UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _______
Commission File Number: 0-6457
MCI COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-0886267
(State of incorporation) (I.R.S. Employer Identification No.)
1801 Pennsylvania Avenue, N.W., Washington, D.C. 20006
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (202) 872-1600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value per share
(Title of class)
8.00% Cumulative Quarterly Income Preferred Securities, Series A*
(Title of class)
- --------------------------
* Issued by MCI Capital I, a Delaware statutory business trust. The payment of
trust distributions and payments on liquidation or redemption are guaranteed
under certain circumstances by MCI Communications Corporation. MCI
Communications Corporation is the owner of 100% of the common securities issued
by MCI Capital I.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]
The aggregate market value of the voting stock of registrant, which includes the
Common Stock and Class A Common Stock, held by non-affiliates was
$24,377,901,691 at February 14, 1997, based upon the closing price of the Common
Stock on that date.
As of February 14, 1997, registrant had outstanding 547,737,100 shares of Common
Stock and 135,998,932 shares of Class A Common Stock.
Documents Incorporated by Reference:
Portions of the Annual Report to Stockholders for the year ended December 31,
1996 - Part II Portions of the Proxy Statement For the 1997 Annual Meeting of
Stockholders -
Part I and Part III
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PAGE 2
Forward-looking Statements May Prove Inaccurate
MCI has made certain forward-looking statements in this Annual Report
on Form 10-K that are subject to risks and uncertainties. Forward-looking
statements include information concerning the possible future results of
operations of the company, its long-distance telecommunication services
business, its investments in ventures and developing markets ("VDM") businesses,
the possible future results of operations of the company and Concert after the
Merger and statements of information preceded by, followed by or that include
the words "believes", "expects", "anticipates", or similar expressions. For
those statements, the company claims the protection of safe-harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995. The reader is cautioned that important factors such as the
following, in addition to those contained elsewhere in this Annual Report on
Form 10-K, could affect the future results of the company, its long distance
telecommunication services and VDM businesses and the company and Concert after
the Merger and could cause those results to differ materially from those
expressed in the forward-looking statements: material adverse changes in the
economic conditions in the markets served by the company and Concert; a
significant delay in the expected closing of the Merger; future regulatory
actions and conditions in MCI's and Concert's operating areas, including the
ability of the company to obtain local facilities at competitive rates; and
competition from others in the U.S. and international long-distance markets,
including the entry of the RBOC's and other companies into the long-distance
markets in the U.S.
Capitalized terms not otherwise defined above shall have the meanings
ascribed to them in this Annual Report on Form 10-K.
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PAGE 3
PART I
Item 1. Business
GENERAL
- -------
MCI* is one of the world's leading providers of communication services. It
is the second largest carrier of long-distance telecommunication services in the
United States ("U.S.") and the third largest carrier of international
long-distance telecommunication services in the world.
MCI provides a broad range of communication services, including
long-distance telecommunication services, local and wireless services,
Internet/intranet services and information technology and outsourcing services.
The provision of long-distance telecommunication services is MCI's core
business. Long-distance telecommunication services comprise a wide spectrum of
domestic and international voice and data services, including long-distance
telephone services, data communication services, teleconferencing services and
electronic messaging services. During each of the last three years, more than
90% of MCI's operating revenues and operating income were derived from its core
business.
The communication services industry continues to change both domestically
and internationally. The enactment of the Telecommunications Act of 1996 (the
"Telecommunications Act") and the recent agreement of member countries of the
World Trade Organization to open their telecommunication markets to competition
reflect and further this change. The Telecommunications Act is expected to have
a significant impact on MCI's business by opening the U.S. local service markets
to competition and allowing the incumbent local exchange carriers ("ILECs") to
compete in the long-distance market. These developments should increase the
momentum of change and provide significant opportunities and risks to the
participants in these markets.
- ----------------------
*MCI conducts its business primarily through its subsidiaries. Unless the
context otherwise requires, "MCI" or "company" means MCI Communications
Corporation, a Delaware corporation organized in August 1968, and its
subsidiaries on a consolidated basis. MCI is a registered service mark of MCI
Communications Corporation. MCI has its principal executive offices at 1801
Pennsylvania Avenue, N.W., Washington, D.C. 20006 (telephone number (202)
872-1600).
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The changes in the communication services industry reflect, and are driven
by, providers of telecommunication services that are entering, or trying to
enter, new markets, both domestically and internationally, and are facing
competition from new entrants in their present markets. This convergence of the
international, domestic long-distance and local telecommunication services
markets into one global market is being facilitated by evolving technology and
by the regulatory developments described above and is partially in response to
the desire of customers to have most or all of their communication requirements
fulfilled by one supplier. As a result and because of this convergence,
companies, including MCI, which previously offered services primarily in one
part of the communication services market, are offering, either directly or
through alliances with others, new services to complement their primary service
offerings. These companies are also aligning with entities that provide services
that complement their own, such as MCI's announcement in November 1996 of an
agreement providing for the merger (the "Merger") with British
Telecommunications plc ("BT") and the pending mergers of several Regional Bell
Operating Companies ("RBOCs"). See "The Merger" below for a further discussion
of the Merger.
MCI's continuing investments in ventures and developing markets will
enable it to expand its offering of a variety of wireless, Internet/intranet,
information technology outsourcing and multimedia services that, along with
local services, complement its long-distance telecommunication services. These
services, combined with the continued growth and strength of MCI's core
business, should enable MCI to participate in all communication service markets.
See "VENTURES AND DEVELOPING MARKETS BUSINESS" and "CORE BUSINESS" below.
MCI anticipates that continued substantial capital expenditures will be
required to compete effectively in the long-distance and local telecommunication
service markets. Competition from the RBOCs and any others that seek to enter
the long-distance telecommunication services market, some of which have
significant financial and other resources, will be intense. Due to the rapidly
changing nature of these markets, the timing of the consummation of the Merger
and the other factors summarized above, MCI cannot predict the level of its
future success, but the company believes that it can and will compete
effectively in providing its services.
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PAGE 5
The Merger
- ----------
On November 3, 1996, MCI announced an agreement to merge with BT to create
the first truly global communications company. The combined company will be
named Concert plc ("Concert") and will operate under the BT and MCI brand names
in the United Kingdom and the U.S., respectively. Concert** will deliver premier
integrated services to customers worldwide and take advantage of opportunities
of a global communications market.
Consummation of the Merger is subject to certain conditions, including the
approval of the Merger by the stockholders of MCI and BT and receipt of required
regulatory approvals. See MCI's Proxy Statement for its 1997 Annual Meeting for
a full description of the Merger and the risks and benefits of the Merger, which
description is incorporated herein by reference.
MCI believes the Merger will increase its financial strength and enable it
to expand into new markets, offer new services and compete earlier and more
effectively in the local services market than it had anticipated. The local
services market, currently dominated by the RBOCs, is in the process of opening
to competition as a result of the Telecommunications Act. The Telecommunications
Act will facilitate MCI's and others' entry into the local services market
although it will permit the RBOCs to enter the long distance market outside
their regions immediately and within their regions eventually. See "CORE
BUSINESS - COMPETITION" and "CORE BUSINESS - TELECOMMUNICATIONS ACT" below for a
further discussion of the Telecommunications Act and its anticipated impact on
competition.
As of December 31, 1996, MCI had approximately 55,000 full-time employees.
- ---------------
** Concert is a mark of Concert Communications Company, a business venture
between MCI and BT, and is used under license.
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PAGE 6
CORE BUSINESS
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Services
--------
MCI provides a wide range of long-distance telecommunication services,
including: basic long-distance telephone service; voice and data services over
software-defined virtual private networks; private line services; collect
calling, operator assistance and calling card services, including prepaid
calling cards; toll free or 800 services; 900 services; switched and dedicated
Internet access services; and Internet backbone services. The company offers
these services individually and in combinations. Through combined offerings, MCI
provides customers with benefits such as single billing, unified services for
multi-location companies and customized calling plans.
MCI markets domestic and international long-distance telecommunication,
domestic data telecommunication and electronic messaging services to business,
government and residential customers primarily through the sales organization of
its long-distance telecommunication subsidiary, MCI Telecommunications
Corporation ("MCIT"). International data telecommunication and electronic
messaging services are marketed through MCI International, Inc., a wholly-owned
subsidiary of MCI. To a lesser extent, MCI also markets its voice and data
communication services domestically and internationally through arrangements
with third parties.
System
------
Domestic long-distance services are provided primarily over MCI's own
optical fiber and terrestrial digital microwave communication systems and, to a
lesser extent, over transmission facilities leased from other common carriers,
utilizing MCI's digital switches. International communication services are
provided by submarine cable systems in which MCI holds investment positions,
satellites and facilities of other domestic and foreign carriers.
