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, 1996
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 401(k) Plan for Non-Exempt Employees
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 COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) 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, 1996 and 1995 4
Statements of Changes in Net Assets Available for
Benefits for the years ended December 31, 1996 and 1995 5,6
Notes to Financial Statements 7-37
Additional Information:
Schedule I.
Schedule of Assets Held for
Investment Purposes at
December 31, 1996 38
Schedule II.
Schedule of Reportable
Transactions for the year
ended December 31, 1996 39
Signature 40
Exhibits:
23. Consent of Independent Accountants 41
99. Certification Regarding Certain
Investment Arrangements 42
Page 2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrative
Committee of the MCI Communications Corporation 401(k) Plan for
Non-Exempt Employees
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the MCI Communications Corporation 401(k) Plan for Non-Exempt Employees
(formerly MCI Consumer Markets 401(k) Plan) and the changes in net assets
available for benefits for the years then ended, 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 audits were performed 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 the Employee Retirement Income Security Act of 1974, as amended.
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 LLP
PRICE WATERHOUSE LLP
Washington, D. C.
June 11, 1997
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MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31
-----------
1996 1995
------------- -------------
Value of interest in master trust $ 105,131,594 $ 63,794,793
------------- -------------
Net assets available for benefits $ 105,131,594 $ 63,794,793
============= =============
See accompanying notes to the financial statements.
Page 4
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
ADDITIONS
- ---------
Contributions:
Participants $ 14,924,229
Non-cash employer 7,469,320
Rollovers 524,098
Transfers from ESOP 178,370
--------------
Total contributions 23,096,017
--------------
Earnings on investments:
Interest on participant loans 349,003
Interest on guaranteed investment contracts 930,446
Dividends on common stock 79,756
Net gain on sale of common stock 195,393
Unrealized appreciation of assets 9,887,614
Net gain from registered investment companies 3,977,511
--------------
Total earnings on investments 15,419,723
--------------
Total additions 38,515,740
--------------
DEDUCTIONS
- ----------
Participant benefit payments 7,538,970
Account maintenance fees 42,313
--------------
Net increase 30,934,457
Net interplan transfers 10,402,344
Net assets available for benefits,
beginning of year 63,794,793
--------------
Net assets available for benefits,
end of year $ 105,131,594
==============
See accompanying notes to the financial statements.
Page 5
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
ADDITIONS
- ---------
Contributions:
Participants $ 11,782,088
Non-cash employer 6,565,128
Rollovers 835,393
--------------
Total contributions 19,182,609
--------------
Earnings on investments:
Interest on participant loans 160,175
Interest on guaranteed investment contracts 716,230
Dividends on common stock 57,302
Net gain on sale of common stock 574,244
Unrealized appreciation of assets 8,783,448
Net gain from registered investment companies 4,988,370
--------------
Total earnings on investments 15,279,769
--------------
Total additions 34,462,378
--------------
DEDUCTIONS
- ----------
Participant benefit payments 6,277,580
Account maintenance fees 28,494
--------------
Net increase 28,156,304
Net interplan transfers (2,463,858)
Net assets available for benefits,
beginning of year 38,102,347
--------------
Net assets available for benefits,
end of year $ 63,794,793
==============
See accompanying notes to the financial statements.
Page 6
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
NOTES TO FINANCIAL STATEMENTS ON FORM 11-K
December 31, 1996 and 1995
NOTE 1- DESCRIPTION OF THE PLAN
The following brief description of the MCI Communications Corporation
401(k) Plan for Non-Exempt Employees (the "Plan" or "401(k)") is provided
for general information purposes only. Participants should refer to the
Plan document for more complete information. The Plan is subject to the
applicable provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
Effective January 1, 1996, the MCI Consumer Markets 401(k) and Employee
Stock Ownership Plan and the MCI Communications Corporation Employee Stock
Ownership and 401(k) Plan ("MCI Plan") were restructured and renamed the
MCI Communications Corporation Employee Stock Ownership and 401(k) Plan for
Non-Exempt Employees ("Non-Exempt Plan") and the MCI Communications
Corporation Employee Stock Ownership and 401(k) Plan for Exempt Employees
("Exempt Plan"), respectively. Also, the plan sponsorship changed from MCIT
to the Company. The MCI Communications Corporation ESOP and 401(k) Plan for
Non-Exempt Employees is comprised of two parts: Part I is an employee stock
ownership plan ("ESOP"), Part II is the 401(k) Plan. The accompanying
financial statements are solely those of Part II and are not intended to
present the net assets available for benefits or the changes in net assets
available for benefits of the MCI Communications Corporation ESOP and
401(k) Plan for Non-Exempt Employees taken as a whole. The Company
separately prepares an annual report on the overall MCI Communications
Corporation ESOP and 401(k) plan for Non-Exempt Employees which is
submitted to the Internal Revenue Service ("IRS") on Form 5500 and is made
available to all employees upon request.
The assets of this Plan are combined with those of the Exempt Plan into the
MCI Communications Corporation Defined Contribution Master Trust. This
arrangement facilitates the administration of the Plans as described below.
Under the terms of the master trust agreement, each plan has a specific
interest in all assets and liabilities of the trust.
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Contributions
- -------------
The Plan is a defined contribution, deferred savings plan. Under the Plan,
employees become eligible to participate upon completion of one year of
service with 1,000 hours of service and attainment of age 21. As a result
of the restructuring of the Plan, the Plan was amended to include all
non-exempt participants from the MCI Plan. (A non-exempt employee is an
employee who is not exempt from the maximum hours limitation under the Fair
Labor Standards Act of 1938, as amended). All exempt participants in the
Plan were transferred to the Exempt Plan. No further modifications were
made to the Plan's provisions. Eligible employees may elect to defer up to
15% of eligible compensation on a pre-tax basis, to be contributed to the
Plan by the Company on behalf of such employees ("Elective Contributions").
The first 6% of each participant's Elective Contributions is eligible for a
Company matching contribution in the form of MCI Communications Corporation
Common Stock. The Company provides a matching contribution of $.67 for each
eligible dollar of Elective Contributions made to the Plan. The Company's
matching contribution is made biweekly and is determined by the closing
price of MCI Communications Corporation Common Stock on the date posted to
the participants' accounts. Participants' Elective Contributions are
withheld from their biweekly paychecks and the Company transfers these
contributions to the Plan 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 vesting purposes for each Plan year during
which they complete at least 1,000 hours of service.
Effective July 1, 1995, the Plan decreased the number of investment options
from sixteen to seven funds. Participants with balances in the funds that
were eliminated were allowed to reallocate their fund balances into the
seven remaining funds. Elective Contributions are invested in any of the
seven investment funds in accordance with participants' instructions. The
available investment funds as of July 1, 1995 are:
- MCI Common Stock Fund
A fund investing in MCI Communications Corporation Common
Stock. These shares of stock are qualified employer securities as
defined by ERISA.
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- EuroPacific Growth Fund
A long term growth fund invested primarily in securities of
issuers domiciled in Europe and the Pacific Basin. The fund is a member
of the American Funds Group and is managed by Capital Research and
Management Company.
- Dreyfus S&P 500 Stock Index Portfolio
An equity index mutual fund invested in common stock which is
comparable to the Standard & Poor's 500 Composite Index. All investment
decisions are made by Dreyfus Corporation, an affiliate of the Plan
trustee. The trustee oversees the fund in accordance with the trust
agreement.
- Putnam Voyager Fund
A long term growth fund invested in a diversified
portfolio of two types of common stocks: emerging growth stocks and
opportunity stocks. The fund is managed by Putnam Investment
Management, Inc.
- Putnam New Opportunities Fund
A growth fund invested primarily in common stock of
companies in economic sectors with above-average prospects for
growth. Putnam Investment Management, Inc. makes the investment
decisions for the fund and is subject to the policies established by
the fund's trustee.
- Putnam Balanced Retirement Fund
A growth and income fund invested in a diversified
portfolio of equity and debt securities. Putnam Investment
Management, Inc. makes the investment decisions for the fund
and is subject to the policies established by the fund's trustee.
