<PAGE>
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MCI COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
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WORLDCOM, INC.
- --------------------------------------------------------------------------------
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<PAGE>
[WorldCom Logo]
FOR IMMEDIATE RELEASE
Contacts:
News Media: Josh Howell Investors: Gary Brandt
(601) 360-8750 (601) 360-8544
WORLDCOM REPORTS THIRD QUARTER 1997 RESULTS
CORE REVENUE UP 34 PERCENT ON 38 PERCENT VOLUME GROWTH
OPERATING INCOME UP 293 PERCENT
TRANSACTIONS WITH COMPUSERVE/ANS AND BROOKS FIBER ON TRACK
MEETINGS WITH MCI AND BT IN PROGRESS
JACKSON, MS (October 30, 1997) - WorldCom, Inc. (WorldCom) today reported
third quarter revenues of $1.90 billion, a 66 percent increase over third
quarter 1996 revenues of $1.14 billion. Strong internal growth across all
Communications Services, combined with the benefits of the MFS Communications
Company (MFS) merger completed December 31, 1996, contributed to the
impressive year-over-year gains. On a reported basis, long distance traffic
for the third quarter increased 57 percent over the previous year. On a pro
forma basis - which is indicative of internal growth - core Communications
Services revenues increased 34 percent on industry leading volume growth of
38 percent.
Reported earnings for the third quarter 1997 - after taking into account the
increased non-cash amortization of goodwill related to the MFS merger - was
$106 million or $0.12 earnings per common share compared with a pro forma
loss of $60 million or $0.07 loss per share for the third quarter 1996.
Reported earnings for the third quarter 1996, which does not include the
purchase accounting impact of the MFS merger, was $109 million or $0.27 per
share.
Operating income for the third quarter 1997 was $310 million - an increase of
293 percent compared with $79 million on a pro forma basis for the third
quarter of 1996.
YEAR-TO-DATE HIGHLIGHTS
For the nine months ended September 30, 1997, WorldCom reported revenues of
$5.35 billion, up 65 percent from reported revenues of $3.25 billion for the
first nine months of 1996. Net income before preferred dividends for 1997
year-to-date was $241 million, or $0.25 per share, compared with reported net
income before non-recurring charges of $296 million, or $0.73 per share for
the first nine months of 1996. Fully diluted earnings per common share are
$0.25 compared with a pro forma loss per share of $0.25, before non-recurring
charges, for the same period in 1996.
Year-to-date operating income for 1997 was $720 million, as compared with
$646 million on a reported basis for 1996 before non-recurring charges, and
$205 million on a pro forma basis, before non-recurring charges, for the
first nine months of 1996.
<PAGE>
2
MANAGEMENT'S COMMENTS ON THE THIRD QUARTER
"The strength in our third quarter financial results is cause for
excitement," said Bernard J. Ebbers, president and chief executive officer of
WorldCom. "Particularly strong revenue gains were evident across all of our
newer business segments such as Internet, international and domestic private
line, which is indicative of the trends we see in the rapidly changing
marketplace. We are beginning to reap the rewards of our end-to-end
facilities-based strategy as data begins to overtake voice in network
capacity utilization.
"Our industry-leading growth in domestic switched revenues is due in part to
continued success in wholesale, competitive pricing on long distance and,
increasingly, a 'one stop shopping' solution for our predominately business
customers," said Ebbers.
"I'm particularly pleased that we continue to demonstrate impressive growth
at the same time we are engaged in important merger discussions and analyses.
It is a tribute to the depth and strength of our organization, the
entrepreneurial spirit of our people, and our experience and track record of
managing successful transactions. We believe our results underscore our core
management and employee strength which has predominately come from successful
mergers over the years. In fact, most of our management team has joined us
through mergers and stayed on to help build our company," said Ebbers.
COMMUNICATIONS SERVICES - PRO FORMA COMPARISON
WorldCom's third quarter highlights include the following year-over-year
internal growth in core revenues and the impact of the sale of the operator
services and broadcast divisions on total revenues.
