,000 creditors. It is the largest corporate bankruptcy filing in U.S. history, twice as large as the previous record-setting bankruptcy filed by Enron in December.

The Mississippi-based company is currently under investigation by the Securities and Exchange Commission, which filed fraud charges against the company in June. On June 25, WorldCom joined the list of big-name corporations caught in accounting scandals when it revealed it had failed to properly report $3.8 billion in expenses.

Beresford and Katzenbach will take the seats on WorldCom's board vacated by WorldCom founder and CEO Bernard Ebbers and chief financial officer Scott Sullivan. Ebbers resigned in April. Sullivan was fired the same day the $3.8 billion in expenses were reported.

Ebbers' resignation came in the wake of the SEC's review of $408 million in loans to the CEO from WorldCom. The company is now carrying an estimated $30 billion in debt.

WorldCom CEO John Sidgmore told media the company will continue operation with the help of $2 billion in financing it expects to receive. The company may also sell some of its Latin American subsidiaries, but will retain core assets such as Internet service provider UUNet and long-distance provider MCI.

In a weekend newspaper interview, Beresford said one of the first steps in WorldCom's reorganization will be a detailed examination of how the company wound up in its current precarious position.

"We will be looking very hard at what has happened," Beresford said.

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