- Stable Asset Fund
The fund consists primarily of guaranteed investment
contracts (GICs) issued by insurance companies and contracts
with other financial institutions that offer fixed interest rates
on investments. This fund was formerly known as the Long-Term
Fixed Income Fund. The fund seeks to maintain a constant book value
of $1.00 per share. The guaranteed rates of interest range from
5.6% to 8.08% at December 31, 1996.
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<PAGE>
The following guaranteed investment contracts were held individually by
the Master Trust as of December 31:
Contract Value
-------------------------
Contract
1996 1995 Rate
------------ ------------ ----
Aetna Life Insurance $ 20,306,182 $ 19,041,899 6.63%
Allstate Life Insurance 6,474,248 6,113,549 5.90%
Allstate Life Insurance 4,000,628 0 5.90%
John Hancock Mutual Life Insurance 14,261,226 13,198,728 8.05%
Metropolitan Life Insurance 0 13,623,754 8.96%
New York Life Insurance 8,847,294 8,281,679 6.82%
New York Life Insurance 5,803,475 5,369,604 8.08%
Pacific Mutual Life Insurance 4,642,586 0 7.30%
Pacific Mutual Life Insurance 1,287,816 0 7.36%
Peoples Security Insurance Company 7,000,905 7,400,229 5.72%
Peoples Security Insurance Company 5,220,011 5,219,396 5.86%
Principal Mutual Life Insurance 3,409,732 0 6.60%
Principal Mutual Life Insurance 0 14,445,534 9.10%
Prudential Life Insurance 6,028,870 5,634,458 7.00%
TransAmerica Life Insurance 3,423,163 3,426,163 5.60%
TransAmerica Life Insurance 4,071,194 2,543,520 7.25%
This fund also includes investment in the Mellon Bank Temporary
Investment Fund (TIF) to satisfy any liquidity needs and also serves as
a temporary account to hold funds from maturing interests.
Participant Accounts
---------------------------
Each individual's investment in the funds is recorded in their participant
account on a unit value basis with the exception of MCI Stock Fund which is
recorded on a per share basis. The Plan is processed on a daily valuation
basis.
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<PAGE>
Participants may transfer all or part of the balance in their Elective
Contributions and related earnings from one fund to another once each
calendar month. Participants may reallocate their matching contributions
balance that is 100% vested as of the prior year end once per plan year.
Participants may change the allocation of their future contributions among
the funds with unlimited frequency. Participants' allocations are affected
by the last change placed prior to payroll processing.
Certain participants have the right to diversify a portion of their account
in the ESOP, Part I of the Non-Exempt Plan, and transfer that 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 participant in the ESOP for at least
10 years, are eligible to diversify under these provisions. During 1996,
5,319 shares of MCI Communications Corporation Common Stock at a fair
market value on the diversification date of $136,299 were transferred from
the ESOP to the 401(k) pursuant to these provisions. There were no
diversifications to the 401(k) during 1995. Participants who are 100%
vested are permitted to diversify amounts in their Matching Contribution
account once per calendar year. During 1996 and 1995, 39,393 and 19,130
shares of MCI Communications Corporation Common Stock at a fair market
value on the diversification date of $1,097,807 and $456,683, respectively,
were transferred from the Employer Matching Contributions accounts to the
Elective Contributions accounts pursuant to these provisions.
Participant Loans
- ----------------------
The Plan allows participants to borrow up to one-half of the vested account
balance (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. Effective January 1, 1995, the
Plan charges a $30 origination fee for loans. Loan proceeds are disbursed
pro rata from each of the participants' investment funds, and are repaid
through biweekly payroll deductions. Loan repayments of principal and
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interest are invested based on the participants' current investment
elections. Interest rates for new loans are determined monthly based on the
prime rate as published on the first business day of each month 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 by a cashier's or
certified check. During Plan years ended December 31, 1996 and 1995,
$3,598,955 and $2,052,500 in loans were disbursed and principal repayments
of $1,783,718 and $997,674, respectively, were made.
Participant Benefit Payments
- ------------------------------------
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 of a participant's Elective Contributions may be
withdrawn prior to termination of employment if the participant is under
age 59 1/2 and can demonstrate an economic hardship (as defined in the
Plan). A participant who has attained age 59 1/2 may withdraw all or any
portion of his Elective Contributions account in accordance with the terms
of the Plan. Upon termination of employment, a participant receives all
vested assets in accounts established on his behalf under the Plan.
Non-vested portions of a terminated participant's accounts are forfeited
and used to offset future Company matching contributions. Effective January
1, 1995, participants who terminate employment and elect to keep their
funds in the Plan are charged a $20 annual account maintenance fee. The
Plan was amended effective January 24, 1995, to provide for the
distribution in a lump sum of terminated participant accounts with a vested
balance of less than $3,500. This distribution generally occurs no sooner
than six months after the participant's termination of employment date. As
of December 31, 1996 and 1995, forfeitures included in the Plan were
$990,812 and $655,370, respectively, which included 28,996 and 23,585
forfeited shares of MCI Communications Corporation Common Stock, at
year-end fair market values of $947,792 and $616,158, respectively.
Plan Administration
- -------------------------
The Plan is not a defined benefit plan and accordingly, Plan benefits are
not guaranteed by the Pension Benefit Guaranty Corporation. The Company is
the plan administrator and has
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appointed an Administrative Committee to administer the Plan. The
Administrative Committee is responsible for carrying out the provisions of
the Plan and may employ such experts as deemed necessary. Plan assets are
held by the trustee, Mellon Bank, N.A. of Pittsburgh, Pennsylvania. The
recordkeeper for the Plan is Putnam Investments, Inc. The Company reserves
its rights 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
ERISA. The Company has not expressed any intent to discontinue its
contributions nor to terminate the Plan.
The Plan's holdings of MCI Communications Corporation Common Stock, various
Putnam Investments, Inc. mutual funds, and a Mellon Bank mutual fund and
collective trust account are party-in-interest investments.
NOTE 2 - DESCRIPTION OF ACCOUNTING PRINCIPLES AND PRACTICES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of changes in net assets available for benefits during the
reporting period, such as those regarding fair value. Actual results could
differ from those estimates.
The financial statements for the Plan are prepared on the accrual basis of
accounting.
The Plan's distribution of the Company's Common Stock to participants is at 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 of the
distributed shares is recorded as a net gain or loss on disposition of assets.
Purchase and sales of securities are recorded on the trade date.
The Plan's interest in registered investment companies 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
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end of each period. Funds invested in guaranteed investment contracts are stated
at contract value, measured as cost plus earned interest income. During 1996,
the Plan adopted American Institute of Certified Public Accountants Statement of
Position 94-4, "Reporting of Investment Contracts Held by Health and Welfare
Benefit Plans and Defined Contribution Pension Plans." Defined contribution
plans should report fully-benefit responsive investment contracts at contract
value, which may or may not be equal to fair value, and all other investment
contracts at fair value. All guaranteed investment contracts held by the Plan at
December 31, 1996, and 1995 were fully-benefit responsive, and therefore are
valued at contract value.
Participant loans are valued at cost which approximates fair value.
Administrative expenses of the Plan are paid by the Company.
NOTE 3 - MASTER TRUST
MCI Communications Corporation established the MCI Communications Corporation
Defined Contribution Master Trust (the "Master Trust"), for the purpose of
facilitating administration of the Plan. The Master Trust is intended to be a
tax-exempt trust within the meaning of Section 501(a) of the Internal Revenue
Code. The administration of the Master Trust is the responsibility of the
trustee. All Plan investments are included in the Master Trust.
Effective November 20, 1996, the assets of the Darome Teleconferencing, Inc.
401(k) Plan were transferred into the MCI Communications Corporation Defined
Contribution Master Trust. The Darome Teleconferencing, Inc. 401(k) Plan had a
specific interest in the Master Trust of $658,541 representing approximately
.08% of the net assets of the Master Trust as of December 31, 1996.
The Master Trust consists of a pool of individual investments in which the
Exempt Plan, the Darome Teleconferencing, Inc. 401(k) Plan, and the Plan have
shared participation through Master Trust units. Net assets and net investment
gains and losses are allocated to each participating plan based on units of
participation held by the respective plans. Each unit represents a
proportionate, specific interest in the Master Trust. The Plan had a specific
interest in the Master Trust of $105,131,594 and $63,794,793 representing
approximately 13% and 11% of the net assets of the Master Trust as of December
31, 1996 and 1995, respectively.