<TABLE>
<CAPTION>
THIRD QUARTER YEAR-TO-DATE
($ MILLIONS) Actual Pro Forma Actual Pro Forma
Revenues 1997 1996 Change 1997 1996 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Domestic switched $1,009.4 $ 842.6 20% $2,928.1 $2,410.7 22%
Domestic private line 406.3 299.4 36% 1,130.7 838.9 35%
International 219.9 121.6 81% 580.7 316.3 84%
Internet 147.1 69.7 111% 384.1 162.7 136%
-------- -------- ---- -------- -------- -------
CORE REVENUES $1,782.7 $1,333.3 34% $5,023.6 $3,728.6 35%
-------- -------- ---- -------- -------- -------
Other 118.5 121.6 (3%) 324.9 304.5 7%
-------- -------- ---- -------- -------- -------
TOTAL REVENUES $1,901.2 $1,454.9 31% $5,348.5 $4,033.1 33%
-------- -------- ---- -------- -------- -------
Businesses sold:
Operator Services (17.4) (27.8) (37%) (69.5) (84.8) (18%)
Broadcast Operations (11.5) (16.1) (28%) (40.2) (48.0) (16%)
-------- -------- ---- -------- -------- -------
RECASTED REVENUES $1,872.3 $1,411.0 33% $5,238.8 $3,900.3 34%
-------- -------- ---- -------- -------- -------
</TABLE>
For both the third quarter and year-to-date, the trends in core
Communications Services revenues are consistent. The Primary drivers of the
mid-30 percent revenue growth are domestic private line, international and
Internet growth combined with the continued strong volume growth of 38
percent. Eliminating the impact of businesses sold during the quarter, total
pro forma revenue grew 33 percent for the third quarter and 34 percent
year-to-date.
CORE REVENUES
Domestic switched services revenue increased 20 percent over the third
quarter 1996. This increase was primarily due to strong volume gains in both
the retail and wholesale segments. WorldCom's gap between revenue and volume
growth continues to be driven by strong wholesale revenues, international
settlement reduction pass throughs, third quarter 1997 access charge pass
throughs, and product mix.
<PAGE>
3
Domestic private line experienced another consistently strong quarter with
revenues increasing by 36 percent over third quarter 1996. The acceleration
in revenue growth for private line and frame relay continues to be driven by
tremendous demand for high speed data and by Internet related growth - and
further underscores WorldCom's high capacity end-to-end facilities-based
strategy.
International revenues - those revenues originating outside of the U.S. -
were $220 million, as compared with $122 million pro forma for the prior year
third quarter, an increase of 81 percent year-over-year. This strong
performance is due to continuing strong traffic growth in the United Kingdom
and a growing presence in Continental Europe for both switched services and
increasingly high speed data services.
Internet revenues for the third quarter were up by 111 percent as compared
with the third quarter of 1996. The provisioning constraints experienced in
the second quarter were significantly overcome in the latter part of the
third quarter, and the strong demand for both dedicated and dial-up access
contributed to the resumption of strong sequential gains.
OTHER REVENUES
Other revenues for the third quarter of 1997 were $119 million, down three
percent, as compared with $122 million for the comparable period on a pro
forma basis in the prior year. Other revenues include MFS Network
Technologies, operator services, broadcast operations, and system sales.
WorldCom completed the sale of its operator services and broadcast divisions
in the third quarter. On a recast basis, excluding the results of the
operator services and broadcast operations divisions in both periods, other
revenues increased approximately 15 percent for the third quarter and 25
percent year-to-date, to $90 million and $215 million, respectively.
