<PAGE> SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For The Fiscal Year Ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE
REQUIRED]
For the transition period from to
Commission file number 0-6547
A. Full title of the plan and the address of the plan,
if different from that of the issuer named below:
MCI Consumer Markets 401(k) - Part I of the MCI
Consumer Markets 401(k) & ESOP
B. Name of issuer of the securities held pursuant to the
plan and the address of its principal executive
office: MCI Communications Corporation, 1801
Pennsylvania Avenue, NW, Washington, DC 20006
Page 1
<PAGE> MCI CONSUMER MARKETS 401(K)
EIN: 13-2745892
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page(s)
-------
Report of Independent Accountants 3
Statements of Net Assets Available for Benefits
at December 31, 1993 4
Statement of Changes in Net Assets Available for
Benefits for the year ended December 31, 1993 5
Notes to Financial Statements on Form 11-K 6-12
Additional Information:
Schedule I. Schedule of Assets Held for
Investment Purposes at
December 31, 1993 13
Schedule II. Schedule of Reportable
Transactions for the year 14
ended December 31, 1993
Signature 15
Exhibits:
23. Consent of Independent Accountants 16
99. Certification Regarding Certain
Investment Arrangements 17
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrative
Committee of the MCI Consumer Markets 401(k)
In our opinion, the accompanying statement of net assets
available for benefits and related statement of changes in net
assets available for benefits present fairly, in all material
respects, the financial status of the MCI Consumer Markets 401(k)
- - Part I of the MCI Consumer Markets 401(k) & ESOP at December
31, 1993 and the changes in its financial status for the year
ended December 31, 1993, in conformity with generally accepted
accounting principles. These financial statements are the
responsibility of the plan's management; our responsibility is to
express an opinion on these financial statements based on our
audit. We conducted our audit of these statements in accordance
with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The additional
information included in Schedules I and II is presented for
purposes of additional analysis and is not a required part of the
basic financial statements, but is additional information required
by ERISA. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements
and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
PRICE WATERHOUSE
Washington, D.C.
June 10, 1994
Page 3
<PAGE> MCI CONSUMER MARKETS 401(K)
EIN: 13-2745892
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1993
Contribution Receivables:
Employer $ 973,636
Employee 755,806
-----------
Total receivables 1,729,442
-----------
General Investments:
Loans to participants 497,683
Value of interest in collective
investment funds of trustee 190,083
Value of interest in registered
investment company 6,222,934
Value of guaranteed investment
contracts 9,659,522
-----------
Total general investments 16,570,222
-----------
Employer related investments:
Employer securities 9,755,488
-----------
Net assets available for benefits $28,055,152
===========
See accompanying notes to the financial statements.
Page 4
<PAGE> MCI CONSUMER MARKETS 401(K)
EIN: 13-2745892
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED December 31, 1993
INCOME
- ------
Contributions:
Non-cash employer $ 3,097,810
Participants 7,153,482
Rollovers 69,077
------------
Total contributions 10,320,369
------------
Earnings on investments:
Interest on participant loans 9,466
Interest on guaranteed investment contracts 426,037
Dividends on common stock 16,193
Net gain on disposition of assets 74,727
Unrealized appreciation of assets 2,182,318
Net investment gain from collective
investment funds of trustee 334,875
Net investment gain from registered
investment company 415,465
------------
Total earnings on investments 3,459,081
------------
Total income 13,779,450
EXPENSES
- --------
Participant benefits (818,173)
------------
Net income 12,961,277
Transfer of assets to the Plan 15,093,875
Net assets available for benefits at beginning
of year 0
------------
Net assets available for benefits at end of
year $28,055,152
============
See accompanying notes to the financial statements.
Page 5
<PAGE> MCI CONSUMER MARKETS 401(K)
EIN: 13-2745892
NOTES TO FINANCIAL STATEMENTS ON FORM 11-K
December 31, 1993
NOTE 1 - DESCRIPTION OF THE PLAN
The following brief description of the MCI Consumer Markets
401(k) (the "Plan" or "401K") is provided for general
information purposes only. Participants should refer to the Plan
document for more complete information.