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The fund information below presents the percentage interest of each plan in the
Master Trust using specific identification:
<TABLE>
<CAPTION>
Percentage Interest
Master Trust -------------------
Plan Name Investment Account 12/31/96 12/31/95
- --------------------- ---------------------------------- -------- --------
<S> <C> <C> <C>
MCI Communications EuroPacific Growth Fund 88.39% 87.35%
Corporation Dreyfus S&P 500 Stock Index 88.44% 88.43%
401(k) Plan Putnam Voyager Fund 90.92% 92.20%
For Exempt Putnam Balanced Retirement Fund 86.21% 87.94%
Employees Stable Asset Fund 86.40% 90.52%
EIN: 52-0886267 Putnam New Opportunities 88.34% 88.39%
MCI Common Stock 85.88% 88.40%
Participant Loans 80.73% 87.88%
MCI Communications EuroPacific Growth Fund 11.33% 12.65%
Corporation Dreyfus S&P 500 Stock Index 11.41% 11.57%
401(k) Plan Putnam Voyager Fund 09.08% 07.80%
For Non-Exempt Putnam Balanced Retirement Fund 13.25% 12.06%
Employees Stable Asset Fund 13.35% 09.48%
EIN: 52-0886267 Putnam New Opportunities 11.60% 11.61%
MCI Common Stock 14.12% 11.60%
Participant Loans 19.18% 12.12%
Darome EuroPacific Growth Fund 00.28% 00.00%
Teleconferencing, Dreyfus S&P 500 Stock Index 00.15% 00.00%
Inc. 401(k) Plan Putnam Voyager Fund 00.00% 00.00%
EIN: 13-2745892 Putnam Balanced Retirement Fund 00.53% 00.00%
Stable Asset Fund 00.25% 00.00%
Putnam New Opportunities 00.06% 00.00%
MCI Common Stock 00.00% 00.00%
Participant Loans 00.09% 00.00%
</TABLE>
The following pages present the net assets available for benefits and changes in
net assets available for benefits for the Master Trust in which the Plan, the
Exempt Plan, and the Darome Teleconferencing, Inc. 401(k) Plan participate.
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MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable
Growth S&P 500 Voyager Asset
Fund Stock Index Fund Fund
ASSETS ------------- ------------- ------------- -------------
------
<S> <C> <C> <C> <C>
Contributions receivable:
Employee $ 727 $ 427 $ 838 $ 182
Employer 0 0 0 0
------------- ------------- ------------- -------------
Total contributions receivable 727 427 838 182
Non-interest bearing cash 0 0 16 628,668
Other receivables 938 24,358 34,113 7,882,658
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 227 27,198 4,705 2,136,200
Registered investment companies 25,677,109 77,615,093* 133,656,939* 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 94,780,330*
------------- ------------- ------------- -------------
Total assets 25,679,001 77,667,076 133,696,611 105,428,038
------------- ------------- ------------- -------------
LIABILITIES
-----------
Operating payables 21,541 24,835 34,943 158,253
------------- ------------- ------------- -------------
Net assets available for benefits $ 25,657,460 $ 77,642,241 $133,661,668 $105,269,785
============= ============= ============= =============
Participating Plan Interests
- ----------------------------
MCI 401(k) Plan for Exempt Employees $ 22,678,619 $ 68,670,124 $121,528,239 $ 90,950,784
MCI 401(k) Plan for Non-Exempt Employees 2,907,841 8,857,738 12,133,429 14,054,922
Darome Teleconferencing, Inc. 401(k) Plan 71,000 114,379 0 264,079
------------- ------------- ------------- -------------
Total $ 25,657,460 $ 77,642,241 $133,661,668 $105,269,785
============= ============= ============= =============
<FN>
*Investment represents 5% or more of the Trust's net assets.
</FN>
</TABLE>
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<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
ASSETS ------------- ------------- ------------- ------------ -------------
------
<S> <C> <C> <C> <C> <C>
Contributions receivable:
Employee $ 1,348 $ 288 $ 1,135 $ 0 $ 4,945
Employer 0 0 2,199 0 2,199
------------- ------------- ------------- ------------ -------------
Total contributions receivable 1,348 288 3,334 0 7,144
Non-interest bearing cash 0 0 0 0 628,684
Other receivables 74,230 4,712 109,760 0 8,130,769
Investments, at fair value:
Common stock 0 0 369,352,337* 0 369,352,337
Common/collective trusts 43,655 4,536 8,844 0 2,225,365
Registered investment companies 52,455,498* 29,329,101 0 0 318,733,740
Participant loans 0 0 0 26,210,945 26,210,945
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 94,780,330
------------- ------------- ------------- ------------ -------------
Total assets 52,574,731 29,338,637 369,474,275 26,210,945 820,069,314
------------- ------------- ------------- ------------ -------------
LIABILITIES
-----------
Operating payables 75,514 4,993 67 0 320,146
------------- ------------- ------------- ------------ -------------
Net assets available for benefits $ 52,499,217 $ 29,333,644 $369,474,208 $26,210,945 $819,749,168
============= ============= ============= ============ =============
Participating Plan Interests
- ----------------------------
MCI 401(k) Plan for Exempt Employees $ 46,378,741 $ 25,289,835 $317,302,646 $ 21,160,045 $713,959,033
MCI 401(k) Plan for Non-Exempt Employees 6,090,028 3,887,960 52,171,562 5,028,114 105,131,594
Darome Teleconferencing, Inc. 401(k) Plan 30,448 155,849 0 22,786 658,541
------------- ------------- ------------- ------------- ------------
Total $ 52,499,217 $ 29,333,644 $369,474,208 $ 26,210,945 $819,749,168
============= ============= ============= ============= ============
<FN>
*Investment represents 5% or more of the Trust's net assets.
</FN>
</TABLE>
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<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable
Growth S&P 500 Voyager Asset
Fund Stock Index Fund Fund
ASSETS ------------- ------------- ------------- -------------
------
<S> <C> <C> <C> <C>
Contributions receivable:
Employee $ 14,237 $ 22,898 $ 46,507 $ 40,196
Employer 0 0 0 0
------------- ------------- ------------- -------------
Total contributions receivable 14,237 22,898 46,507 40,196
Non-interest bearing cash 1,652 72,460 88,919 144,577
Other receivables 258,009 334,968 60,967 1,478
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 14 12,491 1,703 1,584,427
Registered investment companies 14,850,336 58,410,869* 107,447,827* 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 104,298,513*
------------- ------------- ------------- -------------
Total assets 15,124,248 58,853,686 107,645,923 106,069,191
------------- ------------- ------------- -------------
LIABILITIES
-----------
Operating payables 258,009 334,957 88,909 25,089
------------- ------------- ------------- -------------
Net assets available for benefits $ 14,866,239 $ 58,518,729 $107,557,014 $106,044,102
============= ============= ============= =============
Participating Plan Interests
- ----------------------------
MCI Communications Retirement Savings Plan $ 12,985,468 $ 51,748,402 $ 99,167,158 $ 95,991,937
MCI Consumer Markets 401(k) Plan 1,880,771 6,770,327 8,389,856 10,052,165
------------- ------------- ------------- -------------
Total $ 14,866,239 $ 58,518,729 $107,557,014 $106,044,102
============= ============= ============= =============
<FN>
* Investment represents 5% or more of the Trust's net assets.