PRO FORMA COMPARATIVES
In order to compare year-over-year internal growth, the following table
reflects pro forma amounts for third quarter 1996, before nonrecurring
charges in the prior year period:
<TABLE>
<CAPTION>
THIRD QUARTER YEAR-TO-DATE
($ in millions, except
EPS and % of Actual Pro Forma Actual Pro Forma
Revenue) 1997 1996 Change 1997 1996 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues $1,901.2 $1,454.9 31% $5,348.5 $4,033.1 33%
EBITDA $ 541.5 $ 292.9 85% $1,401.9 $ 828.8 69%
% of Revenue 28.5% 20.1% 26.2% 20.6%
Operating Income $ 309.9 $ 78.9 293% $719.6 $ 204.9 251%
% of Revenue 16.3% 5.4% 13.5% 5.1%
EPS $ 0.12 $ ( 0.07) -- $0.25 $ (0.25) --
Cash EPS(1) $ 0.34 $ 0.15 127% $0.80 $ 0.29 176%
</TABLE>
(1) Adding back MFS purchase accounting amortization ($0.09) and cash
utilization of MFS tax loss carryforwards ($0.12) for third quarter, 1997.
As a percent of revenue, EBITDA margin was 28.5 percent and operating income
16.3 percent as compared with 20.1 percent and 5.4 percent, respectively, for
the prior year.
<PAGE>
4
The improvement is due to the realization of synergies and the operating
leverage related to the fixed quarterly level of amortization expense. The
strong growth in core revenues drives further margin improvement as the
company focuses on core Communications Services and other revenues become a
smaller piece of the total.
COMPUSERVE/ANS TRANSACTIONS
On September 8, 1997, WorldCom announced a merger agreement with CompuServe
and an agreement to acquire ANS Communications (ANS) from America OnLine
(AOL). WorldCom will purchase CompuServe in a stock-for-stock transaction
valued at $1.2 billion, and separately acquire AOL's network service company,
ANS, in exchange for CompuServe's on-line services division plus $175 million
in cash. WorldCom will retain the CompuServe Network Services (CNS)
division. In addition, AOL will also sign a five-year contract under which
WorldCom will become AOL's largest network service provider.
These transactions are proceeding on track and are anticipated to close in
the first quarter of 1998.
"In what is emerging as the most competitive arena in the industry with more
than 4,000 Internet Service Providers, focus and differentiation will be
increasingly important for WorldCom," said Ebbers. "With more and more big
players like AT&T and GTE entering the Internet market and the Regional Bell
Operating Companies soon to follow, the skills we gain through CNS and ANS
should hasten the pace of technological advancement, which will bring the
benefits of competition and technology to all customers."
BROOKS FIBER
On October 1, 1997, WorldCom and Brooks Fiber announced that they had signed
a definitive merger agreement. Brooks Fiber is the premier competitive local
exchange carrier in secondary markets in the U.S. today. Through this
merger, WorldCom will effectively accelerate its local network development
plans in the U.S. by one to two years.
Commenting on the merger and on Brooks' recent results, Ebbers said: "Brooks
Fiber is a spectacular company. Not only does it continue to hold a unique
leadership position in the secondary markets across the country, but it has
strengthened that position with an exceptionally strong third quarter. It is
approaching its merger with WorldCom by ratcheting up its performance yet
another notch. The powerful fit between our companies is clear. It is also
clear that Brooks Fiber is only getting better and stronger in the
marketplace. We look forward to closing this transaction in early 1998. We
will both be stronger as a result, and we welcome them and their
entrepreneurial drive."
MCI TRANSACTION
On October 1, 1997, WorldCom announced an exchange offer to acquire all of
the outstanding shares of MCI Communications Corporation (MCI). The company
has begun direct discussions with MCI and British Telecom (BT) with the
intention of coming to an agreement beneficial to all parties.
Commenting on the WorldCom offer, Ebbers said, "We remain excited about the
prospect of a merger with MCI. We have tremendous respect for their company
and what they have accomplished."
