<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 Communications Corporation Retirement Savings
Plan - Part IV of the MCI Communications Corporation
Employee Stock Ownership Plan and 401(k)
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> Page 1
MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN
EIN: 52-0886267
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page(s)
-------
Report of Independent Accountants 3
Statements of Net Assets Available for Benefits
at December 31, 1993 and 1992 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 6-11
Additional Information:
Schedule I. Schedule of Assets Held for
Investment Purposes at
December 31, 1993 12
Schedule II. Schedule of Reportable
Transactions for the year 13
ended December 31, 1993
Signature 14
Exhibits:
23. Consent of Independent Accountants 15
99. Certification Regarding Certain
Investment Arrangements 16
<PAGE> Page 2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrative
Committee of the MCI Communications Corporation
Retirement Savings Plan
In our opinion, the accompanying statements 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 Communications
Corporation Retirement Savings Plan - Part IV of the MCI
Communications Corporation Employee Stock Ownership Plan and
401(k) at December 31, 1993 and 1992, 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 audits. We conducted our
audits 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> Page 3
MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN
EIN: 52-0886267
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31
-----------
1993 1992
----------- -----------
Non-interest bearing cash $ 216,871 $ 70
----------- -----------
Receivables:
Employer contribution receivable 352,919 21
Other receivable 58,963 30,747
----------- -----------
Total receivables 411,882 30,768
----------- -----------
General Investments:
Loans to participants 6,610,567 4,694,427
Value of interest in collective
investment funds of trustee 6,257,468 21,981,845
Value of interest in registered
investment company 77,838,417 34,084,008
Value of guaranteed investment
contracts 73,898,683 65,056,495
----------- -----------
Total general investments 164,605,135 125,816,775
----------- -----------
Employer related investments:
Employer securities 133,186,490 79,442,459
----------- -----------
Net assets available for benefits $298,420,378 $205,290,072
=========== ===========
See accompanying notes to the financial statements.
Page 4
MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED December 31, 1993
INCOME
- ------
Contributions:
Non-cash employer $ 17,526,017
Participants 39,402,255
Rollovers 5,104,066
Transfers from ESOP 553,020
------------
Total contributions 62,585,358
------------
Earnings on investments:
Interest on cash 21,750
Interest on participant loans 411,500
Interest on guaranteed investment contracts 6,045,367
Dividends on common stock 219,111
Net gain on disposition of assets 901,285
Unrealized appreciation of assets 33,404,138
Net investment gain from collective
investment funds of trustee 2,146,262
Net investment gain from registered
investment company 7,423,743
------------
Total earnings on investments 50,573,156
------------
Total income 113,158,514
EXPENSES
- --------
Participant benefits (10,723,992)
------------
Net income 102,434,522
Transfer of assets to the Plan 44,519
Transfer of Assets to MCI Consumer Markets 401(k) (9,348,735)
Net assets available for benefits at beginning
of year 205,290,072
------------
Net assets available for benefits at end of
year $298,420,378
============
See accompanying notes to the financial statements.
<PAGE> Page 5
MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN
EIN: 52-0886267
NOTES TO FINANCIAL STATEMENTS ON FORM 11-K
December 31, 1993 and 1992
NOTE 1 - DESCRIPTION OF THE PLAN
The following brief description of the MCI Communications
Corporation Retirement Savings Plan (the "Plan" or "RSP") is
provided for general information purposes only. Participants
should refer to the Plan document for more complete information.
Effective July 1, 1988, MCI Communications Corporation (the
"Company") added a 401(k) deferral feature, called the Retirement
Savings Plan, as Part IV to its employee stock ownership plan and
renamed the combined plan the MCI Communications Corporation
Employee Stock Ownership Plan and 401(k). The MCI Communications
Corporation Employee Stock Ownership Plan and 401(k) is comprised
of four parts: Part I is an employee stock ownership plan, Part
II is an investment tax credit employee stock ownership plan and
a payroll-based employee stock ownership plan, Part III outlines
special provisions and Part IV is the Retirement Savings Plan.
The accompanying financial statements are solely those of Part
IV, the MCI Communications Corporation Retirement Savings Plan
and are not intended to present the financial position or results
of operations of the MCI Communications Corporation Employee
Stock Ownership Plan and 401(k) taken as a whole. The Company
separately prepares an annual report on the overall MCI
Communications Corporation Employee Stock Ownership Plan and
401(k) 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 10% 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:
<PAGE> Page 6
- Fund A - Aggressive Equity Fund
An aggressive equity mutual fund invested
primarily in corporate stocks. The fund is
professionally managed by Putnam Voyager.
- 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
9.2%.
This fund also includes investments in the Mellon Bank
Temporary Investment Fund (TIF) due to a contract maturity
at December 29, 1993.
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 any
month.
The Plan allows participants to borrow up to one-half of their
vested account balances (or $50,000, whichever is less). The
<PAGE> Page 7
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 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,
$4,846,937 in loans were disbursed and principal repayments of
$2,390,698 were made.