</FN>
</TABLE>
Page 18
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
ASSETS ------------- ------------- ------------- ------------ -------------
------
<S> <C> <C> <C> <C> <C>
Contributions receivable:
Employee $ 26,865 $ 19,313 $ 51,919 $ 0 $ 221,935
Employer 0 0 126,693 0 126,693
------------- ------------- ------------- ------------ -------------
Total contributions receivable 26,865 19,313 178,612 0 348,628
Non-interest bearing cash 0 0 0 0 307,608
Other receivables 17,119 177,650 0 0 850,191
Investments, at fair value:
Common stock 0 0 246,431,822* 0 246,431,822
Common/collective trusts 1,395 1,213 22,393 0 1,623,636
Registered investment companies 28,406,193 19,099,867 0 0 228,215,092
Participant loans 0 0 0 20,447,333 20,447,333
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 104,298,513
------------- ------------- ------------- ------------ -------------
Total assets 28,451,572 19,298,043 246,632,827 20,447,333 602,522,823
------------- ------------- ------------- ------------ -------------
LIABILITIES
-----------
Operating payables 0 193,585 0 0 900,549
------------- ------------- ------------- ------------ -------------
Net assets available for benefits $ 28,451,572 $ 19,104,458 $246,632,827 $20,447,333 $601,622,274
============= ============= ============= ============ =============
Participating Plan Interests
- ----------------------------
MCI Communications Retirement Savings Plan $ 25,147,778 $ 16,800,069 $218,017,594 $17,969,075 $537,827,481
MCI Consumer Markets 401(k) Plan 3,303,794 2,304,389 28,615,233 2,478,258 63,794,793
------------- ------------- ------------- ------------ -------------
Total $ 28,451,572 $ 19,104,458 $246,632,827 $20,447,333 $601,622,274
============= ============= ============= ============ =============
<FN>
* Investment represents 5% or more of the Trust's net assets.
</FN>
</TABLE>
Page 19
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable Putnam Putnam
Growth S&P 500 Voyager Asset New Balanced
Fund Stock Index Fund Fund Opportunities Retirement
ADDITIONS ------------ ------------ ----------- ----------- -------------- ------------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 7,252,491 $11,138,992 $ 21,643,332 $ 10,657,509 $14,051,271 $ 7,166,398
Non-cash employer 0 0 0 0 0 0
Rollovers 738,656 722,245 1,607,984 906,949 1,969,435 684,448
Transfers from ESOP 84,030 86,897 334,056 92,767 343,735 123,300
------------ ------------ ----------- ----------- -------------- ----------
Total contributions 8,075,177 11,948,134 23,585,372 11,657,225 16,364,441 7,974,146
------------ ------------ ----------- ----------- --------------- ----------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 7,188,820 0 0
Dividends on common stock 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0
Net gain from registered investment
companies 3,598,035 14,154,926 14,497,797 0 3,295,115 3,239,957
------------ ------------ ------------ ----------- ------------ ------------
Total earnings on investments 3,598,035 14,154,926 14,497,797 7,188,820 3,295,115 3,239,957
------------ ------------ ------------ ----------- ------------ ------------
Total additions 11,673,212 26,103,060 38,083,169 18,846,045 19,659,556 11,214,103
DEDUCTIONS
- ----------
Participant benefit payments 984,231 3,597,461 6,993,973 8,873,275 2,135,703 1,520,211
Account maintenance fees 6,163 14,225 27,072 27,308 11,396 7,390
------------ ------------ ------------ ----------- ------------ ------------
Net increase 10,682,818 22,491,374 31,062,124 9,945,462 17,512,457 9,686,502
Transfers from (to):
Other master trust investment accounts 137,996 (2,725,774) (3,558,778) (9,805,983) 6,817,424 575,236
Net loans (96,843) (788,574) (1,439,817) (1,215,837) (313,333) (182,289)
Western Union International Collectively
Bargained Plan 215 38,526 41,125 42,069 88 29
Darome Teleconferencing, Inc. 401(k) Plan 67,035 107,960 0 259,972 31,009 149,708
Net assets available for benefits, at
beginning of year 14,866,239 58,518,729 107,557,014 106,044,102 28,451,572 19,104,458
------------ ------------ ----------- ----------- ------------ -----------
Net assets available for benefits, at
end of year $25,657,460 $77,642,241 $ 133,661,668 $105,269,785 $52,499,217 $29,333,644
============ ============ =========== ============ ============ ============
</TABLE>
Page 20
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MCI Participant Total
Common Loans
Stock
ADDITIONS -------------- --------------- ------------
- ---------
<S> <C> <C> <C>
Contributions:
Participants $ 16,670,642 $ 0 $ 88,580,635
Non-cash employer 42,788,843 0 42,788,843
Rollovers 977,692 0 7,607,409
Transfers from ESOP 53,920 0 1,118,705
------------- ------------- -------------
Total contributions 60,491,097 0 140,095,592
------------- ------------- -------------
Earnings on investments:
Interest on participant loans 0 1,978,777 1,978,777
Interest on guaranteed investment contracts 0 0 7,188,820
Dividends on common stock 525,391 0 525,391
Net gain on sale of common stock 1,003,548 0 1,003,548
Unrealized appreciation of assets 69,875,942 0 69,875,942
Net gain from registered investment
companies 0 0 38,785,830
------------- ------------- -------------
Total earnings on investments 71,404,881 1,978,777 119,358,308
------------- ------------- -------------
Total additions 131,895,978 1,978,777 259,453,900
DEDUCTIONS
- ----------
Participant benefit payments 16,137,642 1,801,966 42,044,462
Account maintenance fees 47,232 0 140,786
------------- ------------- -------------
Net increase 115,711,104 176,811 217,268,652
Transfers from (to):
Other master trust investment accounts 8,559,879 0 0
Net loans (1,514,441) 5,551,134 0
Western Union International Collectively
Bargained Plan 84,839 10,786 217,677
Darome Teleconferencing, Inc. 401(k) Plan 0 24,881 640,565
Net assets available for benefits, at
beginning of year 246,632,827 20,447,333 601,622,274
------------- ------------- -------------
Net assets available for benefits, at
end of year $ 369,474,208 $ 26,210,945 $ 819,749,168
============= ============= =============
</TABLE>
Page 21
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
EuroPacific Putnam Scudder Dreyfus Putnam Putnam Putnam
Growth Balanced Income S&P 500 Growth & Investors Vista
Fund Fund Fund Stock Index Income Fund Fund
ADDITIONS ------------ ------------ ----------- ------------ ----------- ---------- -----------
- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 5,251,972 $ 1,248,922 $ 577,090 $ 8,827,241 $ 565,945 $ 123,673 $ 243,681
Non-cash employer 0 0 0 0 0 0 0
Rollovers 791,446 241,301 119,561 745,493 227,021 37,701 90,302
Transfers from ESOP 66,721 0 0 54,377 0 0 0
------------ ------------ ----------- ------------ ----------- ---------- -----------
Total contributions 6,110,139 1,490,223 696,651 9,627,111 792,966 161,374 333,983
------------ ------------ ----------- ------------ ----------- ---------- -----------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 0 0 0 0
Dividends on common stock 0 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0 0
Net gain from registered investment
companies 1,280,651 710,463 247,679 14,536,948 432,773 109,244 208,851
------------ ------------ ----------- ------------ ----------- ---------- -----------
Total earnings on investments 1,280,651 710,463 247,679 14,536,948 432,773 109,244 208,851
------------ ------------ ----------- ------------ ----------- ---------- -----------
Total additions 7,390,790 2,200,686 944,330 24,164,059 1,225,739 270,618 542,834
DEDUCTIONS
- ----------
Participant benefit payments 530,494 195,674 79,766 2,450,337 61,244 10,369 24,012
Account maintenance fees 3,587 920 440 11,812 340 130 168
------------ ------------ ----------- ------------ ----------- ---------- -----------
Net increase 6,856,709 2,004,092 864,124 21,701,910 1,164,155 260,119 518,654
Transfers from (to):
Other master trust investment accounts 1,567,927 (5,496,998) (2,728,202) 1,451,525 (3,060,910) (678,260) (1,514,509)
Net loans (5,685) (31,753) (7,405) (710,327) (15,566) (12,686) 7,781
Western Union International Collectively
Bargained Plan 0 0 0 7,922 0 0 0
Net assets available for benefits, at