<PAGE>
5
"Looking forward, we believe we are witnessing an opportunity that is
unprecedented in the industry," Ebbers continued. "We believe, together, we
can offer a more promising, exciting and rewarding future for the management,
employees, customers and shareholders of MCI. We have so much in common -
our entrepreneurial spirit, our impatience with monopolistic barriers and our
heritage of bringing the benefits of competition to customers. When you
combine their achievement, infrastructure and marketing prowess with our
assets and strategic position, you create an extraordinary telecommunications
company that is exceptionally well-positioned and poised for the changes
sweeping the industry. We welcome the employees of MCI into what we see as
an exciting future without parallel."
"We are currently involved in ongoing, substantive talks with MCI and BT and
are pleased with the progress. We remain hopeful that these talks will lead
to an agreement between MCI, BT and WorldCom that will be in the best
interests of all three companies, their employees and their shareholders,"
said Ebbers.
OUTLOOK
Commenting on the outlook for WorldCom, Ebbers said: "While investor
attention of late has been focused on the MCI transaction, it is important to
highlight the strength of our third quarter results, the strategic
significant of the CompuServe/ANS transactions and the tactical advantages of
the Brooks Fiber transaction. Each of these three events, while significant
in its own right, adds tremendous value for our shareholders. In this
regard, the third quarter 1997 could be looked back upon as a watershed
period in our corporate history - where we further distinguish and distance
ourselves from all of the traditional carriers."
"As we continue our strong growth, we continue our focus on managing that
growth," said Ebbers. "We remain confident that we are putting the right
assets in the right place at the right time. We continue to build a
different kind of communications company, one that understands what is
required of a communications company in the future, one that knows what
creates value for shareholders and one bold enough to take steps to
accomplish that."
Except for the historical information contained herein, the matters discussed
in this news release are forward looking statements that involve risk and
uncertainties as detailed from time to time in various regulatory filings.
Actual results may vary significantly from these statements.
WorldCom is a global telecommunications company. Operating in more than 50
countries, the company is a premier provider of facilities-based and fully
integrated local, long distance, international and Internet services.
WorldCom's subsidiary, UUNET Technologies, Inc., is an international provider
of Internet services with over 1,000 Points of Presence (POPs) throughout the
United States and in Canada, Europe and the Asia- Pacific region. WorldCom's
World Wide Web address is http://www.wcom.com. The common and depositary
shares of WorldCom trade on the Nasdaq National Market (U.S.) under the
symbol WCOM and WCOMP, respectively.
<PAGE>
6
<TABLE>
<CAPTION>
WORLDCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, In Thousands, Except Per Share Data)
For the Three Months Ended September 30,
-----------------------------------------------------------------
1997 1996 1996
-------------------- ------------------- --------------------
Actual % Actual % Pro Forma %
---------- ------ ---------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Minutes 9,704,581 6,179,962 7,025,365
Revenues $1,901,199 100.0% $1,143,428 100.0% $1,454,930 100.0%
---------- ------ ---------- ------ ---------- -------
Operating expenses:
Line costs 971,894 51.1% 625,176 54.7% 805,329 55.4%