MCI continues to expand and upgrade its digital transmission and switching
facilities and capabilities to meet the requirements of its customers for
additional and enhanced domestic and international services, to add redundancy
to its network and to enhance network intelligence. Network intelligence enables
MCI to utilize its transmission resources more effectively and provide enhanced
services. This requires substantial capital expenditures.
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PAGE 7
Total capital expenditures were approximately $3.3 billion in 1996 and $2.9
billion in both 1995 and 1994. Approximately $637 million of MCI's capital
expenditures in 1996 were for its ventures and developing markets business
units. See "VENTURES AND DEVELOPING MARKETS BUSINESS - LOCAL SERVICES" below.
MCI anticipates that its core business and its ventures and developing markets
business units will require total capital expenditures of approximately $3.9
billion in 1997.
Local Access
------------
MCI provides customers that utilize large volumes of long-distance
telecommunication services with direct access to its long-distance network. Most
customers access MCI's services through local interconnection facilities
provided by the ILECs, the largest of which are subsidiaries of the RBOCs, and
competitive local exchange carriers ("CLECs"). To a much lesser extent, local
access is provided by MCImetro, Inc. ("MCImetro"), an MCI subsidiary providing
local telephone and competitive access services. The costs of these local
interconnection facilities are a significant component of MCI's operating
expenses.
MCI believes that the anticipated increase in competition in the local
services market due to the Telecommunications Act will lower access and
interconnection costs. MCImetro*** expects that the requirements of the
Telecommunications Act that allow it to purchase both services and network
elements from ILECs will enable it to offer a wider variety of services,
increase its revenues and utilize the most economical local service delivery
methods. However, the extent to which MCI and MCImetro will benefit cannot be
quantified and will be partially dependent upon the prices at which services and
network elements become and are available. In addition, MCI believes the
temporary stay granted by the United States Court of Appeals for the Eighth
Circuit (the "Eighth Circuit") of certain key provisions of the Federal
Communications Commission ("FCC") Interconnection Order (the "Interconnection
Order") implementing the Telecommunications Act may hinder its ability to obtain
ILEC services and facilities on an economic basis and could delay national
competition in the local services market. See "TELECOMMUNICATIONS ACT" below for
a discussion of the Telecommunications Act and the FCC Interconnection Order and
"VENTURES AND DEVELOPING MARKETS BUSINESS - LOCAL SERVICES" below for discussion
of the benefits MCImetro and MCI anticipate from the Telecommunications Act.
- -----------------------
*** MCImetro is a service mark of MCI.
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PAGE 8
Competition
-----------
MCI's primary and most vigorous competitor in the domestic and
international long-distance telecommunication services market continues to be
AT&T Corp. ("AT&T"), which is substantially larger than MCI. In general, MCI's
long-distance telecommunication services are priced lower than AT&T's comparable
services. Although price is a factor in customer choice, innovation in and
quality of services, diversity of services, the ability to offer a combination
of services, marketing strategy, customer service and other non-price elements
are also important competitive factors.
The Telecommunications Act now allows the RBOCs to provide long-distance
telecommunication services internationally and domestically in territories
outside of their respective local service regions. The RBOCs may also provide
long-distance telecommunication services that are incidental to certain other
services (e.g., wireless and video services) in their local regions. The
authority to provide long-distance telecommunication services originating
outside of an RBOC's local service region does not include the authority to
provide services, such as private line services, 800 services or any equivalent
service, that terminate in its local service region and allow the called party
to choose the interLATA (see definition of LATA below) carrier. The RBOCs are
prohibited from providing a full range of long-distance telecommunication
services in their local service regions until certain important conditions are
met (see "TELECOMMUNICATIONS ACT" below). The RBOCs own extensive facilities in
their local service regions and have long-standing customer relationships and
very substantial capital and other financial resources. MCI believes that the
RBOCs will eventually become substantial competitors of MCI for long-distance
telecommunication services, especially in their local regions.
In addition to AT&T and the RBOCs, MCI competes with Sprint Corporation
("Sprint"), other facilities-based domestic telecommunication common carriers
and numerous resellers of long-distance telecommunication services. MCI also
competes with the ILECs that provide long-distance telecommunication services
within local access transport areas ("LATA").
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Regulation
----------
The Telecommunications Act preserves the FCC's extensive authority to
regulate interstate services and local access facilities and services provided
by common carriers, including the right to review the interstate rates charged
by common carriers, as well as the authority to implement policies that promote
competition for all telecommunication services. The Telecommunications Act
broadened the scope of authority of the FCC by granting the FCC, in consultation
with the Attorney General of the United States (the "Attorney General") the
authority to determine when the RBOCs may provide long-distance
telecommunication services in their local regions. The FCC was also given
authority to preempt state and local action that is inconsistent with the
Telecommunications Act. See "TELECOMMUNICATIONS ACT" below for a summary of
portions of the Telecommunications Act.
In addition, the Telecommunications Act authorized the FCC to discontinue
regulation in situations where it could find, based on evidence, that regulation
is unnecessary to further the interest of consumers and competition. In October
1996, the FCC applied this new authorization and concluded that non-dominant
common carriers, including MCI, should no longer be required to file tariffs for
their domestic service offerings. It mandated that such carriers cease tariffing
all their domestic service offerings by September 23, 1997. MCI and others
appealed this FCC action, and on February 13, 1997, the United States Court of
Appeals for the District of Columbia Circuit stayed the FCC's ruling pending the
appeal. The issues to be decided are: (1) whether the FCC has the authority to
mandate detariffing (or whether it only has the authority to permit carriers, at
their election, not to tariff); and (2) assuming that the FCC has the authority
to require detariffing, whether the record is sufficient to support that action.
MCI expects a decision in early 1998.
Under the Telecommunications Act, the states retain their authority to
regulate rates for intrastate services and advance universal telecommunication
service, to protect the public safety and welfare, to ensure continued quality
of telecommunication services and to safeguard the rights of consumers, subject
to FCC authority to preempt state and local action that violates or is
inconsistent with the Telecommunications Act. MCI is subject to extensive
regulation by state regulatory commissions to the extent it provides intrastate
long-distance telecommunication services and local services.
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Rates of international communication carriers for traffic from the United
States to foreign countries are regulated by the FCC. Revenues from traffic
between the foreign country and the U.S. (with the exception of leased channel
services) are generally collected by the originating carrier and shared with the
terminating carrier through agreements that are subject to the approval of the
FCC and the appropriate overseas agency. In addition to regulation of rates and
agreements, the FCC has jurisdiction over international communication facilities
located in the U.S. The provision of long-distance telecommunication services to
a foreign country is subject to the approval of the FCC and the appropriate
foreign governmental agencies.
Telecommunications Act
----------------------
The Telecommunications Act, among other things, allows the RBOCs to offer
long-distance telecommunication services outside of their respective local
service regions. In order for an RBOC to offer such services in a state within
its local service region, the FCC must determine, on a state by state basis,
that: (i) the RBOC has entered into one or more approved interconnection
agreements in the applicable state; (ii) the RBOC is actually offering to
competitors all items on the competitive checklist (the "Competitive Checklist")
set forth in the Telecommunications Act; (iii) there is a competitor offering
services to residential and business customers in the applicable state over its
own facilities; and (iv) the grant of authority to the RBOC to provide
long-distance telecommunication services in the applicable state is in the
public interest. Alternatively, if no competitor has demanded interconnection,
an RBOC may apply for in-region entry based on the availability of a "Statement
of Generally Available Terms" as provided for in the Telecommunications Act.
The Competitive Checklist includes requirements that:(i) interconnection
be at any technically feasible point and of equal quality as that provided to
the RBOC or to other carriers; (ii) access to the RBOC's facilities and
equipment, and their features, functions and capabilities, be provided on an
unbundled, non-discriminatory basis; (iii) any telecommunication service the
RBOC provides at retail to subscribers who are not carriers be offered to
carriers for resale, at wholesale rates; (iv) access to poles, ducts, conduits
and rights-of-way owned or controlled by the RBOC be provided on a
non-discriminatory basis; (v) local loop transmission from the central office to
the customer's premises be provided unbundled from local switching or other
services; (vi) local transport be provided from the trunk side of a wireline
switch unbundled from switching or other services; (vii) local switching be
provided unbundled from transport, local loop
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PAGE 11
transmission or other services; (viii) access be provided on a
non-discriminatory basis to 911 and Enhanced 911 services, directory assistance
services and operator call completion services; (ix) white pages directory
listings for customers of the other carrier's telephone exchange service be
provided; (x) access to telephone numbers for assignment to the other carrier's
telephone exchange service customers be provided on a non-discriminatory basis
until telecommunications numbering administration guidelines are established by
the FCC and thereafter be provided in accordance with such guidelines; (xi)
access to data bases and associated signaling necessary for call routing and
completion be provided on a non-discriminatory basis; (xii) interim number
portability be provided through remote call forwarding, direct inward dialing
trunks or other comparable arrangements until the FCC supersedes such interim
arrangements by issuing its number portability rules; (xiii) access to such
services or information as are necessary to allow the requesting carrier to
implement local dialing parity be provided on a non-discriminatory basis; and
(xiv) reciprocal compensation arrangements be implemented for the origination
and termination of telecommunications so as to provide the recovery by each
carrier of costs based on a reasonable approximation of the additional costs of
terminating calls.