beginning of year 6,447,288 3,524,659 1,871,483 36,067,699 1,912,321 430,827 988,074
------------ ------------ ----------- ------------ ----------- ---------- -----------
Net assets available for benefits, at
end of year $14,866,239 $ 0 $ 0 $58,518,729 $ 0 $ 0 $ 0
============ ============ =========== ============ =========== ========== ===========
</TABLE>
Page 22
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Putnam Putnam Putnam Putnam Putnam Putnam
Voyager Convertible High Yield Global Gov't OTC Emerging Diversified
Fund Income-Growth Advantage Income Growth Income
ADDITIONS ------------- ------------- ---------- ------------ ------------ -----------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 16,872,907 $ 198,879 $ 130,518 $ 60,923 $ 1,036,061 $ 81,012
Non-cash employer 0 0 0 0 0 0
Rollovers 1,286,559 59,077 25,654 7,986 189,639 26,713
Transfers from ESOP 81,661 0 0 0 0 0
------------- ------------- ---------- ------------ ------------ -----------
Total contributions 18,241,127 257,956 156,172 68,909 1,225,700 107,725
------------- ------------- ---------- ------------ ------------ -----------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 0 0 0
Dividends on common stock 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0
Net gain from registered investment
companies 28,079,036 107,684 57,739 16,807 663,984 40,082
------------- ------------- ---------- ------------ ------------ -----------
Total earnings on investments 28,079,036 107,684 57,739 16,807 663,984 40,082
------------- ------------- ---------- ------------ ------------ -----------
Total additions 46,320,163 365,640 213,911 85,716 1,889,684 147,807
DEDUCTIONS
- ----------
Participant benefit payments 5,020,074 12,105 17,737 4,797 109,631 19,295
Account maintenance fees 21,203 239 136 42 646 58
------------- ------------- ---------- ------------ ------------ -----------
Net increase 41,278,886 353,296 196,038 80,877 1,779,407 128,454
Transfers from (to):
Other master trust investment accounts 4,780,658 (1,045,665) (611,710) (296,290) (4,812,448) (485,856)
Net loans (1,268,072) (21,765) (442) 1,853 (10,051) (5,941)
Western Union International Collectively
Bargained Plan 31,562 0 0 0 0 0
Net assets available for benefits, at
beginning of year 62,733,980 714,134 416,114 213,560 3,043,092 363,343
------------- ------------- ---------- ------------ ------------ -----------
Net assets available for benefits, at
end of year $107,557,014 $ 0 $ 0 $ 0 $ 0 $ 0
============= ============= ========== ============ ============ ===========
</TABLE>
Page 23
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Stable Putnam Putnam MCI
Asset New Balanced Common Participant
Fund Opportunities Retirement Stock Loans Total
ADDITIONS ------------- ------------- ------------- ------------- ------------- -------------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 11,915,844 $ 5,436,882 $ 3,080,954 $ 15,451,668 $ 0 $ 71,104,172
Non-cash employer 0 0 0 38,743,079 0 38,743,079
Rollovers 1,214,460 1,006,870 396,986 752,466 0 7,219,235
Transfers from ESOP 334,063 55,454 53,836 75,926 0 722,038
------------- ------------- ------------- ------------- ------------- -------------
Total contributions 13,464,367 6,499,206 3,531,776 55,023,139 0 117,788,524
------------- ------------- ------------- ------------- ------------- -------------
Earnings on investments:
Interest on participant loans 0 0 0 0 1,668,598 1,668,598
Interest on guaranteed investment contracts 7,160,055 0 0 0 0 7,160,055
Dividends on common stock 0 0 0 456,852 0 456,852
Net gain on sale of common stock 0 0 0 2,798,630 0 2,798,630
Unrealized appreciation of assets 0 0 0 66,162,577 0 66,162,577
Net gain from registered investment
companies 0 5,545,511 1,701,843 0 0 53,739,295
------------- ------------- ------------- ------------- ------------- -------------
Total earnings on investments 7,160,055 5,545,511 1,701,843 69,418,059 1,668,598 131,986,007
------------- ------------- ------------- ------------- ------------- -------------
Total additions 20,624,422 12,044,717 5,233,619 124,441,198 1,668,598 249,774,531
DEDUCTIONS
- ----------
Participant benefit payments 8,079,761 722,038 558,121 14,459,032 1,480,795 33,835,282
Account maintenance fees 28,684 3,424 2,619 34,554 0 109,002
------------- ------------- ------------- ------------- ------------- -------------
Net increase 12,515,977 11,319,255 4,672,879 109,947,612 187,803 215,830,247
Transfers from (to):
Other master trust investment accounts (5,022,366) 12,473,352 14,416,962 (8,937,210) 0 0
Net loans (1,493,070) 40,952 14,617 (791,294) 4,308,854 0
Western Union International Collectively
Bargained Plan 40,298 0 0 39,706 9,350 128,838
Net assets available for benefits, at
beginning of year 100,003,263 4,618,013 0 146,374,013 15,941,326 385,663,189
------------- ------------- ------------- ------------- ------------- -------------
Net assets available for benefits, at
end of year $106,044,102 $ 28,451,572 $ 19,104,458 $246,632,827 $ 20,447,333 $601,622,274
============= ============= ============= ============= ============= =============
</TABLE>
Page 24
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
SCHEDULE OF MASTER TRUST PARTICIPATION
<TABLE>
<CAPTION>
Current Value of Interest Year Ended December 31, 1996
---------------------------- ------------------------------------------------------ ------------------
Participant
December 31, December 31, Benefit Net
Investment Account Interest: 1996 1995 Contributions Payments Net Loans Net Transfers Appreciation
-------------- -------------- -------------- ---------------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
EuroPacific Growth Fund $ 2,907,841 $ 1,880,771 $ 1,133,489 $ (161,800) $ (49,274) $ (296,612) $ 401,267
Dreyfus S&P 500 Stock Index 8,857,738 6,770,327 1,643,234 (469,745) (155,189) (520,476) 1,589,587
Putnam Voyager Fund 12,133,429 8,389,856 3,230,931 (958,104) (358,363) 562,608 1,266,501
Putnam Balanced Retirement Fund 3,887,960 2,304,389 1,457,404 (287,810) (47,079) 38,806 422,250
Stable Asset Fund 14,054,922 10,052,165 2,401,827 (1,575,013) (379,240) 2,624,737 930,446
Putnam New Opportunities 6,090,028 3,303,794 2,445,921 (337,779) (77,620) 457,806 297,906
MCI Common Stock 52,171,562 28,615,233 10,783,211 (3,441,751) (399,469) 6,451,575 10,162,763
Participant Loans
interest rates range 7% - 11%) 5,028,114 2,478,258 0 (349,281) 1,466,234 1,083,900 349,003
-------------- -------------- -------------- --------------- ------------- ------------- --------------
Total $ 105,131,594 $ 63,794,793 $ 23,096,017 $ (7,581,283) $ 0 $ 10,402,344 $ 15,419,723
============== ============== ============== =============== ============= ============= ==============
</TABLE>
Page 25
<PAGE>
NOTE 4 - NET ASSETS AVAILABLE FOR BENEFITS AND CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS BY FUND
The net assets available for benefits and the changes in
net assets among the Plan's investment funds for the years ended December 31,
1996 and 1995 are presented on the following pages.
Page 26
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable
Growth S&P 500 Voyager Asset
Fund Stock Index Fund Fund
------------- ------------- ------------- -------------
ASSETS
------
<S> <C> <C> <C> <C>
Contributions receivable:
Employee $ 89 $ 52 $ 117 $ 117
Employer 0 0 0 0
Other receivables 1,375 1,923 6,553 961,312
------------ ------------ ------------ ---------------
Total receivables 1,464 1,975 6,670 961,429
Non-interest bearing cash 0 0 1 83,936
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 26 3,103 427 285,211
Registered investment companies 2,910,068 8,854,641* 12,133,001* 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 12,757,728
------------- ------------- ------------- -------------
Total assets 2,911,558 8,859,719 12,140,099 14,088,304
------------- ------------- ------------- -------------
LIABILITIES
-----------
Operating payables 3,717 1,981 6,670 33,382
------------- ------------- -------------- ------------
Net assets available for benefits $ 2,907,841 $ 8,857,738 $ 12,133,429 $ 14,054,922
============= ============= ============= =============
<FN>
* Investment represents 5% or more of the Plan's net assets.