Effective January 1, 1993, the MCI Consumer Markets 401(k) & ESOP
Plan was created. MCI Consumer Markets is a business unit of MCI
Telecommunications Corporation which is a wholly owned subsidiary
of MCI Communications Corporation. The MCI Consumer Markets
401(k) & ESOP is comprised of two parts: Part I is the 401(k)
Plan and Part II is a payroll-based employee stock ownership
plan. The accompanying financial statements are solely those of
Part I, the MCI Consumer Markets 401(k) and are not intended to
present the financial position or results of operations of the
MCI Consumer Markets 401(k) & ESOP taken as a whole. MCI
Communications Corporation, hereafter known as the Company,
separately prepares an annual report on the overall MCI Consumer
Markets 401(k) and ESOP which is submitted to the Internal
Revenue Service ("IRS") on Form 5500 and is made available to all
employees who request it.
The Plan is a deferred savings plan, under which eligible
employees may contribute up to 12% of eligible compensation
("Elective Contribution") under the Plan. The first 6% of the
Elective Contribution is eligible for a Company matching
contribution in the form of MCI Communications Corporation common
stock. The Company's matching contribution is $.50 for each
eligible dollar contributed by participants. The Company's
matching contribution is made monthly and is determined by the
closing price of MCI Communications Corporation common stock on
the last trading day of the month. Participants' Elective
Contributions are withheld from their biweekly paychecks and the
Company transfers these contributions to the Plan after each pay
period. Participants vest in the Company's matching
contributions at a rate of 20% per year of service and are always
100% vested in their Elective Contributions. Participants
receive a year of service for each Plan year during which they
complete at least 1,000 hours of service. Elective Contributions
may be invested in any of four investment funds. The available
investment funds are:
- Fund A - Aggressive Equity Fund
An aggressive equity mutual fund invested
primarily in corporate stocks. The fund is
professionally managed by Putnam Voyager.
Page 6
<PAGE>
- Fund B - MCI Common Stock Fund
A fund investing in MCI Communications Corporation
common stock. These shares of stock are qualified
employer securities as defined by the Employee
Retirement Income Security Act of 1974.
- Fund C - Laurel S & P Fund
An equity index mutual fund invested in common
stock which is comparable to the Standard & Poor's
500 Composite Stock Index. All investment
decisions are made by Mellon Capital Management
Corporation, a subsidiary of the Plan trustee. The
trustee oversees the fund in accordance with the
trust agreement.
- Fund D - Long-Term Fixed Income Fund
A long-term fixed income fund which guarantees
both principal and interest through investments in
guaranteed interest and annuity contracts. The
guaranteed interest rate at December 31, 1993 was
7.55%.
Each individual's investment in Fund B is recorded in their
participant account on a per share basis of the MCI Communications
Corporation common stock according to their pro rata portion of the
share activity in the fund. All other funds are tracked on a
dollar value basis with each fund's activity allocated to
participants on a pro rata basis. Therefore, the Plan does not
record activity on a unit value basis.
Participants may transfer all or part of their Elective
Contribution balance and related earnings in any fund to any other
fund on a quarterly basis. Participants may change the allocation
of their future contributions among funds at the beginning of the
calendar quarter.
The Plan allows participants to borrow up to one-half of their
vested account balances (or $50,000, whichever is less). The
minimum loan amount is $1,000 and the minimum term of a loan is one
year. The maximum term of a loan is five years for a general
purpose loan and fifteen years for a primary residence loan. Only
one loan of each type, general purpose and primary residence, may
be outstanding at any time. Loan proceeds are disbursed pro rata
from each of the borrowers' investment funds, and are repaid
through biweekly payroll deductions. Loan repayments of principal
and interest are invested based on the borrowers' current
investment election. Interest rates for new loans are determined
quarterly by the Plan Administrative Committee, based on the prime
Page 7
<PAGE>
rate as published on the first day of each quarter in The Wall
Street Journal, plus one percentage point. The interest rate is
fixed for the term of the loan. Loans can be repaid in full,
with one month's notice, by a cashier's or certified check.