In determining whether to grant an RBOC authority to offer long-distance
telecommunication services in a state in its local service region, the FCC must
consult with the Attorney General and give substantial weight to the Attorney
General's recommendations. The FCC must also consult with the applicable state
regulatory authority. MCI will vigorously seek to ensure that the
Telecommunications Act requirement of meaningful facilities-based competition in
the local services market is fully enforced before any RBOC is allowed to
provide long-distance telecommunication services in a state in its local service
region. Currently, no RBOC applications to provide in-region long-distance
telecommunication services are pending before the FCC, the one previous
application having been withdrawn. Several of the RBOCs have indicated publicly
their intent to file such applications in the second quarter of 1997.
Upon the grant of authority to provide long-distance service in its
region, an RBOC is required to provide immediately intraLATA toll dialing parity
throughout the applicable state. In general, states cannot require such dialing
parity until the date that the RBOC is granted in-region interLATA authority or
February 8, 1999, whichever is earlier. Importantly, the following categories of
states may mandate such dialing parity sooner: (i) the ten single LATA states,
and (ii) the 15 states (of which two are single LATA states) that issued dialing
parity orders by December 19, 1995.
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The Telecommunications Act also provides that until the date that an RBOC
is authorized to provide long-distance telecommunication services within a state
in the RBOC's local services region or February 8, 1999, whichever is earlier, a
carrier, such as MCI, serving more than 5% of the U.S.'s pre-subscribed access
lines, may not market within a state resold telephone exchange service obtained
from the RBOC jointly with interLATA services offered by that carrier. However,
this restriction would not preclude MCI from marketing local services provided
by MCImetro or another non-RBOC local service provider over its own facilities
with MCI's long-distance telecommunication services. The Telecommunications Act
also provides that an RBOC is restricted from marketing its local services
within any of the states in its region jointly with an affiliate's interLATA
services until the RBOC is authorized to offer interLATA services in such state.
Pursuant to the Telecommunications Act, the FCC released the
Interconnection Order on August 8, 1996. The Interconnection Order (i)
established national rules regarding the duty of the ILECs to negotiate in good
faith; (ii) established rules and methods by which the ILECs must provide
interconnection between the networks of the ILECs and other telecommunication
common carriers; (iii) established rules and methods by which the ILECs must
provide to other telecommunication common carriers access to the ILECs' network
elements on an unbundled basis; (iv) contained a pricing methodology which the
various state commissions could use to establish the rates at which
interconnection and network elements will be sold by the ILECs to other
telecommunication common carriers; and (v) contained a range for discounts from
the ILECs' retail prices for their telecommunication facilities and services
which the ILECs should offer new entrants. Most state regulatory commissions
have set interim prices for interconnection that are consistent with the rate
levels and discount levels set forth in the Interconnection Order. While several
states have set permanent rates, most states are scheduled to set permanent
rates in proceedings that are expected to conclude later this year. MCI has
completed arbitration of the interconnection terms and conditions in most states
and is in the process of filing interconnection agreements with state public
utility commissions for approval.
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PAGE 13
VENTURES AND DEVELOPING MARKETS BUSINESS
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MCI has diversified the communication services it offers through
investments in ventures and developing markets businesses. This diversification
enables MCI to meet more of the communications needs of its customers and to
take advantage of developing opportunities in the communication services market.
In 1996 and 1995, MCI had revenues of $1,953 million and $365 million,
respectively, from the ventures and developing markets businesses. MCI invested
$1,939 million in 1996 and anticipates investing, an estimated $200 million in
1997, in addition to capital expenditures, in existing ventures and developing
markets businesses. The 1996 amount included the purchase of a high-power direct
satellite ("DBS") services license for $682 million and an additional investment
of $350 million pursuant to the investment agreement with The News Corporation
Limited. See Item 6. Management's Discussion and Analysis and "VENTURES AND
DEVELOPING MARKETS BUSINESS - MULTIMEDIA SERVICES" below.
Local Services
--------------
MCImetro was created to enter the local services market and compete with
the ILECs and CLECs in that market. In 1996 and 1995, MCImetro had revenues of
$178 million and $108 million, respectively, substantially all of which were
from sales of services to MCI. Also in 1996 and 1995, MCImetro had capital
expenditures of approximately $390 million and $265 million, respectively.
MCImetro provides businesses and governments with high quality dedicated
access to the MCI network or to the networks of other long-distance
telecommunications providers. The access services are provided either on
MCImetro's own local city networks or through arrangements with the ILECs and
CLECs for special access and switched access services. As of March 24, 1997,
MCImetro had been granted authority to offer a full range of local switched
services in 30 states and had applications pending for such services in eight
other states. MCImetro has 67 local city networks and 27 Class 5 local switches
installed. MCImetro currently offers local exchange services such as local
telephone service, business lines, private branch exchange (PBX) trunks, access
services and enhanced services in 21 major U.S. cities and intends to offer such
local exchange services in over 30 major U.S. cities by the end of 1997. To a
lesser extent, MCImetro resells local services to customers in several states in
the U.S.
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If or when MCImetro will be able to offer a full range of local services
in competition with the ILECs in all states is unknown. Although the
Telecommunications Act establishes a timetable for an ILEC to sell separately
its local services and provide them to other carriers on a non-discriminatory
basis prior to receiving authority to provide long-distance service in its local
service region, MCI does not know if the timetable will be met. This uncertainty
is increased due to the stay of the Interconnection Order. See "CORE BUSINESS -
TELECOMMUNICATIONS ACT" above. The pace at which all local services are sold
separately, the prices at which MCImetro can purchase such services from the
ILEC and the amount of capital available to MCImetro to expand its facilities
will affect the types of services MCImetro can offer and its ability to compete
with the ILECs in providing local telecommunications services.
The ILECs have very substantial capital and other resources, long standing
customer relationships and extensive existing facilities and network
rights-of-way and will be MCImetro's primary competitors in the local services
market. In addition, it is anticipated that a number of long-distance
telecommunication, wireless and cable service providers will enter the local
services market in competition with MCImetro. Some of these potential
competitors have substantial financial and other resources. MCImetro will also
compete in the local services market with a number of CLECs, a few of which have
existing local networks and significant financial resources.
To the extent MCImetro and others provide intrastate local services, they
are also subject to regulation by state regulatory commissions, which have
extensive authority to regulate the provision of local services. MCImetro will
be required to file tariffs as a competitive local exchange carrier. Those
filing requirements may be less restrictive than those imposed on the ILECs.
Wireless Services
-----------------
Through the acquisition in September 1995 of Nationwide Cellular Service,
Inc. ("Nationwide"), a reseller of cellular phone services and a retailer of
cellular phone equipment, and as a result of the execution of resale agreements
with facilities-based cellular phone service providers, MCI has the capability
to offer cellular phone services obtained from facilities based providers to
approximately 55% of the U.S. population.
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MCI markets these services to both business and residential customers
through the former Nationwide's sales organization and stores and MCIT's sales
organization. Revenues for the years ended December 31, 1996 and 1995 from these
services were $347 million and $93 million, respectively. Revenues are expected
to increase in 1997 as MCI increases the number of cities in which it offers
cellular phone and paging services and combines these service offerings with
MCI's core business service offerings to meet its customers' needs. At December
31, 1996, MCI had approximately 429,000 cellular phone service subscribers.
In addition, MCI has signed an agreement with NextWave Telecom Inc.
("NextWave") to purchase at least 10 billion Personal Communication System
("PCS") minutes over 10 years. The agreement will permit MCI to utilize the
features of its intelligent network with NextWave's planned national system. PCS
technology is a digital, wireless technology that enables new and more advanced
wireless services, such as greater security, short messaging service,
single-number service, integrated voice and paging and enhanced wireless data
communications. PCS technology may provide MCI with an alternate means of
providing local communication services.