</FN>
</TABLE>
Page 27
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
------------- ------------- ------------- ------------- ---------
ASSETS
------
<S> <C> <C> <C> <C> <C>
Contributions receivable:
Employee $ 199 $ 114 $ 147 $ 0 $ 836
Employer 0 0 508 0 508
Other receivables 639 52 25,658 0 997,512
------------ ------------ ------------ ------------ -----------
Total receivables 838 166 26,313 0 998,856
Non-interest bearing cash 0 0 0 0 83,937
Investments, at fair value:
Common stock 0 0 52,144,009* 0 52,144,009
Common/collective trusts 5,064 601 1,249 0 295,681
Registered investment companies 6,084,956* 3,887,359 0 0 33,870,025
Participant loans 0 0 0 5,028,114* 5,028,114
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 12,757,728
------------- ------------ ------------ ------------ -----------
Total assets 6,090,858 3,888,126 52,171,571 5,028,114 105,178,349
------------- ------------ ------------ ------------ -----------
LIABILITIES
-----------
Operating payables 830 166 9 0 46,755
------------- ------------ ------------ ------------ -----------
Net assets available for benefits $ 6,090,028 $3,887,960 $ 52,171,562 $ 5,028,114 $105,131,594
============= ============ ============ ============ ===========
<FN>
* Investment represents 5% or more of the Plan's net assets.
</FN>
</TABLE>
Page 28
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable
Growth S&P 500 Voyager Asset
Fund Stock Index Fund Fund
------------ ------------ ------------ -------------
ASSETS
------
<S> <C> <C> <C> <C>
Contributions receivable:
Employee $ 14,237 $ 22,898 $ 46,507 $ 40,196
Employer 0 0 0 0
Other receivables 32,425 40,872 1,314 140
------------ ------------ ------------ -------------
Total receivables 46,662 63,770 47,821 40,336
Non-interest bearing cash 209 8,383 6,936 13,705
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 2 1,445 133 150,186
Registered investment companies 1,866,323 6,772,946* 8,415,511* 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 9,850,316*
------------ ------------ ------------ -------------
Total assets 1,913,196 6,846,544 8,470,401 10,054,543
------------ ------------ ------------ -------------
LIABILITIES
-----------
Operating payables 32,425 76,217 80,545 2,378
------------ ------------ ------------ -------------
Net assets available for benefits $ 1,880,771 $ 6,770,327 $ 8,389,856 $ 10,052,165
============ ============ ============ =============
<FN>
* Investment represents 5% or more of the Plan's net assets.
</FN>
</TABLE>
Page 29
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
------------- ------------- ------------- ------------ -------------
ASSETS
------
<S> <C> <C> <C> <C> <C>
Contributions receivable:
Employee $ 26,865 $ 19,313 $ 51,920 $ 0 $ 221,936
Employer 0 0 126,693 0 126,693
Other receivables 141 19,567 7 0 94,466
------------- ------------- ------------- ------------ -------------
Total receivables 27,006 38,880 178,620 0 443,095
Non-interest bearing cash 0 0 0 0 29,233
Investments, at fair value:
Common stock 0 0 28,434,032* 0 28,434,032
Common/collective trusts 162 146 2,581 0 154,655
Registered investment companies 3,281,035* 2,291,462 0 0 22,627,277
Participant loans 0 0 0 2,478,258 2,478,258
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 9,850,316
------------- ------------- ------------- ------------ -------------
Total assets 3,308,203 2,330,488 28,615,233 2,478,258 64,016,866
------------- ------------- ------------- ------------ -------------
LIABILITIES
-----------
Operating payables 4,409 26,099 0 0 222,073
------------- ------------- ------------- ------------ -------------
Net assets available for benefits $ 3,303,794 $ 2,304,389 $ 28,615,233 $ 2,478,258 $ 63,794,793
============= ============= ============= ============ =============
<FN>
* Investment represents 5% or more of the Plan's net assets.
</FN>
</TABLE>
Page 30
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable Putnam Putnam
Growth S&P 500 Voyager Asset New Balanced
Fund Stock Index Fund Fund Opportunities Retirement
ADDITIONS ------------ ------------ ----------- ----------- -------------- ------------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 1,094,938 $ 1,600,956 $ 3,089,772 $ 2,275,487 $ 2,316,168 $1,310,492
Non-cash employer 0 0 0 0 0 0
Rollovers 36,129 38,143 116,417 77,412 77,277 129,112
Transfers from ESOP 2,422 4,135 24,742 48,928 52,476 17,800
------------ ------------ ----------- ----------- -------------- ----------
Total contributions 1,133,489 1,643,234 3,230,931 2,401,827 2,445,921 1,457,404
------------ ------------ ----------- ----------- --------------- ----------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 930,446 0 0
Dividends on common stock 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0
Net gain from registered investment
companies 401,267 1,589,587 1,266,501 0 297,906 422,250
------------ ------------ ------------ ----------- ------------ ------------
Total earnings on investments 401,267 1,589,587 1,266,501 930,446 297,906 422,250
------------ ------------ ------------ ----------- ------------ ------------
Total additions 1,534,756 3,232,821 4,497,432 3,332,273 2,743,827 1,879,654
DEDUCTIONS
- ----------
Participant benefit payments 159,943 465,916 950,717 1,565,643 334,525 285,381
Account maintenance fees 1,857 3,829 7,387 9,370 3,254 2,429
------------ ------------ ------------ ----------- ------------ ------------
Net increase 1,372,956 2,763,076 3,539,328 1,757,260 2,406,048 1,591,844
Transfers from (to):
Other master trust investment accounts (62,133) (235,482) (193,351) (586,094) 848,539 48,422
Net loans (49,274) (155,189) (358,363) (379,240) (77,620) (47,079)
Western Union International Collectively
Bargained Plan 51 2,390 2,200 615 88 29
MCI 401(k) Plan for Exempt Employees (234,530) (287,384) 753,759 3,210,216 (390,821) (9,645)
Net assets available for benefits,
beginning of year 1,880,771 6,770,327 8,389,856 10,052,165 3,303,794 2,304,389
------------ ------------ ----------- ----------- ------------ -----------
Net assets available for benefits,
end of year $ 2,907,841 $ 8,857,738 $12,133,429 $14,054,922 $ 6,090,028 $3,887,960
============ ============ =========== ============ ============ ============
</TABLE>
Page 31
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
MCI Participant Total
Common Loans
Stock
ADDITIONS -------------- --------------- ------------
- ---------
Contributions:
Participants $ 3,236,416 $ 0 $ 14,924,229
Non-cash employer 7,469,320 0 7,469,320
Rollovers 49,608 0 524,098
Transfers from ESOP 27,867 0 178,370
------------ ------------- ------------
Total contributions 10,783,211 0 23,096,017
-------------- ------------- ------------
Earnings on investments:
Interest on participant loans 0 349,003 349,003
Interest on guaranteed investment
contracts 0 0 930,446
Dividends on common stock 79,756 0 79,756
Net gain on sale of common stock 195,393 0 195,393
Unrealized appreciation of assets 9,887,614 0 9,887,614
Net gain from registered investment
companies 0 0 3,977,511
------------- ------------ ------------
Total earnings on investments 10,162,763 349,003 15,419,723
------------- ------------ ------------
Total additions 20,945,974 349,003 38,515,740
DEDUCTIONS
- ----------
Participant benefit payments 3,427,564 349,281 7,538,970
Account maintenance fees 14,187 0 42,313
------------- ------------ ------------
Net increase 17,504,223 (278) 30,934,457
Transfers from (to):
Other master trust investment accounts 180,099 0 0
Net loans (399,469) 1,466,234 0
Western Union International Collectively
Bargained Plan 2,371 0 7,744
MCI Plan for Exempt Employees 6,269,105 1,083,900 10,394,600
Net assets available for benefits,
beginning of year 28,615,233 2,478,258 63,794,793
-------------- ------------- ------------
Net assets available for benefits,
end of year $ 52,171,562 $ 5,028,114 $105,131,594
============= ============ ============
Page 32
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
EuroPacific Putnam Scudder Dreyfus Putnam Putnam Putnam