Certain participants have the right to diversify a portion of
their account in the Employee Stock Ownership Plan (ESOP, Part I
of the MCI Communications Corporation Employee Stock Ownership
Plan and 401(k)) and transfer a portion of their account to the
RSP. 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. During 1993 and
1992, 11,133 and 1,578 shares of MCI Communications Corporation
common stock at a fair market value on the diversification date of
$553,020 and $52,666, respectively, were transferred from the ESOP
to the RSP pursuant to these provisions. In addition to ESOP
diversification, during 1993 1,356 shares of MCI Communications
Corporation common stock at a fair market value on the
diversification date of $66,898, were transferred from the Fund B
Employer Match fund to the RSP pursuant to these provisions.
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 and
1992, forfeitures included in the Plan were $54,015 and $885,808,
respectively, which included 1,311 and 14,135 forfeited shares of
MCI Communications Corporation common stock, at year-end fair
market values of $37,050 and $560,099, 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
<PAGE> Page 8
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, the Laurel S & P
Fund and the Mellon Bank Temporary Investment Fund are
party-in-interest investments.
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
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>
Aggressive Long-Term
Equity MCI Common Equity Index Fixed Income Total
Fund Stock Fund Fund Fund Funds
------------ -------------- ------------ ---------------- -------------
INCOME
- ------
<S> <C> <C> <C> <C> <C>
Contributions:
Non-cash employer $17,526,017 $ 17,526,017
Participants $11,451,586 9,037,492 $ 7,304,281 $11,608,896 39,402,255
Rollovers 513,912 385,676 197,751 4,006,727 5,104,066
Transfers from ESOP 110,656 468 148,304 293,592 553,020
----------- ----------- ----------- ----------- ------------
Total contributions 12,076,154 26,949,653 7,650,336 15,909,215 62,585,358
----------- ----------- ----------- ----------- ------------
Earnings on investments:
Interest on cash (TIF) 1,568 3,149 11,044 5,989 21,750
Interest on participant
loans 104,548 120,421 62,329 124,202 411,500
Interest on guaranteed
investment contracts 6,045,367 6,045,367
Dividends on common stock 219,111 219,111
Net gain on disposition
of assets 901,285 901,285
Unrealized appreciation
of assets 33,404,138 33,404,138
Net investment gain from
collective investment
funds of trustee 57 2,146,205 2,146,262
Net investment gain from
registered investment
company 7,423,743 7,423,743
----------- ----------- ----------- ----------- ------------
Total earnings
on investments 7,529,916 34,648,104 2,219,578 6,175,558 50,573,156
----------- ----------- ----------- ----------- ------------
Total income 19,606,070 61,597,757 9,869,914 22,084,773 113,158,514
EXPENSES
- --------
Participant benefits (1,452,735) (4,552,335) (901,206) (3,817,716) (10,723,992)
----------- ----------- ----------- ----------- ------------
Net income 18,153,335 57,045,422 8,968,708 18,267,057 102,434,522
Interfund transfers (1,316,962) 1,969,501 (1,116,415) 463,876 0
Transfer of assets
to the Plan 4,743 13,425 19,279 7,072 44,519
Transfer of assets
to MCI Consumer
Markets 401(k) (1,568,056) (3,965,925) (903,411) (2,911,343) (9,348,735)
Net assets available for
benefits at beginning
of year 34,043,444 80,770,907 22,395,027 68,080,694 205,290,072
----------- ----------- ----------- ----------- ------------
Net assets available for
benefits at
end of year $49,316,504 $135,833,330 $29,363,188 $83,907,356 $298,420,378
=========== =========== =========== =========== ============
</TABLE>
NOTE 4 - PARTICIPANT ACCOUNTS
As of December 31, 1993 and 1992, the Plan held 4,714,566 and 2,004,857
shares of MCI Communications Corporation common stock at fair market
values of $133,186,490 and $79,442,459, respectively. Of these shares,
501,306 and 452,408 were contributed by the Company during the Plan years
ended December 31, 1993 and 1992, respectively, as the Company's matching
contributions. As of December 31, 1993 and 1992, the Plan's benefit claims
payable was $10,098,348 and $10,544,171, which includes 191,270 and 83,244
shares of MCI
<PAGE> Page 10
Communications Corporation common stock at fair market values of
$5,403,378 and $2,101,857, respectively.
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 FROM PLAN
During the year ended December 31, 1993 certain participants transferred
between the MCI Communications 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 90,435 shares of MCI Communications
Corporation Common Stock at a fair market value of $3,848,004 were
transferred from the MCI Communications Retirement Savings Plan to the
MCI Consumer Markets 401(k) and ESOP.