Selling, general and administrative 387,845 20.4% 212,473 18.6% 356,674 24.5%
Depreciation and amortization 231,543 12.2% 73,436 6.4% 214,057 14.7%
---------- ------ ---------- ------ ---------- -------
Total 1,591,282 83.7% 911,085 79.7% 1,376,000 94.6%
---------- ------ ---------- ------ ---------- -------
Operating income 309,917 16.3% 232,343 20.3% 78,870 5.4%
Other income (expense):
Interest expense (81,789) -4.3% (55,085) -4.8% (84,192) -5.8%
Miscellaneous 6,133 0.3% 1,840 0.2% 22,374 1.5%
---------- ------ ---------- ------ ---------- -------
Income before income taxes and
extraordinary items 234,261 12.3% 179,098 15.7% 17,052 1.2%
Provision for income taxes 121,816 6.4% 69,843 6.1% 70,037 4.8%
---------- ------ ---------- ------ ---------- -------
Net income (loss) 112,445 5.9% 109,255 9.6% (52,985) -3.6%
Preferred dividend requirement 6,606 0.3% - - 7,460 0.5%
Net income (loss) applicable to common
shareholders $ 105,839 5.6% $ 109,255 9.6% $ (60,445) $ -4.2%
========== ====== ========== ====== ========== =======
Earnings per common share:
Net income (loss) applicable to common shareholders:
Primary $ 0.12 $ 0.27 $ (0.07)
========== ========== ==========
Fully diluted $ 0.12 $ 0.27 $ (0.07)
========== ========== ==========
</TABLE>
<PAGE>
7
<TABLE>
<CAPTION>
WORLDCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, In Thousands, Except Per Share Data)
For the Nine Months Ended September 30,
-----------------------------------------------------------------
1997 1996 1996
-------------------- ------------------- --------------------
Actual % Actual % Pro Forma %
---------- ------ ---------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Minutes 27,150,159 17,489,208 19,832,607
Revenues $ 5,348,522 100.0% $ 3,251,026 100.0% $ 4,033,125 100.0%
----------- ------ ----------- ------ ----------- ------
Operating expenses:
Line costs 2,805,807 52.5% 1,772,639 54.5% 2,204,168 54.7%
Selling, general and administrative 1,140,849 21.3% 602,902 18.5% 1,000,133 24.8%
Depreciation and amortization 682,219 12.8% 229,034 7.0% 623,975 15.5%
Provision to reduce carrying value of
certain assets - - 402,000 12.4% 402,000 10.0%
----------- ------ ----------- ------ ----------- ------
Total 4,628,875 86.5% 3,006,575 92.5% 4,230,276 104.9%
----------- ------ ----------- ------ ----------- ------
Operating income (loss) 719,647 13.5% 244,451 7.5% (197,151) -4.9%
Other income (expense):
Interest expense (234,949) -4.4% (168,031) -5.2% (248,400) -6.2%
Miscellaneous 16,794 0.3% 5,989 0.2% 35,962 0.9%
----------- ------ ----------- ------ ----------- ------
Income (loss) before income taxes and
extraordinary items 501,492 9.4% 82,409 2.5% (409,589) -10.2%
Provision for income taxes 260,776 4.9% 130,015 4.0% 150,359 3.2%
----------- ------ ----------- ------ ----------- ------
Net income (loss) before extraordinary
items 240,716 4.5% (47,606) -1.5% (539,948) -13.4%
Extraordinary items (net of income
taxes of $15,621 in 1996) - - (24,434) -0.8% (24,434) -0.6%
Preferred dividend requirement 19,827 0.4% 860 0.0% 22,852 0.6%
----------- ------ ----------- ------ ----------- ------
Net income (loss) applicable to common
shareholders $ 220,889 4.1% $ (72,900) -2.2% $ (587,234) -14.6%
=========== ====== =========== ====== =========== ======
Earnings per common share:
Net income (loss) applicable to
common shareholders before
extraordinary items:
Primary $ 0.25 $ (0.12) $ (0.65)
=========== =========== ===========
Fully diluted $ 0.25 $ (0.12) $ (0.65)
=========== =========== ===========
Extraordinary items $ - $ (0.06) $ (0.03)
=========== =========== ===========
Net income (loss) applicable to
common shareholders:
Primary $ 0.25 $ (0.18) $ (0.68)
=========== =========== ===========
Fully-diluted $ 0.25 $ (0.18) $ (0.68)
=========== =========== ===========