Growth Balanced Income S&P 500 Growth & Investors Vista
Fund Fund Fund Stock Index Income Fund Fund
ADDITIONS ------------ ---------- ---------- ------------ ---------- --------- ---------
- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 861,411 $ 212,801 $ 93,432 $ 1,393,296 $ 120,271 $ 21,358 $ 31,981
Non-cash employer 0 0 0 0 0 0 0
Rollovers 64,524 19,314 8,821 111,898 57,600 20,838 12,278
------------ ---------- ---------- ------------ ---------- --------- --------
Total contributions 925,935 232,115 102,253 1,505,194 177,871 42,196 44,259
------------ ---------- ---------- ------------ ---------- --------- --------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 0 0 0 0
Dividends on common stock 0 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0 0
Net gain from registered investment
companies 150,793 83,427 24,504 1,693,107 48,872 9,374 23,049
------------ ---------- ---------- ------------ ---------- --------- ---------
Total earnings on investments 150,793 83,427 24,504 1,693,107 48,872 9,374 23,049
------------ ---------- ---------- ------------ ---------- --------- ---------
Total additions 1,076,728 315,542 126,757 3,198,301 226,743 51,570 67,308
DEDUCTIONS
- ----------
Participant benefit payments 77,162 13,218 11,926 375,544 12,182 918 4,390
Account maintenance fees 796 194 74 3,336 63 35 25
------------ ---------- ---------- ------------ ---------- --------- ---------
Net increase 998,770 302,130 114,757 2,819,421 214,498 50,617 62,893
Transfers from (to):
Other master trust investment accounts 268,344 (668,271) (305,922) 177,693 (422,194) (79,717) (183,632)
Net loans (3,588) (583) 175 (160,142) 1,337 (3,605) (6,483)
MCI Communications Retirement Savings Plan (83,937) (20,346) (183) (364,557) (5,121) 906 44,438
Net assets available for benefits,
beginning of year 701,182 387,070 191,173 4,297,912 211,480 31,799 82,784
------------ ---------- ---------- ------------ ---------- --------- ---------
Net assets available for benefits,
end of year $ 1,880,771 $ 0 $ 0 $ 6,770,327 $ 0 $ 0 $ 0
============ ========== ========== ============ ========== ========= =========
</TABLE>
Page 33
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Putnam Putnam Putnam Putnam Putnam Putnam
Voyager Convertible High Yield Global Gov't OTC Emerging Diversified
Fund Income-Growth Advantage Income Growth Income
ADDITIONS ------------ ------------- ---------- ------------ ------------ -----------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 2,526,517 $ 32,195 $ 19,476 $ 11,784 $ 141,209 $ 16,064
Non-cash employer 0 0 0 0 0 0
Rollovers 153,633 12,929 0 0 34,855 0
------------ ------------- ---------- ------------ ------------ -----------
Total contributions 2,680,150 45,124 19,476 11,784 176,064 16,064
------------ ------------- ---------- ------------ ------------ -----------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 0 0 0
Dividends on common stock 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0
Net gain from registered investment
companies 2,078,396 10,559 4,890 1,736 59,483 5,629
----------- ------------- ---------- ------------ ------------ -----------
Total earnings on investments 2,078,396 10,559 4,890 1,736 59,483 5,629
----------- ------------- ---------- ------------ ------------ -----------
Total additions 4,758,546 55,683 24,366 13,520 235,547 21,693
DEDUCTIONS
- ----------
Participant benefit payments 555,050 1,186 1,729 225 10,443 1,144
Account maintenance fees 4,668 25 28 7 126 11
----------- ------------- ---------- ------------ ------------ -----------
Net increase 4,198,828 54,472 22,609 13,288 224,978 20,538
Transfers from (to):
Other master trust investment accounts 257,303 (94,894) (62,109) (30,662) (458,898) (69,446)
Net loans (160,459) (6,696) 112 214 (17,907) 1,624
MCI Communications Retirement Savings Plan (428,679) (1,120) 591 (446) 11,115 (498)
Net assets available for benefits,
beginning of year 4,522,863 48,238 38,797 17,606 240,712 47,782
------------ ------------- ---------- ------------ ------------ -----------
Net assets available for benefits,
end of year $ 8,389,856 $ 0 $ 0 $ 0 $ 0 $ 0
============ ============= ========== ============ ============ ===========
</TABLE>
Page 34
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Stable Putnam Putnam MCI
Asset New Balanced Common Participant
Fund Opportunities Retirement Stock Loans Total
ADDITIONS ------------- ------------- ------------ ------------- ------------ -------------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 2,147,967 $ 972,447 $ 589,048 $ 2,590,831 $ 0 $ 11,782,088
Non-cash employer 0 0 0 6,565,128 0 6,565,128
Rollovers 85,489 162,222 33,088 57,904 0 835,393
------------- ------------- ------------ ------------- ------------ -------------
Total contributions 2,233,456 1,134,669 622,136 9,213,863 0 19,182,609
------------- ------------- ------------ ------------- ------------ -------------
Earnings on investments:
Interest on participant loans 0 0 0 0 160,175 160,175
Interest on guaranteed investment contracts 716,230 0 0 0 0 716,230
Dividends on common stock 0 0 0 57,302 0 57,302
Net gain on sale of common stock 0 0 0 574,244 0 574,244
Unrealized appreciation of assets 0 0 0 8,783,448 0 8,783,448
Net gain from registered investment
companies 0 593,767 200,784 0 0 4,988,370
------------- ------------- ------------ ------------- ------------ -------------
Total earnings on investments 716,230 593,767 200,784 9,414,994 160,175 15,279,769
------------- ------------- ------------ ------------- ------------ -------------
Total additions 2,949,686 1,728,436 822,920 18,628,857 160,175 34,462,378
DEDUCTIONS
- ----------
Participant benefit payments 1,670,191 77,493 77,257 3,060,627 326,895 6,277,580
Account maintenance fees 8,112 801 691 9,502 0 28,494
------------- ------------- ------------ ------------- ------------ -------------
Net increase 1,271,383 1,650,142 744,972 15,558,728 (166,720) 28,156,304
Transfers from (to):
Other master trust investment accounts (861,070) 1,361,740 1,626,852 (455,117) 0 0
Net loans (313,848) (17,271) (23,226) (184,305) 894,651 0
MCI Communications Retirement Savings Plan (407,343) (68,883) (44,209) (1,021,414) (74,172) (2,463,858)
Net assets available for benefits,
beginning of year 10,363,043 378,066 0 14,717,341 1,824,499 38,102,347
------------- ------------- ------------ ------------- ------------ -------------
Net assets available for benefits,
end of year $ 10,052,165 $ 3,303,794 $ 2,304,389 $ 28,615,233 $ 2,478,258 $ 63,794,793
============= ============= ============ ============= ============ =============
</TABLE>
Page 35
<PAGE>
NOTE 5 - PARTICIPANTS' ACCOUNTS
As of December 31, 1996 and 1995, the Plan held 1,595,520 and 1,089,037 shares
of MCI Communications Corporation Common Stock at fair market values of
$52,153,560 and $28,451,092, respectively. Of these shares, 275,777 and 295,130
were contributed by MCIT during the Plan years ended December 31, 1996 and 1995,
respectively, as MCIT's matching contributions. As of December 31, 1996 and
1995, the Plan's benefit claims payable were $11,755,110 and $10,457,005,
respectively, which include 156,894 and 159,503 shares of MCI Communications
Corporation Common Stock at fair market values of $5,128,464 and $4,167,016,
respectively. Net assets include account balances of participants who have
terminated from MCIT and have not received a distribution as of year end.
NOTE 6 - TRANSFER OF ASSETS TO (FROM) THE PLAN
During the years ended December 31, 1996 and 1995, certain participants
transferred between the Plan and the Exempt Plan. During the plan year ended
December 31, 1996, assets valued at $10,394,600 were transferred to the Plan,
including 235,152 shares of MCI Communications Corporation Common Stock at a
fair value of $6,269,575. During the year ended December 31, 1995, assets valued
at $2,463,858 were transferred from the Plan, including 47,040 shares of MCI
Communications Corporation Common Stock at a fair value of $1,021,414.