NextWave was granted, or was the winning bidder for, 95 PCS spectrum
licenses in the recent C, D, E, and F block PCS spectrum auctions held by the
FCC. If NextWave obtains the necessary financing to build, and does build, its
PCS network, MCI will be able to offer PCS service to more than 163 million
individuals in the 95 markets where NextWave has PCS licenses. MCI's
arrangements with NextWave will enable MCI to provide PCS services without
building or owning wireless facilities. MCI will market PCS service under the
MCI brand name and integrate it with MCI's other communication services. MCI may
also obtain and resell PCS services from other carriers.
MCI's primary competitors in the wireless market are AT&T Wireless
Services, Airtouch Communications, Inc., Ameritech Corporation, Bell Atlantic
NYNEX Mobile, Southwestern Bell and Sprint, all of which provide wireless
services over their own facilities. As MCI is not a facilities based wireless
operator, its ability to be competitive will depend on the terms and conditions
under which it obtains services and its ability to renew on satisfactory terms
its resale agreements. Competition is expected to intensify as the winning
bidders in the PCS spectrum auctions begin to offer competing services.
As a reseller, MCI is not subject to any tariffing or licensing
requirements by the FCC or state regulatory agencies.
<PAGE>
PAGE 16
Information Technology Services
-------------------------------
MCI's information technology ("IT") services primarily consist of
outsourcing, IT consulting, systems integration, private network management,
technology deployment and applications and systems development. IT services
generally involve the use of technology, know-how and methodologies to gather,
collate, analyze, record, characterize, categorize, process, generate,
distribute and/or store information for end-users or others.
In addition to IT services, MCI offers call center services which include
technical help desk services, customer services, telesales, call center
consulting and implementation, call center network integration services, and
software/database application development. IT and call center service revenues
for the years ended December 31, 1996 and 1995 were $1,401 million and $135
million, respectively. The majority of these revenues were from SHL Systemhouse
Inc. ("MCI Systemhouse") businesses acquired by MCI in November 1995.
MCI Systemhouse**** is one of the world's largest providers of IT
outsourcing services to commercial and government enterprises. The acquisition
of MCI Systemhouse provides MCI with the ability to address the growing demands
of its business customers for IT outsourcing services, which include the design,
development and implementation of IT systems with an emphasis on client/server
technologies; the management, operation and maintenance of client IT functions
as part of outsourcing arrangements; and the delivery and installation of IT
hardware and software.
MCI serves its IT clients by (i) working with a client to analyze its IT
needs and, based on this analysis, designing, developing and implementing an
integrated client/server IT system; (ii) providing systems operations and
management services for a broad range of computing platforms, including
mainframe, mid-range computers, personal computer and network environments, such
as local-area networks and wide-area networks; and (iii) assessing a client's
computing platform and network requirements and then configuring, delivering,
installing and testing the needed hardware and software products to meet such
requirements. MCI also offers service for IT products and training and education
of client IT users.
- ----------------------
**** MCI Systemhouse is a service mark of MCI.
<PAGE>
PAGE 17
Competitors in the IT business include Andersen Consulting, Computer
Sciences Corporation, Electronic Data Systems Corporation and Integrated Systems
Solutions Corp., a wholly-owned subsidiary of International Business Machines
Corporation, all of which have substantial financial and other resources. MCI
derives a material amount of its IT revenues from a small number of customers.
In addition, MCI faces competition in the IT industry not only for contracts,
but also for personnel. There is a shortage of skilled employees and a high
turnover rate among skilled employees in the client/server portion of the IT
business. On the other hand, MCI is not dependent on any single employee or
group in providing these services.
International Services
----------------------
MCI continues to develop global alliances to expand the use and reach of
its services and to meet the global needs of its customers.
Concert Communications Company ("Concert JV"), is a business venture
between MCI and BT in which MCI owns a 24.9% equity interest. Concert JV
provides global enhanced and value-added telecommunication services, such as
packet data, virtual network, frame relay and managed bandwidth services. MCI is
the exclusive distributor of Concert JV services in North, Central and South
America, and BT is the exclusive distributor of Concert JV services in the rest
of the world. Since July 1994, MCI has invested approximately $170 million in
Concert JV. For the years ended December 31, 1996 and 1995, Concert JV's
distributors had approximately $570 million and $300 million, respectively, in
revenue from the sale of Concert JV's products.
AT&T and Sprint have each formed global alliances that will compete with
Concert JV. AT&T's WorldPartners is an association of member companies formed in
1993 to provide a family of telecommunication services (private line, frame
relay and virtual network services) to multinational customers. Members of the
association include AT&T, KDD of Japan, Singapore Telecom, Telstra of Australia,
Telecom New Zealand, Hong Kong Telecom, Unitel of Canada, Korea Telecom and the
members of Unisource (which include Telefonica de Espana, SA, Royal PTT
Netherlands NV, Telia AB and Schweizerische PTT - Betriebe). Sprint, France
Telecom ("FT") and Deutsche Telekom ("DT") have formed Global One, a global
partnership which offers an array of international telecommunication services to
multinational business customers. As part of the transaction, FT and DT each
acquired 10% of Sprint's common stock.
<PAGE>
PAGE 18
AVANTEL S.A. de C.V. ("AVANTEL") is a business venture between Grupo
Financiero Banamex-Accival, Mexico's largest financial group, and MCI, in which
MCI owns a 44.5% equity interest. AVANTEL built Mexico's first all-digital
fiber-optic network. In 1996, AVANTEL became the first company to provide
alternative long-distance telecommunication service in Mexico in competition
with Telefonos de Mexico ("TelMex"). As of December 31, 1996, MCI had invested
$495 million in AVANTEL. AVANTEL is a supplier of Concert JV services in Mexico
and is a sub-distributor to MCI of Concert JV services in Mexico. TelMex, the
monopoly telecommunications provider, is AVANTEL's primary competitor. TelMex's
financial and other resources are substantially greater than AVANTEL's, and it
has an extensive existing customer base.
In 1992, MCI entered into a strategic alliance with Stentor, an alliance
of major Canadian telephone companies, to develop a fully integrated intelligent
network linking the U.S. and Canada. In 1995, Stentor entered into an agreement
with MCI to become the exclusive distributor of Concert JV services in Canada.
The Stentor alliance and the AVANTEL joint venture will facilitate the
development of a fully integrated, seamless North American network capable of
providing services with identical features to customers throughout the U.S.,
Canada and Mexico.
In addition, MCI owns minority equity interests in telecommunication
service providers in New Zealand and Belize and is exploring opportunities in
Central and South America and other areas of the world.
Multimedia Services
-------------------
In August 1995, MCI invested $1 billion in The News Corporation Limited
("News Corp."). In addition, MCI received a five year option to invest in News
Corp. from time to time up to an additional $1 billion in the aggregate. Under
certain circumstances, News Corp. has the right from time to time to cause MCI
to exercise this option and make additional investments up to $1 billion in the
aggregate. At the request of News Corp., MCI invested an additional $350 million
in News Corp. in May of 1996.
MCI and News Corp. are currently discussing the formation of a venture, of
which MCI would own less than a 20% interest, to provide DBS services to
consumers in the U.S. DBS service is a point-to-multipoint service that uses
high-powered KU band satellites which are placed in a geosynchronous orbit. DBS
service is capable of delivering a wide range of services, such as
<PAGE>
PAGE 19
subscription television, pay-per-view services, such as movies, concerts and
sporting events, and digitized content, such as magazines. As part of these
ongoing discussions, MCI is renegotiating its investment agreement with News
Corp. which may result in the purchase by MCI of mandatory redeemable preferred
securities of News Corp. and the termination of MCI's remaining investment
obligation and News Corp.'s rights relating thereto.
The proposed venture with News Corp. would provide DBS services by
utilizing satellites which will operate under a license awarded by the FCC to
MCI in an auction in December 1996 for $682.5 million. The license grants MCI
the right to use 28 of 32 channels in the satellite slot located at 110 degrees
west longitude, which provides coverage to all fifty states in the U.S. and
Puerto Rico. MCI has entered into an agreement to purchase two satellites, one
of which is scheduled for launch in late 1997. MCI anticipates the proposed
venture will provide DBS services by late 1997, assuming the first of its
satellites is successfully launched according to plan. The joint venture will
pay MCI a fee to utilize the capacity represented by the license under a
right-to-use for a limited term.
In February 1997, News Corp. announced that it would purchase 50% of
EchoStar Communications Corp. ("EchoStar") for $1 billion. It is anticipated
that the proposed MCI/News Corp. DBS venture would own the interest in EchoStar.
The acquisition, if completed, would result in the proposed venture having the
right to use additional DBS channels. The acquisition is subject to EchoStar
shareholder and various regulatory approvals.
