1.Calculate free cash flow for each year from 1997 to 2001. After determining free cash flows, determine the percentage change in free cash flows from year to year (horizontal analysis). For example, if 1997 free cash flows are $100 and 1998 free cash flows are $150, then $150/$100 = 150%, then subtract 100% to see the percent change (150-100=50% change from 1997 to 1998). Then compare 1999 and 1998 results in the same way and continue through all the years calculated.

2.Calculate cash flow from operations to net income ratio for 1997 - 2001.

3.Calculate cash flow from operations to capital expenditures (capex) ratio for 1997 - 2001.

4.Calculate a cash flow from operations horizontal analysis for 1997 - 2001, determining the percentage change from each previous year.

5.Calculate a capital expenditures (from the Statement of Cash Flows) horizontal analysis for 1997 - 2001, determining the percentage change from each previous year.

6.Calculate the gross profit margin percentage for 1997 - 2001 using revenue minus line costs as the gross profit amount.

7.Calculate the operating profit margin percentage for 1997 - 2001.

8.Calculate the net profit margin percentage for 1997 - 2001.

MCI WORLDCOM. INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Millions, Except Per Share Data)

AS AMENDED 4-26-2001

For the Years Ended December 31,

-----------------------------------------------------------------------

199919981997

---------------------------------------------

Revenues$35,908$17,617$7,643

------------------------------------------

Operating expenses:

Line costs14,7397,9823,741

Selling, general and administrative8,9354,5631,854

Depreciation and amortization4,3542,2891,066

In-process research and development and

other charges(8)3,725-

------------------------------------------

Total28,02018,5596,661

------------------------------------------

Operating income (loss)7,888(942)982

Other income (expense):

Interest expense(966)(692)(450)

Miscellaneous2424446

------------------------------------------

Income (loss) before income taxes, minority

interests, cumulative effect of

accounting change and extraordinary items7,164(1,590)578

Provision for income taxes2,965877393

------------------------------------------

Income (loss) before minority interests,

cumulative effect of accounting

change and extraordinary items4,199(2,467)185

Minority interests(186)(93)-

------------------------------------------

Income (loss) before cumulative effect of

accounting change and extraordinary items4,013 (2,560)185

Cumulative effect of accounting change (net

of income taxes of $22 in 1998)-(36)-

Extraordinary items (net of income taxes of

$78 in 1998)-(129)(3)

------------------------------------------

Net income (loss)4,013(2,725)182

Distributions on subsidiary trust

mandatorily redeemable preferred securities6318-

Preferred dividend requirement92439

------------------------------------------

Net income (loss) applicable to common

shareholders$ 3,941$(2,767)$143

==========================================

Earnings (loss) per common share:

Net income (loss) applicable to common

shareholders before cumulative effect of

accounting change and extraordinary items:

Basic$1.40$ (1.35)$ 0.10

==========================================

Diluted$1.35$ (1.35)$ 0.10

==========================================

Cumulative effect of accounting change$-$ (0.02)$-

==========================================

Extraordinary items$-$ (0.07)$-

==========================================

Net income (loss) applicable to common

shareholders:

Basic$1.40$ (1.43)$ 0.10

==========================================

Diluted$1.35$ (1.43)$ 0.09

==========================================

The accompanying notes are an integral part of these statements.

MCI WORLDCOM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

For the Years Ended December 31,

------------------------------------

199919981997

-------------------------------

Cash flows from operating activities:

Net income (loss)$ 4,013$(2,725)$182

Adjustments to reconcile net income (loss) to net cash

provided by operating activities:

Cumulative effect of accounting change-36-

Extraordinary items-1293

Minority interests18693-

In-process research and development and other charges(8)3,725-

Depreciation and amortization4,3542,2891,066

Provision for losses on accounts receivable951395132

Provision for deferred income taxes2,903785340

Accreted interest on debt-25122

Change in assets and liabilities, net of effect of

business combinations:

Accounts receivable(1,826)(703)(457)

Other current assets143(250)(167)

Accrued line costs(252)(330)97

Accounts payable and other current liabilities944753(20)

Other(403)(40)(3)

---------------------

Net cash provided by operating activities11,0054,1821,295

---------------------

Cash flows from investing activities:

Capital expenditures(8,716)(5,486)(3,153)

Sale of short-term investments, net454890

Acquisitions and related costs(1,078)(3,400)(1,160)

Increase in intangible assets(743)(351)(141)

Proceeds from the sale of SHL1,640--

Proceeds from disposition of marketable securities and other long-term assets1,940148133

Increase in other assets(1,952)(319)(260)

Decrease in other liabilities(650)(144)(42)

---------------------

Net cash used in investing activities(9,555)(9,498)(3,733)

---------------------

Cash flows from financing activities:

Principal borrowings (repayments) on debt, net(2,894)6,3901,981

Common stock issuance886472166

Distributions on subsidiary trust mandatorily redeemable preferred

securities(63)(18)-

Dividends paid on preferred stock(9)(24)(39)

Other-48(5)

---------------------

Net cash provided by (used in) financing activities(2,080)6,8682,103

Effect of exchange rate changes on cash(221)--

---------------------

Net increase (decrease) in cash and cash equivalents(851)1,552(335)

Cash and cash equivalents at beginning of period1,727175510

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Cash and cash equivalents at end of period$876$ 1,727$175

=====================

The accompanying notes are an integral part of these statements.