During the year ended December 31, 1996, certain participants transferred
between the Plan and the Western Union International 401(k) Plan for
Collectively Bargained Employees. During the year ended December 31, 1996,
assets valued at $7,744, including 86 shares of MCI Communications Corporation
Common Stock at a fair value of $2,371 were transferred to the Plan.
NOTE 7 - FEDERAL INCOME TAX STATUS
As described in Note 1, the Plan is Part II of the MCI Communications
Corporation ESOP and 401(k) for Non-Exempt Employees. The Plan, as amended
through January 24, 1995, has been determined by letter dated January 31, 1996,
by the IRS to be qualified under Section 401 of the Internal Revenue Code.
Page 36
<PAGE>
NOTE 8- MERGER AGREEMENT
Effective November 3, 1996, MCI Communications Corporation ("MCI") and British
Telecommunications, plc ("BT") entered into an Agreement and Plan of Merger
("the Merger"). As a result of the proposed merger, the stockholders of MCI and
BT will become the owners of a combined company, renamed Concert plc (Concert).
Under the terms of the Merger, each outstanding share of the MCI's common stock
(other than treasury shares and shares owned by BT including the shares of Class
A common stock) will be converted into the right to receive (i) .54 American
Depository Share (ADS) of Concert, each ADS representing ten ordinary shares of
25 pence each of Concert (with cash being paid in lieu of fractional ADSs), and
(ii) $6.00 in cash.
The shareholders of the respective companies approved the Merger at meetings
held on April 2, 1997 and April 15, 1997, respectively. Completion of the Merger
is subject to certain conditions, including the receipt of required regulatory
approvals. MCI expects to complete the Merger in the fall of 1997.
NOTE 9 - SUBSEQUENT EVENTS
Effective January 1, 1997, the eligibility requirements under the Plan were
amended to permit an employee to become a participant and eligible for elective
contributions on the entry date coincident with or next following the close of
the three consecutive, full, calendar months period from his or her date of
hire. The participant shall be eligible to receive matching contributions after
completing a 12-consecutive-month period starting on his or her date of hire in
which the participant has completed 1,000 hours of service.
Page 37
<PAGE>
SCHEDULE I
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CURRENT
NUMBER VALUE AT
DESCRIPTION/ISSUER OF SHARES COST 12/31/96
- ------------------ --------- ------------ ------------
<S> <C> <C> <C>
LOANS TO PARTICIPANTS
Participant loan accounts (rates range 7% - 11%) $ 0 $ 26,210,945
(maturities range 1997-2011) ------------
<CAPTION>
INTEREST IN COLLECTIVE INVESTMENT
FUNDS OF TRUSTEE
* Mellon Bank Temporary
Investment Fund 2,225,365 2,225,365
------------
<CAPTION>
INTEREST IN REGISTERED INVESTMENT
COMPANIES
EuroPacific Growth Fund 986,064 22,903,818 25,677,109
* Dreyfus S&P 500 Stock Index 4,878,384 55,973,987 77,615,093
* Putnam Voyager Fund 8,291,373 102,466,644 133,656,939
* Putnam New Opportunities 1,291,053 44,871,300 52,455,498
* Putnam Balanced Retirement 2,836,470 27,895,654 29,329,101
------------
Total investment in registered
investment companies 318,733,740
------------
<CAPTION>
GUARANTEED INVESTMENT CONTRACTS **
Stable Asset Fund
Aetna Life Insurance (6.63% Matures 6/30/00) 20,306,182 20,306,182
Allstate Life Insurance Company (5.90% Matures 7/1/98) 6,474,248 6,474,248
John Hancock Mutual Life Insurance (8.05% Matures 6/30/99) 4,000,628 4,000,628
Metropolitan Life Insurance (8.96% Matures 6/30/96) 14,261,226 14,261,226
New York Life Insurance (6.82% Matures 3/31/98) 8,847,294 8,847,294
New York Life Insurance (8.08% Matures 12/31/99) 5,803,475 5,803,475
Pacific Mutual Life Insurance (7.30% Matures 12/31/01) 4,642,586 4,642,586
Pacific Mutual Life Insurance (7.36% Matures 12/31/01) 1,287,816 1,287,816
Peoples Security Insurance Company (5.72% Matures 6/30/94) 7,000,905 7,000,905
Peoples Security Insurance Company (5.86% Matures 3/31/98) 5,220,011 5,220,011
Principal Mutual Life Insurance (6.60% Matures 4/02/01) 3,409,732 3,409,732
Prudential Life Insurance (7.00% Matures 9/30/98) 6,028,870 6,028,870
TransAmerica Life Insurance (5.60% Matures 6/30/95) 3,426,163 3,426,163
TransAmerica Life Insurance (7.25% Matures 12/31/98) 4,071,194 4,071,194
------------
Total guaranteed investment contracts 94,780,330
------------
<CAPTION>
COMMON STOCK
* MCI Communications Corporation 11,299,325 248,485,916 369,352,337
------------
TOTAL INVESTMENTS $811,302,717
============
<FN>
* Denotes a party-in-interest
** Current value is considered to be contract value.
</FN>
</TABLE>
Page 38
<PAGE>
SCHEDULE II
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
Transactions or series of transactions exceeding 5% of the beginning fair values
of master trust assets for the plan year January 1, 1996 to December 31, 1996
are considered reportable transactions. Fair value at January 1, 1996 is
$602,522,823. Five percent (5%) of fair value is $30,126,141.
<TABLE>
<CAPTION>
Identity Expense Current
of incurred value of asset
party Purchase Selling Lease with Cost of on transaction Net gain
involved Description of asset price price rental transaction asset date or (loss)
- -------- ----------------------- -------------- ------------- ------ ----------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
* Putnam Voyager Fund $ 26,805,559 $ 26,805,559 $ 26,805,559 $ 0
(129 purchases)
* Putnam Voyager Fund $ 15,121,764 $ 10,559,468 $ 15,121,764 $4,562,296
(126 sales)
MCI Common Stock $ 10,197,229 $ 10,197,229 $ 10,197,229 $ 0
(202 deliveries)
MCI Common Stock $ 38,361,503 $ 38,361,503 $ 38,361,503 $ 0
(209 receipts)
Stable Asset Fund $ 35,230,443 $ 35,230,443 $ 35,230,443 $ 0
(207 purchases)
Stable Asset Fund $ 34,678,608 $ 34,678,608 $ 34,678,608 $ 0
(179 sales)
* Mellon Bank Temporary $ 37,705,175 $ 37,705,175 $ 37,705,175 $ 0
Investment Fund (100 purchases)
* Mellon Bank Temporary $ 37,558,568 $ 37,558,568 $ 37,558,568 $ 0
Investment Fund (62 sales)
<FN>
* Denotes a party-in-interest
</FN>
</TABLE>
Page 39
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
sponsor of the MCI Communications Corporation ESOP and 401(k) Plan for
Non-Exempt Employees has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT
EMPLOYEES - PART II OF THE MCI
COMMUNICATIONS CORPORATION
ESOP AND 401(K) FOR NON-EXEMPT
EMPLOYEES
Date: June 27, 1997 By:David M. Case
------------------------------
David M. Case
Vice President
MCI Telecommunications Corporation
Page 40
<PAGE>
Exhibit 23
----------
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT EMPLOYEES
(FORMERLY MCI CONSUMER MARKETS 401(K) 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 of Form S-8 (No. 333-12847) of
MCI Communications Corporation of our report dated June 11, 1997, appearing on
page 3 of this Form 11-K.
PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Washington, D.C.
June 27, 1997
Page 41
<PAGE>
Exhibit 99
DOL Filing Confirmation ----------
I certify that the Plan Administrator of the MCI Communications Corporation
401(k) Plan for Non-Exempt Employees has received a Statement of Assets and
Liabilities and also that the 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 25-6078903-980
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR NON-EXEMPT
EMPLOYEES - PART II OF THE MCI
COMMUNICATIONS CORPORATION ESOP
AND 401(K) FOR NON-EXEMPT EMPLOYEES
Date: June 27, 1997 By:David M. Case
------------------------------
David M. Case
Vice President
MCI Communications Corporation
Page 42