Net income (loss) applicable to
common shareholders before non-
cash charges and extraordinary
items:
Primary $ 0.25 $ 0.73 $ (0.25)
=========== =========== ===========
Fully diluted $ 0.25 $ 0.73 $ (0.25)
=========== =========== ===========
</TABLE>
<PAGE>
8
<TABLE>
<CAPTION>
WORLDCOM, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share data)
For the Three Months Ended
----------------------------
September 30,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Primary:
Weighted average shares outstanding 903,356 402,881
Common stock equivalents 28,537 7,724
Common stock equivalents issuable upon conversion of
Series A preferred stock 32,703 -
5% convertible notes - 4,584
-------- --------
964,596 415,189
======== ========
Net income applicable to common shareholders $105,839 $109,255
Add back:
Dividend on series A preferred stock 6,364 -
Interest paid on 5% convertibles notes conversions,
net of taxes - 1,489
-------- --------
Net income applicable to common shareholders $112,203 $110,744
======== ========
Primary earnings per share:
Applicable to common shareholders before extraordinary
items $0.12 $0.27
======== ========
Fully diluted:
Weighted average shares outstanding 903,356 402,881
Common stock equivalents 30,041 7,730
Common stock issuable upon conversion of:
Series A preferred stock 32,703 -
Series B preferred stock 1,227 -
5% convertible notes - 4,584
-------- --------
967,327 415,195
======== ========
Net income applicable to common shareholders $105,839 $109,255
Add back:
Series A preferred dividend 6,364 -
Series B preferred dividend 242 -
Interest on 5% convertible notes, net of taxes
Net income applicable to common shareholders - 1,489
-------- --------
$112,445 $110,744
======== ========
Fully diluted earnings (loss) per share:
Applicable to common shareholders $ 0.12 $ 0.27
======== ========
</TABLE>
<PAGE>
9
<TABLE>
<CAPTION>
WORLDCOM, INC AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share data)
For the Nine Months Ended
--------------------------------------
September 30, 1996
-----------------------
Before After
Sept 30, Non-Cash Non-Cash
1997 Charges Charges
-------- -------- --------
<S> <C> <C> <C>
Primary:
Weighted average shares outstanding 895,688 393,869 393,869
Common stock equivalents 27,045 7,744 -
Common stock equivalents issuable upon conversion of:
Series A preferred stock 32,703 - -
Series 2 preferred stock - 2,976 -
5% convertible notes - 8,357 -
-------- -------- --------
955,436 412,946 393,869
======== ======== ========
Net income (loss) applicable to common shareholders before
extraordinary items $220,889 $295,114 $(48,466)
Extraordinary items - - (24,434)
Add back:
Dividend on series A preferred stock 19,092 - -
Dividend paid on series 2 preferred stock conversions - 860 -
Interest paid on 5% convertibles notes conversions, net of taxes - 4,470 -
-------- -------- --------
Net income (loss) applicable to common shareholders $239,981 $300,444 $(72,900)
======== ======== ========
Primary earnings (loss) per share:
Applicable to common shareholders before extraordinary items $ 0.25 $ 0.73 $ (0.12)
======== ======== ========
Extraordinary items $ - $ - $ (0.06)
======== ======== ========
Applicable to common shareholders $ 0.25 $ 0.73 $ (0.18)
======== ======== ========
Fully diluted:
Weighted average shares outstanding 895,688 393,869 393,869
Common stock equivalents 29,109 8,343 -
Common stock issuable upon conversion of:
Series A preferred stock 32,703 - -
Series B preferred stock 1,230 - -
5% convertible notes - 8,357 -
Series 2 preferred stock - 2,976 -
-------- -------- --------
958,730 413,545 393,869
======== ======== ========
Net income (loss) applicable to common shareholders before
extraordinary items $220,889 $295,114 $(48.466)
Extraordinary items - - (24,434)