Competition in the DBS service market will arise from three sources:
existing and future DBS service providers; medium-power satellite video service
providers; and cable companies that operate land based facilities. These
competitors have substantial financial resources, existing customer bases and
experienced marketing organizations. In addition, it is anticipated that certain
long-distance telecommunication service providers and the RBOCs may seek to form
alliances with DBS service or other multimedia service providers and compete in
this market.
Except for routine FCC licensing of earth station (uplink) facilities to
be used in conjunction with the satellites and the satellite license itself,
including certain restrictions on use of the spectrum, neither MCI nor the
proposed venture with News Corp. will be subject to extensive regulation by the
FCC. At the state level, the venture will be subject to standard zoning
requirements for the placement of uplink facilities. Zoning restrictions by
localities on the placement of receive dishes is largely preempted by federal
law.
<PAGE>
PAGE 20
Item 2. Properties.
- -------------------
MCI leases, under long-term leases, portions of railroad, utility and
other rights-of-way for its fiber-optic transmission system. MCI also has
numerous tower sites, generally in rural areas, to serve as repeater stations in
its domestic microwave transmission system. Most of these sites are leased,
although MCI does own many of those which are at an intersection of two or more
routes of MCI's transmission system. Generally, MCI owns the buildings that
serve as switch facilities for the transmission system. In metropolitan areas,
MCI leases facilities to serve as operations facilities for its transmission
systems.
MCI also leases, under long-term leases, office space to serve as sales
office and/or administrative facilities. Some of these facilities are located
jointly with operations facilities. In addition, MCI owns its headquarters
building in Washington, D.C. and two buildings in a suburb of Washington, D.C.,
as well as administrative facilities in Cary, North Carolina; Cedar Rapids,
Iowa; Colorado Springs, Colorado; Piscataway, New Jersey; and Richardson, Texas.
MCImetro operates a fiber optic transmission network consisting of owned
fibers located in conduits, which are either owned or leased under long-term
leases, and dark (not currently used) fibers leased under long-term leases.
MCImetro supplements its network with transmission capacity leased from other
carriers under long-term leases. MCImetro leases, under long-term leases, the
buildings that house its Class 5 switches and other network and administrative
office space. MCImetro also sub-leases administrative and sales office and
operation facility space from MCI.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
PAGE 21
Item 3. Legal Proceedings.
- ---------------------------
Information regarding contingencies and legal proceedings is included in
Note 15 of the Notes to Consolidated Financial Statements on page 26 of the
company's Annual Report to Stockholders for the year ended December 31, 1996,
which is incorporated herein by reference to Exhibit 13 to the registrant's
Current Report on Form 8-K, dated February 10, 1997.
With respect to the actions relating to AT&T patents identified in Note
15, on March 6, 1997 a Stipulation and Order dismissing the actions in the U.S.
with prejudice was entered in the United States District Court for the District
of Columbia and a Consent Judgement dismissing the matter with prejudice in
Canada was entered on February 28, 1997.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
None.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
PAGE 22
Item 10. Executive Officers of the Registrant.*
- -----------------------------------------------
The executive officers of MCI, including its subsidiaries, are elected
annually and serve at the pleasure of the respective board of directors. They
are:
Name Age* Position**
Bert C. Roberts, Jr. 54 Chairman of the Board,
Director
Gerald H. Taylor 55 Chief Executive Officer, Director
Timothy F. Price 43 President and
Chief Operating Officer
Seth D. Blumenfeld 56 President,
MCI International, Inc.
John W. Gerdelman 44 Executive Vice President,
MCI Telecommunications Corporation
Douglas L. Maine 48 Executive Vice President and
Chief Financial Officer
Scott B. Ross 45 Director, SHL Systemhouse Inc.,
Director, President and Chief
Operating Officer, MCI Systemhouse
Corp.
Michael J. Rowny 46 Executive Vice President
Michael H. Salsbury 47 Executive Vice President and
General Counsel
David M. Case 41 Vice President and Controller
- --------------------
* As of March 1, 1997.
** Unless otherwise indicated, the position is with MCI
Communications Corporation.
<PAGE>
PAGE 23
Mr. Roberts has been Chairman of the Board of MCI since June 1992. He was
Chief Executive Officer of MCI from December 1991 to November 1996. He was
President and Chief Operating Officer of MCI from October 1985 to June 1992 and
President of MCI Telecommunications Corporation ("MCIT") from May 1983 to June
1992. Mr. Roberts has been a director of MCI since 1985; a non-executive
director of British Telecommunications plc ("BT"), a global telecommunications
provider which has an approximate 20% equity interest in MCI, since October
1994; and a non-executive director of The News Corporation Limited, a global
multi-media company located in Australia, since November 1995.
Mr. Taylor has been Chief Executive Officer of MCI since November 1996. He
has been Vice Chairman of MCIT since July 1995. He was President and Chief
Operating Officer of MCI from July 1994 to November 1996 and President and Chief
Operating Officer of MCIT from April 1994 to July 1995. He was an Executive Vice
President and Group Executive of MCIT from September 1993 to April 1994. He was
an Executive Vice President of MCIT, serving as President, Consumer Markets,
from November 1990 to September 1993. Mr. Taylor has been a director of MCI
since September 1994 and a non-executive director of BT since November 1996.
Mr. Price has been President and Chief Operating Officer of MCI since
November 1996. He has been President and Chief Operating Officer of MCIT since
July 1995. He was an Executive Vice President and Group President of MCIT,
serving as Group President, Communication Services, from December 1994 to July
1995. He was an Executive Vice President of MCIT, serving as President, Business
Markets, from June 1993 to December 1994. He was a Senior Vice President of MCIT
from November 1990 to June 1993, serving as President, Business Services, from
July 1992 to June 1993 and as Senior Vice President, Consumer Markets, from
November 1990 to July 1992.
Mr. Blumenfeld was President of MCI International, Inc., from August 1983
to July 1993. He was Executive Vice President and Group Executive of MCIT from
July 1993 to September 1994 and has been President of MCI International, Inc.
since September 1994.
<PAGE>
PAGE 24
Mr. Gerdelman has been an Executive Vice President of MCIT, serving as
President, networkMCI Services, since October 1994. He was a Senior Vice
President of MCIT from August 1992 to October 1994. From July 1991 to August
1992, he was President and Chief Executive Officer of MCI Services Marketing,
Inc., a company that provided telemarketing services to, and in which a 51%
equity interest was held by, MCIT. Since July 1994, Mr. Gerdelman has been a
director of General Communication, Inc. ("GCI"), a telecommunications provider
in Alaska, of which MCIT owns approximately 22% of the outstanding shares of
Class A Common Stock and approximately 31% of the outstanding shares of Class B
Common Stock.
Mr. Maine has been an Executive Vice President of MCI since April 1994. Mr.
Maine has been Chief Financial Officer of MCI since February 1992. He was a
Senior Vice President of MCI from September 1988 to April 1994. From November
1990 to February 1992, he was a Senior Vice President of MCIT, serving as
President of the Southern Division.
Mr. Ross has been President and Chief Operating Officer of MCI Systemhouse
Corp. since September 1995. He was Executive Vice President of MCIT, serving as
President, Finance and Business Operations, from August 1995 to March 1996 and
as President, Business Markets, from December 1994 to August 1995. He was Senior
Vice President of MCIT from September 1993 to December 1994 and a Vice President
of MCIT for more that 5 years prior thereto.
Mr. Rowny has been an Executive Vice President of MCI since April 1995 and
an Executive Vice President of MCIT since June 1994, serving as Executive Vice
President, Ventures and Alliances. He was President of MJR Enterprises, a
consulting company, from April 1994 to June 1994; Executive Vice President and
Chief Financial Officer and a director of ICF Kaiser International, Inc., an
environmental and engineering services company, from April 1992 to April 1994;
and Chairman and Chief Executive Officer of Ransohoff Company, a manufacturer of
environmental and industrial equipment, from November 1989 to April 1992.
Mr. Salsbury has been Executive Vice President and General Counsel of MCI
since November 1995. He was a partner in the law firm of Jenner & Block for more
than five years prior thereto.
Mr. Case has been Vice President and Controller of MCI since September
1995 and a Vice President of MCIT since October 1993. For more than five years
prior thereto, he served MCIT in various management capacities.
<PAGE>
PAGE 25
PART II
Item 5. Market for Registrant's Common Equity and Related
- -----------------------------------------------------------------
Stockholder Matters.
- -------------------
MCI Common Stock is traded on the NASDAQ National Market. The tables below
set forth the high and low bid prices of the Common Stock as reported for the
periods indicated.