During the Plan year ended December 31, 1993, $333,910 in loans
were disbursed and principal repayments of $92,578 were made.
Certain participants have the right to diversify a portion of
their account in the Employee Stock Ownership Plan (ESOP), Part
II of the MCI Consumer Markets 401(k) & ESOP and transfer a
portion of their account to the 401(K). Participants in the
ESOP, who have attained at least 55 years of age and have been a
member of the ESOP for at least ten years, are eligible to
diversify under these provisions. There were no ESOP
diversifications to the 401(K) during 1993.
Distribution of the benefits in a participant's Plan account is
normally made only after the participant ceases to be an employee
of the Company. However, the account balance of a participant's
Elective Contributions may be withdrawn prior to termination of
employment if the participant can demonstrate an economic
hardship. Upon termination of employment, a participant receives
all vested assets in his individual account. Non-vested portions
of a terminated participant's account are forfeited and used to
offset future Company matching contributions. As of December 31,
1993 forfeitures included in the Plan were $64,015 which included
1,589 forfeited shares of MCI Communications Corporation common
stock, at year-end fair market values of $44,889 respectively.
The Plan is not a defined benefit plan and accordingly, Plan
benefits are not guaranteed by the Pension Benefit Guaranty
Corporation. Plan assets are held by the trustee and recordkeeper,
Mellon Bank, N.A. of Pittsburgh, Pennsylvania. The Company reserves
its right under the Plan to discontinue its contributions and to
terminate the Plan at any time. Upon such termination, all amounts
funded shall become nonforfeitable and shall be provided for and
paid from the Plan's trust in accordance with the order of priority
set forth in Section 4044 of the Employee Retirement Income
Security Act of 1974. The Company has not expressed any intention
to discontinue its contributions nor to terminate the Plan.
The Plan's holdings of MCI Common Stock, and the Mellon Bank
Temporary Investment Fund are party-in-interest investments.
Page 8
<PAGE>
NOTE 2 - DESCRIPTION OF ACCOUNTING PRINCIPLES AND PRACTICES
The financial statements for the Plan are prepared on the accrual
basis of accounting.
The expense recorded upon the distribution of the Company's
common stock to participants is the fair market value as of the
distribution date. The difference between the fair market value
on the date of distribution and the carrying value to the Plan of
the distributed shares is recorded as a net gain or loss on
disposition of assets. Purchases and sales of securities are
recorded on the trade date.
The Plan's interest in a registered investment company and employer
securities are stated at fair value, measured by the quoted current
market price. Units in collective trusts are valued at the net
asset value as reported by such trusts at the end of each period.
Funds invested in guaranteed interest and annuity contracts are
stated at contract value, measured as cost plus earned interest
income.
Administrative expenses of the Plan are paid by the Company.
Page 9
<PAGE>
NOTE 3 - CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND
The allocation of income and changes in assets among the investment funds for
the year ended December 31, 1993 are as follows:
<TABLE>
<CAPTION>
Aggressive Long-Term
Equity MCI Common Laurel S & P Fixed Income Total
Fund Stock Fund Fund Fund Funds
-------------- -------------- ------------- --------------- -------------
INCOME
- ------
<S> <C> <C> <C> <C> <C>
Contributions:
Non-cash employer $3,097,810 $ 3,097,810
Participants $ 1,600,714 2,036,583 $ 1,135,661 $ 2,380,524 7,153,482
Rollovers 5,306 1,151 62,620 69,077
----------- ----------- ----------- ----------- ----------
Total contributions 1,600,714 5,139,699 1,136,812 2,443,144 10,320,369
----------- ----------- ----------- ----------- ----------
Earnings on investments:
Interest on participant
loans 2,355 3,025 1,784 2,302 9,466
Interest on guaranteed
investment contracts 426,037 426,037
Dividends on common stock 16,193 16,193
Net gain on disposition
of assets 74,727 74,727
Unrealized appreciation
of assets 2,182,318 2,182,318