Add back:
Series A preferred dividend 19,092 - -
Series B preferred dividend 735 - -
Interest on 5% convertible notes, net of taxes - 4,470 -
Series 2 preferred dividend requirement - 860 -
-------- -------- --------
Net income (loss) applicable to common shareholders $240,716 $300,444 $(72,900)
======== ======== ========
Fully diluted earnings (loss) per share:
Applicable to common shareholders before extraordinary items $ 0.25 $ 0.73 $ (0.12)
======== ======== ========
Extraordinary items $ - $ - $ (0.06)
======== ======== ========
Applicable to common shareholders $ 0.25 $ 0.73 $ (0.18)
======== ======== ========
</TABLE>
<PAGE>
10
<TABLE>
<CAPTION>
WORLDCOM, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Before 1996 Non-Recurring Charges
(Unaudited. In Thousands of Dollars, Except Per Share Data)
September 30, 1996 December 31, 1996 March 31, 1997 June 30, 1997 September 30, 1997
------------------ ----------------- ------------------ ---------------- ------------------
$ % $ % $ % $ % $ %
---------- ------- ---------- ------ ---------- ------- --------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Domestic switched $ 842,545 57.9% $ 912,647 57.0% $ 951,892 56.8% $ 966,780 54.7% $1,009,407 53.1%
Domestic private line 299,422 20.6% 328,092 20.5% 352,700 21.0% 371,731 21.0% 406,239 21.4%
International 121,637 8.3% 152,901 9.5% 163,777 9.8% 197,034 11.1% 219,920 11.6%
Internet 69,693 4.8% 90,466 5.6% 111,226 6.6% 125,756 7.1% 147,137 7.7%
---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------
Core revenues 1,333,297 91.6% 1,484,106 92.6% 1,579,595 94.2% 1,661,301 93.9% 1,782,703 93.8%
Other 121,633 8.4% 117,992 7.4% 97,644 5.8% 108,783 6.1% 118,496 6.2%
---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------
Total Revenues $1,454,930 100.0% $1,602,098 100.0% $1,677,239 100.0% $1,770,084 100.0% $1,901,199 100.0%
========== ======= ========== ===== ========== ====== ========== ===== ========== ======
Operating expenses:
Line costs 805,329 55.4% 917,113 57.2% 911,469 54.3% 922,444 52.1% 971,894 51.1%
Selling, general and
administrative 356,674 24.5% 365,989 22.9% 372,347 22.2% 380,657 21.5% 387,845 20.4%
---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------
EBITDA 292,927 20.1% 318,996 19.9% 393,423 23.5% 466,983 26.4% 541,460 28.5%
---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------
Depreciation and amortization 214,057 14.7% 214,389 13.4% 222,903 13.3% 227,773 12.9% 231,543 12.2%
---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------
Operating income 78,870 5.4% 104,607 6.5% 170,520 10.2% 239,210 13.5% 309,917 16.3%
Other income (expense):
Interest expense (84,192) -5.8% (85,267) -5.3% (75,455) -4.5% (77,705) -4.4% (81,789) -4.3%
Miscellaneous 22,374 1.5% 16,992 1.1% 8,401 0.5% 2,260 0.1% 6,133 0.3%
---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------
Income (loss) before income taxes 17,052 1.2% 36,332 2.3% 103,466 6.2% 163,765 9.3% 234,261 12.3%
Income tax expense 70,037 4.8% 76,781 4.8% 53,802 3.2% 85,158 4.8% 121,816 6.4%
---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------
Net income (loss) (52,985) -3.6% (40,449) -2.5% 49,664 3.0% 78,607 4.4% 112,445 5.9%
Preferred dividend requirement 7,460 0.5% 7,437 0.5% 6,610 0.4% 6,611 0.4% 6,606 0.3%
---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------
Net income (loss) applicable to
common shareholders $ (60,445) -4.2% $ (47,886) -3.0% $ 43,054 2.6% $ 71,996 4.1% $ 105,839 5.6%
========== ======= ========== ===== ========== ====== ========== ===== ========== ======
Earnings (loss) per common share:
Primary $ (0.07) $ (0.05) $ 0.05 $ 0.08 $ 0.12
========== ========== ========== ========== ==========
Fully diluted $ (0.07) $ (0.05) $ 0.05 $ 0.08 $ 0.12