1996
HIGH LOW
-------- ---------
1st Quarter $31 1/8 $25 5/8
2nd Quarter 30 3/8 24 7/8
3rd Quarter 28 1/8 22 3/8
4th Quarter 33 7/8 23 7/8
1995
HIGH LOW
-------- ---------
1st Quarter $21 1/4 $17 3/8
2nd Quarter 23 1/8 19 7/64
3rd Quarter 27 1/8 20 7/8
4th Quarter 27 1/2 23 3/4
MCI paid cash dividends of $.025 per share of Common Stock in July and
December of 1995 and 1996 and an equivalent cash dividend on the shares of Class
A Common Stock.
At February 14, 1997, there were 47,472 holders of record of MCI's Common
Stock and 1 holder of record of MCI's Class A Common Stock.
<PAGE>
PAGE 26
Recent Sales of Unregistered Securities
- ---------------------------------------
On June 30, 1995, as part of the merger consideration contemplated under the
Agreement and Plan of Merger among Darome Teleconferencing, Inc., MCI and MCIT,
MCI issued 793,297 shares of MCI Common Stock, par value $.10 per share, with an
aggregate value of approximately $16,000,000 or approximately $20.17 per share,
to the shareholders of Darome Teleconferencing, Inc. MCI claims exemption from
registration of the shares under Regulation D of the Securities Act of 1933, as
amended.
Items 6 through 8.
- -----------------
The information required by these items is included in pages 2 through 28
of the company's Annual Report to Stockholders for the year ended December 31,
1996. The referenced pages of the company's Annual Report to Stockholders have
been filed as Exhibit 13 to the company's Current Report on Form 8-K filed
February 10, 1997. Such information is incorporated herein by reference.
Item 9. Change in and Disagreements with Accountants on
- --------------------------------------------------------
Accounting and Financial Disclosure.
- ------------------------------------
None.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
PAGE 27
PART III
Item 10. Directors and Executive Officers.
- ------------------------------------------
Information with respect to executive officers of MCI is set forth in Part
I of this Annual Report on Form 10-K.
Information with respect to directors of MCI is incorporated herein by
reference to the information under the captions "Information Relating to
Directors and Executive Officers of MCI" and "Section 16(a) Beneficial Ownership
Compliance" in MCI's Proxy Statement for its 1997 Annual Meeting of Stockholders
(the "1997 Proxy Statement").
Item 11. Executive Compensation.
- --------------------------------
Information with respect to executive compensation is incorporated herein
by reference to the information under the captions "Interests of Certain Persons
in the Merger", including the sub-captions thereunder, "Board of Directors'
Committees, Meetings and Fees", "Remuneration of Executive Officers", "Pension
Plans" and "MCI Executive Compensation Policies and Objectives", including the
sub-captions thereunder, in the 1997 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
- -------------------------------------------------------------
Management.
- ----------
Information with respect to security ownership is incorporated herein by
reference to the information under the captions "Information Relating to
Directors and Executive Officers of MCI", including the sub-captions thereunder,
"Interests of Certain Persons in the Merger", including the sub-captions
thereunder, and "Security Ownership of Management and Certain Beneficial Owners"
in the 1997 Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------
Information with respect to certain relationships and related transactions
is incorporated herein by reference to the information under the caption
"Certain Relationships and Related Transactions" in the 1997 Proxy Statement.
<PAGE>
PAGE 28
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
- -----------------------------------------------------------------
Form 8-K.
- --------
(a) Documents filed as a part of this report.
(1) Financial Statements.
Report of Independent Accountants
Income Statements for the years
ended December 31, 1996, 1995
and 1994
Balance Sheets at December 31, 1996
and 1995
Statements of Cash Flows for the
years ended December 31, 1996,
1995 and 1994
Statements of Stockholders' Equity
for the years ended December 31,
1996, 1995 and 1994
Notes to Consolidated Financial Statements
The Financial Statements and Notes thereto are incorporated
herein by reference to pages 11 through 28 of the company's Annual
Report to Stockholders for the year ended December 31, 1996. See
Part II.
(2) Financial Statement Schedule.
The following additional financial data should be read in conjunction with
the Financial Statements and Notes thereto which are incorporated herein by
reference to Exhibit 13 to the company's Current Report on Form 8-K filed
February 10, 1997. Schedules not included with this additional financial data
have been omitted because they are not required or applicable or the required
information is shown in the Financial Statements or Notes thereto.
Report of Independent Accountants on
Financial Statement Schedule
Valuation and Qualifying Accounts (Schedule II)
<PAGE>
PAGE 29
The Report of Independent Accountants on the Financial Statement Schedule
is incorporated herein by reference to Exhibit 99(c) to the company's Current
Report on Form 8-K filed February 10, 1997.
The Financial Statement Schedule is submitted as Exhibit 99(a) to this
Annual Report on Form 10-K.
(3) Exhibits.
Executive compensation plans and arrangements required to be filed, and
which have been filed, with the Commission pursuant to Item 14(c) of this Annual
Report on Form 10-K are listed in this Annual Report on Form 10-K as Exhibits
10(a)-(u).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
PAGE 30
Exhibit No. Description
- ----------- -----------
2 Agreement and Plan of Merger among British
Telecommunications plc, MCI Communications
Corporation and Tadworth Corporation, dated November
3, 1996. (Incorporated by reference to Exhibit 2 to
Registrant's Current Report on Form 8-K, filed
November 5, 1996.)
3 (a) Restated Certificate of Incorporation of MCI
Communications Corporation filed on March 28, 1995.
(Incorporated by reference to Exhibit 3(a) to
registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994.)
(b) By-laws of registrant, as amended. (Incorporated by
reference to Exhibit 3(ii) to registrant's
Registration Statement on Form S-3, Reg. No.
33-57155.)
4 (a) Indenture, dated as of October 15, 1989, between
registrant and Bankers Trust Company. (Incorporated
by reference to Exhibit 4(c) to registrant's
Registration Statement on Form S-3, Reg. No.
33-31600.)
(b) Indenture dated as of October 15, 1989 between
registrant and Bankers Trust Company. (Incorporated
by reference to Exhibit 4(d) to registrant's
Registration Statement on Form S-3, Reg. No.
33-31600.)
(c) Indenture dated as of October 15, 1989 between
registrant and Citibank, N.A. (Incorporated by
reference to Exhibit 4(e) to registrant's
Registration Statement on Form S-3, Reg. No.
33-31600.)
(d) Indenture dated as of February 17, 1995 between
registrant and Citibank, N.A. (Incorporated by
reference to Exhibit 4 (d) to registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994.)
(e) Supplement No. 1 to the Indenture, dated as of
February 17, 1995, between MCI and Citibank, N.A.
(f) Form of Senior Fixed Rate Medium-Term Note.
(Incorporated by reference to Exhibit 4(a) to
<PAGE>
PAGE 31
Registrant's Current Report on Form 8-K, filed
October 7, 1996.)
(g) Form of Senior Floating Rate Medium-Term Note.
(Incorporated by reference to Exhibit 4(b) to
Registrant's Current Report on Form 8-K, filed
October 7, 1996.)
(h) Form of Subordinated Fixed Rate Medium-Term Note.
(Incorporated by reference to Exhibit 4(g) to
registrant's Registration Statement on Form S-3,
Reg. No. 33-31600.)
(i) Form of Subordinated Floating Rate Medium-Term Note.
(Incorporated by reference to Exhibit 4(i) to
registrant's Registration Statement on Form S-3,
Reg. No. 33-31600.)
(j) Form of 7-1/2% Senior Note due August 20, 2004.
(Incorporated by reference to Exhibit 4 of
registrant's Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1992.)
(k) Form of 7-1/8% Senior Note due January 20, 2000.
(Incorporated by reference to Exhibit 1(b) of
registrant's Current Report on Form 8-K filed January
19, 1993.)
(l) Form of 8-1/4% Senior Debenture due January 20, 2023.
(Incorporated by reference to Exhibit 1(c) of
registrant's Current Report on Form 8-K filed January
19, 1993.)
(m) Form of 7-3/4% Senior Debenture due March 15, 2024.
(Incorporated by reference to Exhibit 4(a) of
registrant's Current Report on Form 8-K filed March
12, 1993.)
(n) Form of 6-1/4% Senior Note due March 23, 1999.
(Incorporated by reference to Exhibit 4(a) of
registrant's Current Report on Form 8-K filed March
15, 1994.)
(o) Form of 7-3/4% Senior Debenture due March 23, 2025.
(Incorporated by reference to Exhibit 4(b) of
registrant's Current Report on Form 8-K filed March
15, 1994.)
<PAGE>
PAGE 32
(p) Form of 7-1/8% Debenture due June 15, 2027.
(Incorporated by reference to Exhibit 4(a) of
registrant's Current Report on Form 8-K filed June
21, 1996.)
(q) Form of 6.95% Senior Note due August 15, 2006.