NOTE 6 - FEDERAL INCOME TAX STATUS
As described in Note 1, the Plan is Part IV of the MCI Communications
Corporation Employee Stock Ownership Plan and 401(k), which, as amended
through December 12, 1986, has been determined by the IRS to be
qualified under Section 401 of the Internal Revenue Code. Within the time
frame allowed by the IRS, the Company will file for a determination
letter from the IRS covering amendments adopted subsequent to December
12, 1986. The Plan Administrator anticipates receiving a favorable
determination from the IRS on these amendments.
NOTE 7 - SUBSEQUENT EVENTS
Effective January 1, 1994 the assets of the Plan were merged with the
assets of the MCI Consumer Markets 401(k) Plan and have become part of a
master trust held by the Plan's trustee. Each plan will have an undivided
interest in the assets of the trust and ownership is represented by a
record of proportionate dollar interest or units of participation.
Effective January 1, 1994 Putnam Investments assumed the role of Plan
Administrator and Recordkeeper. The Plan also increased the investment
options to sixteen funds. Daily valuations, weekly loans and
distributions, and monthly loan rate changes are also in effect as of
January 1, 1994. Also effective 1/1/94, the Company match increased
from fifty cents ($.50) to sixty seven cents ($.67) on each dollar
contributed up to six percent (6%) of elective contributions.
<PAGE> Page 11
SCHEDULE I
MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN
EIN: 52-0886267
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 $ 6,610,507 $ 6,610,567
------------ ------------
INTEREST IN COLLECTIVE INVESTMENT
FUNDS OF TRUSTEE
* Mellon Bank Temporary
Investment Fund 6,257,468 6,257,468
------------ ------------
Total interest in collective
investment funds of trustee 6,257,468 6,257,468
------------ ------------
INTEREST IN REGISTERED INVESTMENT
COMPANY
Laurel Funds Inc.
S&P Stock Index 2,817,841 28,828,724 28,854,690
Putnam Voyager Fund 4,085,382 36,926,452 48,983,727
------------ ------------
Total interest in registered
investment company 65,755,176 77,838,417
------------ ------------
GUARANTEED INVESTMENT CONTRACTS
Allstate Life Insurance Company 5,451,317 5,451,317
John Hancock Mutual Life Insurance 11,305,311 11,305,311
Aetna Life Insurance 16,749,045 16,749,045
Metropolitan Life Insurance 11,475,262 11,475,262
New York Life Insurance 10,801,893 10,801,893
Principal Mutual Life Insurance 18,115,855 18,115,855
------------ ------------
Total guaranteed investment
contracts 73,898,683 73,898,683
------------ ------------
COMMON STOCK
* MCI Communications Corporation 4,714,566 99,782,352 133,186,490
------------ -----------
TOTAL INVESTMENTS $252,304,186 $297,791,625
============ ============
* Party-in-interest investment
Page 12
SCHEDULE II
MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN
EIN: 52-0886267
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. Fair value at January 1, 1993 is
$205,290,072. Five percent (5%) of fair value is $10,264,504.
<TABLE>
Purchases Sales
-------------- --------------------------------------------
Description/Issuer Purchase Price Sale Price Cost of Asset Gain
- ------------------ -------------- --------------------------------------------
<S> <C> <C> <C> <C>
Laurel S & P Fund $28,828,724
( 2 purchases)
Aetna Life $16,212,964
Investment Fund ( 2 purchases)
*Mellon Bank Temporary $32,564,405 $27,038,098 $27,038,098 $ 0
Investment Fund (398 purchases) (217 sales)
*Mellon EB Stock Index Fund $ 6,063,253 $23,445,544 $23,445,544 $ 0
( 23 purchases) ( 2 sales)
Aetna Life $15,454,145 $15,454,145 $ 0
Investment Fund ( 1 sale )
John Hancock Mutual $ 7,108,104 $ 4,302,305 $ 4,302,305 $ 0
Life Insurance ( 45 purchases) ( 2 sales)
</TABLE>
*Party-in-interest transaction
<PAGE> Page 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan sponsor of the MCI Communications Corporation Employee Stock Ownership
Plan and 401 (k) has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN - PART
IV OF THE MCI COMMUNICATIONS
CORPORATION EMPLOYEE STOCK
OWNERSHIP PLAN AND 401(k)
Date: June 28, 1994 BY Brad E. Sparks
-----------------------------
Brad E. Sparks
Vice President and Controller
MCI Communications Corporation
<PAGE> Page 14
Exhibit 23
----------
MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN
EIN: 52-0886267
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 15
DOL Filing Confirmation Exhibit 99
----------
I certify that the Plan Administrator of the MCI Communications
Corporation Employee Stock Ownership Plan and 401(k) 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 Index Fund 25-6078093-920
MCI COMMUNICATIONS CORPORATION RETIREMENT
SAVINGS PLAN - PART IV OF THE MCI
COMMUNICATIONS CORPORATION EMPLOYEE STOCK
OWNERSHIP PLAN AND 401(k)
Date: June 28, 1994 BY Brad E. Sparks
-----------------------------
Brad E. Sparks
Vice President and Controller
MCI Communications Corporation
Page 16