========== ========== ========== ========== ==========
Shares outstanding:
Primary 874,395 881,467 948,979 952,732 964,596
========== ========== ========== ========== ==========
Fully Diluted 874,395 881,467 950,216 958,655 967,327
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
11
<TABLE>
<CAPTION>
WORLDCOM, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
After 1996 Non-Recurring Charges
(Unaudited. In Thousands of Dollars, Except Per Share Data)
September 30, 1996 December 31, 1996 March 31, 1997 June 30, 1997 September 30, 1997
------------------ -------------------- ------------------ ------------------ ------------------
$ % $ % $ % $ % $ %
---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Domestic switched $842,545 57.9% $ 912,647 57.0% $ 951,892 56.8% $ 966,780 54.7% $1,009,407 53.1%
Domestic private line 299,422 20.6% 328,092 20.5% 352,700 21.0% 371,731 21.0% 406,239 21.4%
International 121,637 8.3% 152,901 9.5% 163,777 9.8% 197,034 11.1% 219,920 11.6%
Internet 69,693 4.8% 90,466 5.6% 111,226 6.6% 125,756 7.1% 147,137 7.7%
---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------
Core revenues 1,333,297 91.6% 1,484,106 92.6% 1,579,595 94.2% 1,661,301 93.9% 1,782,703 93.8%
Other 121,633 8.4% 117,992 7.4% 97,644 5.8% 108,783 6.1% 118,496 6.2%
---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------
Total Revenues $1,454,930 100.0% $ 1,602,098 100.0% $1,677,239 100.0% $1,770,084 100.0% $1,901,199 100.0%
========== ====== =========== ======= ========== ====== ========== ====== ========== ======
Operating expenses:
Line costs 805,329 55.4% 917,113 57.2% 911,469 54.3% 922,444 52.1% 971,894 51.1%
Selling, general and
administrative 356,674 24.5% 365,989 22.9% 372,347 22.2% 380,657 21.5% 387,845 20.4%
---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------
EBITDA 292,927 20.1% 318,996 19.9% 393,423 23.5% 466,983 26.4% 541,460 28.5%
---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------
Depreciation and amortization 214,057 14.7% 214,389 13.4% 222,903 13.3% 227,773 12.9% 231,543 12.2%
Other charges - - 198,148 12.4% - - - - - -
Charge for in-process research
and development - - 2,140,000 133.6% - - - - - -
---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------
Operating income (loss) 78,870 5.4% (2,233,541) -139.4% 170,520 10.2% 239,210 13.5% 309,917 16.3%
Other income (expense):
Interest expense (84,192) -5.8% (85,267) -5.3% (75,455) -4.5% (77,705) -4.4% (81,789) -4.3%
Miscellaneous 22,374 1.5% 16,992 1.1% 8,401 0.5% 2,260 0.1% 6,133 0.3%
---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------
Income (loss) before income taxes 17,052 1.2% (2,301,816) -143.7% 103,466 6.2% 163,765 9.3% 234,261 12.3%
Income tax expense (benefit) 70,037 4.8% (287) 0.0% 53,802 3.2% 85,158 4.8% 121,816 6.4%
---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------
Net income (loss) (52,985) -3.6% (2,301,529) -143.7% 49,664 3.0% 78,607 4.4% 112,445 5.9%
Preferred dividend requirement 7,460 0.5% 7,437 0.5% 6,610 0.4% 6,611 0.4% 6,606 0.3%
---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------
Net income (loss) applicable to
common shareholders $ (60,445) -4.2% $(2,308,966) -144.1% $ 43,054 2.6% $ 71,996 4.1% $ 105,839 5.6%
========== ====== =========== ======= ========== ====== ========== ====== ========== ======
Earnings (loss) per common share:
Primary $ (0.07) $ (2.62) $ 0.05 $ 0.08 $ 0.12
========== =========== ========== ========== ==========
Fully diluted $ (0.07) $ (2.62) $ 0.05 $ 0.08 $ 0.12
========== =========== ========== ========== ==========
Shares outstanding:
Primary 874,395 881,467 948,979 952,732 964,596
========== =========== ========== ========== ==========
Fully diluted 874,395 881,467 950,216 958,655 967,327
========== =========== ========== ========== ==========
</TABLE>