(Incorporated by reference to Exhibit 4(a) of
registrant's Current Report on Form 8-K filed August
8, 1996.)
(r) Form of Senior Floating Rate Note due March 16,
1999. (Incorporated by reference to Exhibit 4(c) of
registrant's Current Report on Form 8-K filed March
15, 1994.)
(s) Rights Agreement, dated as of September 30, 1994,
between the registrant and Mellon Bank, N.A.
(Incorporated by reference to Exhibit 4(a) to
registrant's Current Report on Form 8-K filed October
4, 1994.)
(t) Amendment No. 1, dated as of November 3, 1996, to
Rights Agreement, dated as of September 30, 1994,
between the registrant and Mellon Bank, N.A.
(Incorporated by reference to Exhibit 2 to
registrant's Form 8-A/A filed November 20, 1996.)
(u) Junior Subordinated Indenture between registrant and
Wilmington Trust Company, as Debenture Trustee.
(Incorporated by reference to Exhibit 4.01 of
registrant's Registration Statement on Form S-3,
Registration No. 333-02593.)
(v) Form of Amended and Restated Trust Agreement among
registrant, as Depositor, Wilmington Trust Company,
as Property Trustee and Delaware Trustee, and the
Administrative Trustees named therein.
(Incorporated by reference to Exhibit 4.10 of
registrant's Registration Statement on Form S-3,
Registration No. 333-02593.)
(w) Form of Guarantee Agreement between registrant, as
Guarantor, and Wilmington Trust Company, as Trustee.
(Incorporated by reference to Exhibit 4.12 of
registrant's Registration Statement on Form S-3,
Registration No. 333-02593.)
(x) Form of Supplemental Indenture between registrant
and Wilmington Trust Company, as Debenture Trustee.
(Incorporated by reference to Exhibit 4.13 of
<PAGE>
PAGE 33
registrant's Registration Statement on Form S-3,
Registration No. 333-02593.)
10 (a) 1979 Stock Option Plan of registrant, as amended and
restated. (Incorporated by reference to Exhibit
10(a) to registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1988.)
(b) Supplemental Retirement Plan for Employees of MCI
Communications Corporation and Subsidiaries, as
amended. (Incorporated by reference to Exhibit 10(b)
to registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.)
(c) Description of Executive Life Insurance Plan for MCI
Communications Corporation and Subsidiaries.
(Incorporated by reference to "Remuneration of
Officers" in registrant's Proxy Statement for its
1992 Annual Meeting of Stockholders.)
(d) MCI Communications Corporation Executive Incentive
Compensation Plan. (Incorporated by reference to
Exhibit 10(e) to registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995.)
(e) Amendment No. 1 to MCI Communications Corporation
Executive Incentive Compensation Plan.
(f) Form of Director Indemnification
Agreement.(Incorporated by reference to Appendix B to
registrant's Proxy Statement for its 1987 Annual
Meeting of Stockholders.)
(g) 1988 Directors' Stock Option Plan of registrant.
(Incorporated by reference to Exhibit D to
registrant's Proxy Statement for its 1989 Annual
Meeting of Stockholders.)
(h) Amendment No. 1 to the 1988 Directors' Stock Option
Plan of registrant. (Incorporated by reference to
Appendix D to registrant's Proxy Statement for its
1996 Annual Meeting of Stockholders.)
(i) Amendment No. 2 to 1988 Directors' Stock Option Plan
of registrant.
(j) Amendment No. 3 to 1988 Directors' Stock Option Plan
of registrant.
<PAGE>
PAGE 34
(k) Stock Option Plan of registrant. (Incorporated by
reference to Exhibit C to registrant's Proxy
Statement for its 1989 Annual Meeting of
Stockholders.)
(l) Amendment No. 1 to the Stock Option Plan of
registrant.
(m) Amendment No. 2 to the Stock Option Plan of
registrant. (Incorporated by reference to Appendix
B to registrant's Proxy Statement for its 1996
Annual Meeting of Stockholders.)
(n) Amendment No. 3 to the Stock Option Plan of
registrant.
(o) Amendment No. 4 to the Stock Option Plan of
registrant.
(p) Amendment No. 5 to the Stock Option Plan of
registrant.
(q) Board of Directors Deferred Compensation Plan of
Registrant. (Incorporated by reference to Exhibit
10(i) to registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994.)
(r) The Senior Executive Incentive Compensation Plan of
registrant. (Incorporated by reference to Appendix
A to registrant's Proxy Statement for its 1996
Annual Meeting of Stockholders.)
(s) Amendment No. 1 to the Senior Executive Incentive
Compensation Plan of registrant.
(t) Executive Severance Policy. (Incorporated by
reference to Exhibit 10(a) to Registrant's Quarterly
Report on Form 10-Q for the quarter ended September
30, 1996.)
(u) Form of employment agreement, effective as of
November 2, 1996, between MCI and certain executive
officers of MCI.
(v) Amended and Restated Investment Agreement dated as
of January 31, 1994 between MCI Communications
Corporation and British Telecommunications plc.
(Incorporated by reference to Appendix I of
registrant's Notice of Special Meeting of
<PAGE>
PAGE 35
Stockholders and Proxy Statement dated February 4,
1994.)
(w) Modified Joint Venture Agreement dated as of July 1,
1994 between MCI Communications Corporation and
British Telecommunications plc and MCI Ventures
Corporation and Moorgate (Twelve) Limited and
Concert Communications Company. (Incorporated by
reference to Exhibit 10(l) to registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994.)
(x) Warrant Purchase Agreement by and between The News
Corporation Limited and MCI Communications
Corporation dated as of August 2, 1995. (Incorporated
by reference to Exhibit 10(p) to registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1995.)
(y) Preferred Stock Purchase Agreement by and among MCI,
News Triangle Finance, Inc. and News T Investments,
Inc. dated as of August 2, 1995. (Incorporated by
reference to Exhibit 10(q) to registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1995.)
(z) $2,000,000,000 Revolving Credit Agreement, dated as
of September 26, 1996, among the registrant, Bank of
America National Trust and Savings Association, as
agent, and the several financial institutions
parties thereto. (Incorporated by reference to
Exhibit 10 of registrant's Current Report on Form
8-K filed October 4, 1996).
11 Computation of Earnings per Common Share.
(Incorporated by reference to Exhibit 11 to
registrant's Current Report on Form 8-K filed
February 10, 1997.)
12 Computation of Ratio of Earnings to Fixed Charges.
(Incorporated by reference to Exhibit 12 to
registrant's Current Report on Form 8-K filed
February 10, 1997.)
13 Specified portions (pages 1 through 29) of the
registrant's Annual Report to Stockholders for the
year ended December 31, 1996. (Incorporated by
reference to Exhibit 13 to registrant's Current
Report on Form 8-K filed February 10, 1997.)
<PAGE>
PAGE 36
21 Significant Subsidiaries of MCI Communications
Corporation.
23 Consent of Independent Accountants. (Incorporated
by reference to Exhibit 23 to registrant's Current
Report on Form 8-K filed February 10, 1997.)
27 Financial Data Schedule. (Incorporated by reference
to Exhibit 27 to registrant's Current Report on Form
8-K filed February 10, 1997.)
99 (a) Valuation and Qualifying Accounts (Schedule II).
(Incorporated by reference to Exhibit 99(a) to
registrant's Current Report on Form 8-K filed
February 10, 1997.)
(b) Capitalization Schedule. (Incorporated by reference
to Exhibit 99(b) to registrant's Current Report on
Form 8-K filed February 10, 1997.)
(c) Accountant's Report on Financial Statement Schedule.
(Incorporated by reference to Exhibit 99(c) to
registrant's Current Report on Form 8-K filed
February 10, 1997.)
(b) Reports on Form 8-K.
(i) Current Report on Form 8-K filed on October 4, 1996
reporting on Items 5 and 7.
(ii) Current Report on Form 8-K filed on October 7, 1996
reporting on Item 7.
(iii) Current Report on Form 8-K filed on November 5, 1996
reporting on Items 5 and 7.
(c) Exhibits.
See Item 14(a)(3) of this Annual Report on Form 10-K.
(d) Financial Statement Schedules.
See Items 14(a)(2) and 14(a)(3) of this Annual Report on Form 10-K.
<PAGE>
PAGE 37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MCI COMMUNICATIONS CORPORATION
/s/ Bert C. Roberts, Jr.
Dated: March 28, 1997 By: --------------------------
Bert C. Roberts, Jr.
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on March 28, 1997 on
behalf of the registrant and in the capacities indicated.