Net investment gain from
collective investment
funds of trustee 774 320 327,904 5,877 334,875
Net investment gain from
registered investment
company 415,465 415,465
----------- ----------- ----------- ----------- ----------
Total earnings
on investments 418,594 2,276,583 329,688 434,216 3,459,081
----------- ----------- ----------- ----------- ----------
Total income 2,019,308 7,416,282 1,466,500 2,877,360 13,779,450
EXPENSES
- --------
Participant Benefits (78,185) (297,838) (89,307) (352,843) (818,173)
----------- ---------- ---------- ----------- ----------
Net income 1,941,123 7,118,444 1,377,193 2,524,517 12,961,277
Interfund transfers 7,000 139,000 (22,000) (124,000)
Transfer of assets
to the Plan 1,567,978 4,329,669 1,619,172 7,577,056 15,093,875
Net assets available for
benefits at beginning
of year
----------- ----------- ----------- ----------- ------------
Net assets available
for benefits at
end of year $ 3,516,101 $11,587,113 $ 2,974,365 $ 9,977,573 $28,055,152
=========== =========== =========== =========== ============
</TABLE>
Page 10
<PAGE>
NOTE 4 - PARTICIPANT ACCOUNTS
As of December 31, 1993 the Plan held 345,327 shares of MCI
Communications Corporation common stock at a fair market values of
$9,755,488. Of these shares, 92,930 were contributed by the Company
during the Plan year ended December 31, 1993 as the Company's matching
contributions. As of December 31, 1993 the Plan's benefit claims payable
was $1,328,594 which includes 21,542 shares of MCI Communications
Corporation common stock at a fair market value of $608,562.
Benefit claims payable represent the account balances of participants who
have terminated from the Company and have not received a distribution as
of year end.
NOTE 5 - TRANSFER OF ASSETS TO THE PLAN
Effective January 1, 1993 former Long Lines 401(K) Retirement Savings
Plan ("the Long Lines Plan") participants who had met eligibility
requirements, became participants of the plan pursuant to MCI Telecommunications
Corporation's acquisition of MCI Services Marketing Inc. effective 1/1/93.
Effective April 1, 1993, participants' assets from the Long Lines Plan
associated with those employees who became members of the plan were valued at
$5,745,140, including 10,572 shares of MCI Communications Corporation Common
Stock at a fair market value of $359,888, were transferred into the Plan.
Former Long Lines Plan Participants received past service credit for
vesting purposes.
During the year ended December 31, 1993 certain participants transferred
between the MCI Communications Corporation Employee Stock Ownership Plan
and Retirement Savings Plan and the MCI Consumer Markets 401(k) and ESOP.
Effective July 1, 1993 and October 1, 1993 participant account balances
were transferred between the plans. Assets valued at $9,348,735
including 90,345 shares of MCI Communications Corporation Common Stock at
a fair market value of $3,848,004 were transferred into the Plan. The
participants received past service credit earned in the other plan for
vesting purposes.
NOTE 6 - FEDERAL INCOME TAX STATUS
As described in Note 1, the Plan is Part I of the MCI Consumer Markets
401(k) & ESOP. Within the time frame allowed by the IRS, the Company will
file for a determination letter from the IRS covering the Plan. The Plan
Administrator anticipates receiving a favorable determination from the IRS
on the Plan.
Page 11
<PAGE>
NOTE 7 - SUBSEQUENT EVENTS
Effective January 1, 1994 the assets of the Plan were merged with the
assets of the MCI Communications Corporation Retirement Savings Plan and
have become part of a master trust held by the Plan's trustee. Each plan
will have an undivided interest in the assets of the trust and ownership
is represented by a record of proportionate dollar interest or units of
participation.
Effective January 1, 1994 Putnam Investments assumed the role of Plan
Administrator and Recordkeeper. The Plan also increased the investment
options to sixteen funds. Daily valuations, weekly loans and
distributions, and monthly loan rate changes are also in effect as of
January 1, 1994. Also effective 1/1/94, the Company match increased from fifty
cents ($.50) to sixty seven cents ($.67) on each dollar contributed up to
six percent (6%) of elective contributions.
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<PAGE>
SCHEDULE I
MCI CONSUMER MARKETS 401(K)
EIN: 13-2745892
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1993
ADDITIONAL INFORMATION
FAIR
NUMBER VALUE AT
DESCRIPTION/ISSUER OF SHARES COST 12/31/93
- ------------------- ------------ ------------ ------------
LOANS TO PARTICIPANTS
Participant loan accounts $ 497,683 $ 497,683
------------ ------------
INTEREST IN COLLECTIVE INVESTMENT
FUNDS OF TRUSTEE
* Mellon Bank Temporary
Investment Fund 190,083 190,083
------------ ------------
INTEREST IN REGISTERED INVESTMENT
COMPANY
Putnam Voyager Fund 280,239 2,781,301 3,360,062
Laurel S & P Fund 279,577 2,860,699 2,862,872
---------- ----------
Total interest in registered
investment companies 5,642,000 6,222,934
---------- ----------
GUARANTEED INVESTMENT CONTRACTS
CIGNA, GA 9,659,522 9,659,522
---------- ----------
COMMON STOCK
* MCI Communications Corporation 345,327 6,675,725 9,755,488
------------ -----------
TOTAL INVESTMENTS $ 22,665,013 $ 26,325,710
============ ============
* Party-in-interest investment
Page 13
<PAGE> SCHEDULE II
MCI CONSUMER MARKETS 401(K)
EIN: 13-2745892
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
ADDITIONAL INFORMATION
Transactions or series of transactions exceeding 5% of the beginning fair value
of plan assets for the plan year January 1, 1993 to December 31, 1993 are
considered reportable transactions. The Plan's effective date is January 1,
1993; therefore the fair value of plan assets at January 1, 1993 is 0 and all
transactions exceed 5% of fair value or 0.
<TABLE>
<CAPTION> Purchases Sales
-------------- --------------------------------------------
Description/Issuer Purchase Price Sale Price Cost of Asset Gain
- ------------------ -------------- --------------------------------------------
<S> <C> <C> <C> <C>
Laurel S & P Fund $2,860,699
(2 purchases)
CIGNA GA $9,666,372 $ 432,884 $ 432,884 $0
(35 purchases) (4 Sales)
*Mellon Bank Temporary $4,168,533 $3,981,397 $3,981,397 $0
Investment Fund (238 purchases) ( 72 sales)
*Mellon EB Stock
Index Fund $2,039,471 $3,187,915 $2,890,847 $297,068
(17 purchases) (4 sales)
Putnam Voyager Fund $1,567,126 $ 585 $ 506 $ 79
(48 Purchases) ( 2 Sales)
</TABLE>
*Party-in-interest transaction
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan sponsor of the MCI Consumer Markets 401(K) & ESOP has duly caused this
annual report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MCI CONSUMER MARKETS 401(K)
PART I OF THE MCI CONSUMER MARKETS
401(K) & ESOP
Date: June 28, 1994 BY Brad E. Sparks
-----------------------------
Brad E. Sparks
Vice President and Controller
MCI Telecommunications Corporation
Page 15
<PAGE> Exhibit 23
----------
MCI CONSUMER MARKETS 401(K)
EIN: 13-2745892
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the
Prospectus constituting part of the Registration Statement on
Form S-8 (No. 33-21740) of MCI Communications Corporation of our
report dated June 10, 1994, appearing on page 3 of this Form 11-K.
PRICE WATERHOUSE
Washington, D.C.
June 28, 1994
Page 16
<PAGE> DOL Filing Confirmation Exhibit 99
----------
I certify that the Plan Administrator of the MCI Consumer Markets
401(k) & ESOP has received a Statement of Assets and Liabilities
and also that this statement has been filed directly with the
United States Department of Labor by Mellon Bank, N.A. (EIN # 25-
0659206) for the following investment arrangements:
EIN#
-------------
Mellon Bank Temporary Investment Fund 25-6078093-980
Laurel S & P Fund 25-6078093-920
MCI CONSUMER MARKETS 401(K)
PART I OF THE MCI CONSUMER MARKETS
401(K) & ESOP
Date: June 28, 1994 BY Brad E. Sparks
-----------------------------
Brad E. Sparks
Vice President and Controller
MCI Telecommunications Corporation
Page 17