Signature Title
/s/ Gerald H. Taylor
- ---------------------------- Chief Executive Officer,
Gerald H. Taylor Director
/s/ Douglas L. Maine
- ----------------------------- Principal Financial Officer
Douglas L. Maine
/s/ David M. Case
- ----------------------------- Principal Accounting Officer
David M. Case
/s/ Bert C. Roberts, Jr.
- ----------------------------- Director
Bert C. Roberts, Jr.
/s/ Clifford L. Alexander, Jr.
- ----------------------------- Director
Clifford L. Alexander, Jr.
- ------------------------------ Director
Judith Areen
<PAGE>
PAGE 38
/s/ Michael H. Bader
- ----------------------------- Director
Michael H. Bader
- ----------------------------- Director
Sir Peter L. Bonfield
/s/ Richard M. Jones
- ----------------------------- Director
Richard M. Jones
/s/ Gordon S. Macklin
- ----------------------------- Director
Gordon S. Macklin
/s/ Sir Colin Marshall
- ----------------------------- Director
Sir Colin Marshall
- ----------------------------- Director
K. Rupert Murdoch
/s/ John Keith Oates
- ----------------------------- Director
John Keith Oates
/s/ Richard B. Sayford
- ----------------------------- Director
Richard B. Sayford
- ----------------------------- Director
Judith Whittaker
/s/ John R. Worthington
- ----------------------------- Director
John R. Worthington
<PAGE>
PAGE 1
Exhibit Index
---------------
Exhibit No. Description
- ----------- -----------
2 Agreement and Plan of Merger among British
Telecommunications plc, MCI Communications
Corporation and Tadworth Corporation, dated November
3, 1996. (Incorporated by reference to Exhibit 2 to
Registrant's Current Report on Form 8-K, filed
November 5, 1996.)
3 (a) Restated Certificate of Incorporation of MCI
Communications Corporation filed on March 28, 1995.
(Incorporated by reference to Exhibit 3(a) to
registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994.)
(b) By-laws of registrant, as amended. (Incorporated by
reference to Exhibit 3(ii) to registrant's
Registration Statement on Form S-3, Reg. No.
33-57155.)
4 (a) Indenture, dated as of October 15, 1989, between
registrant and Bankers Trust Company. (Incorporated
by reference to Exhibit 4(c) to registrant's
Registration Statement on Form S-3, Reg. No.
33-31600.)
(b) Indenture dated as of October 15, 1989 between
registrant and Bankers Trust Company. (Incorporated
by reference to Exhibit 4(d) to registrant's
Registration Statement on Form S-3, Reg. No.
33-31600.)
(c) Indenture dated as of October 15, 1989 between
registrant and Citibank, N.A. (Incorporated by
reference to Exhibit 4(e) to registrant's
Registration Statement on Form S-3, Reg. No.
33-31600.)
(d) Indenture dated as of February 17, 1995 between
registrant and Citibank, N.A. (Incorporated by
reference to Exhibit 4 (d) to registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994.)
(e) Supplement No. 1 to the Indenture, dated as of
February 17, 1995, between MCI and Citibank, N.A.
<PAGE>
PAGE 2
(f) Form of Senior Fixed Rate Medium-Term Note.
(Incorporated by reference to Exhibit 4(a) to
Registrant's Current Report on Form 8-K, filed
October 7, 1996.)
(g) Form of Senior Floating Rate Medium-Term Note.
(Incorporated by reference to Exhibit 4(b) to
Registrant's Current Report on Form 8-K, filed
October 7, 1996.)
(h) Form of Subordinated Fixed Rate Medium-Term Note.
(Incorporated by reference to Exhibit 4(g) to
registrant's Registration Statement on Form S-3,
Reg. No. 33-31600.)
(i) Form of Subordinated Floating Rate Medium-Term Note.
(Incorporated by reference to Exhibit 4(i) to
registrant's Registration Statement on Form S-3,
Reg. No. 33-31600.)
(j) Form of 7-1/2% Senior Note due August 20, 2004.
(Incorporated by reference to Exhibit 4 of
registrant's Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1992.)
(k) Form of 7-1/8% Senior Note due January 20, 2000.
(Incorporated by reference to Exhibit 1(b) of
registrant's Current Report on Form 8-K filed January
19, 1993.)
(l) Form of 8-1/4% Senior Debenture due January 20, 2023.
(Incorporated by reference to Exhibit 1(c) of
registrant's Current Report on Form 8-K filed January
19, 1993.)
(m) Form of 7-3/4% Senior Debenture due March 15, 2024.
(Incorporated by reference to Exhibit 4(a) of
registrant's Current Report on Form 8-K filed March
12, 1993.)
(n) Form of 6-1/4% Senior Note due March 23, 1999.
(Incorporated by reference to Exhibit 4(a) of
registrant's Current Report on Form 8-K filed March
15, 1994.)
(o) Form of 7-3/4% Senior Debenture due March 23, 2025.
(Incorporated by reference to Exhibit 4(b) of
registrant's Current Report on Form 8-K filed March
15, 1994.)
<PAGE>
PAGE 3
(p) Form of 7-1/8% Debenture due June 15, 2027.
(Incorporated by reference to Exhibit 4(a) of
registrant's Current Report on Form 8-K filed June
21, 1996.)
(q) Form of 6.95% Senior Note due August 15, 2006.
(Incorporated by reference to Exhibit 4(a) of
registrant's Current Report on Form 8-K filed August
8, 1996.)
(r) Form of Senior Floating Rate Note due March 16,
1999. (Incorporated by reference to Exhibit 4(c) of
registrant's Current Report on Form 8-K filed March
15, 1994.)
(s) Rights Agreement, dated as of September 30, 1994,
between the registrant and Mellon Bank, N.A.
(Incorporated by reference to Exhibit 4(a) to
registrant's Current Report on Form 8-K filed October
4, 1994.)
(t) Amendment No. 1, dated as of November 3, 1996, to
Rights Agreement, dated as of September 30, 1994,
between the registrant and Mellon Bank, N.A.
(Incorporated by reference to Exhibit 2 to
registrant's Form 8-A/A filed November 20, 1996.)
(u) Junior Subordinated Indenture between registrant and
Wilmington Trust Company, as Debenture Trustee.
(Incorporated by reference to Exhibit 4.01 of
registrant's Registration Statement on Form S-3,
Registration No. 333-02593.)
(v) Form of Amended and Restated Trust Agreement among
registrant, as Depositor, Wilmington Trust Company,
as Property Trustee and Delaware Trustee, and the
Administrative Trustees named therein.
(Incorporated by reference to Exhibit 4.10 of
registrant's Registration Statement on Form S-3,
Registration No. 333-02593.)
(w) Form of Guarantee Agreement between registrant, as
Guarantor, and Wilmington Trust Company, as Trustee.
(Incorporated by reference to Exhibit 4.12 of
registrant's Registration Statement on Form S-3,
Registration No. 333-02593.)
(x) Form of Supplemental Indenture between registrant
and Wilmington Trust Company, as Debenture Trustee.
(Incorporated by reference to Exhibit 4.13 of
<PAGE>
PAGE 4
registrant's Registration Statement on Form S-3,
Registration No. 333-02593.)
10 (a) 1979 Stock Option Plan of registrant, as amended and
restated. (Incorporated by reference to Exhibit
10(a) to registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1988.)
(b) Supplemental Retirement Plan for Employees of MCI
Communications Corporation and Subsidiaries, as
amended. (Incorporated by reference to Exhibit 10(b)
to registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.)
(c) Description of Executive Life Insurance Plan for MCI
Communications Corporation and Subsidiaries.
(Incorporated by reference to "Remuneration of
Officers" in registrant's Proxy Statement for its
1992 Annual Meeting of Stockholders.)
(d) MCI Communications Corporation Executive Incentive
Compensation Plan. (Incorporated by reference to
Exhibit 10(e) to registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995.)
(e) Amendment No. 1 to MCI Communications Corporation
Executive Incentive Compensation Plan.
(f) Form of Director Indemnification
Agreement.(Incorporated by reference to Appendix B to
registrant's Proxy Statement for its 1987 Annual
Meeting of Stockholders.)
(g) 1988 Directors' Stock Option Plan of registrant.
(Incorporated by reference to Exhibit D to
registrant's Proxy Statement for its 1989 Annual
Meeting of Stockholders.)
(h) Amendment No. 1 to the 1988 Directors' Stock Option
Plan of registrant. (Incorporated by reference to
Appendix D to registrant's Proxy Statement for its
1996 Annual Meeting of Stockholders.)
(i) Amendment No. 2 to 1988 Directors' Stock Option Plan
of registrant.
(j) Amendment No. 3 to 1988 Directors' Stock Option Plan
of registrant.
<PAGE>
PAGE 5
(k) Stock Option Plan of registrant. (Incorporated by
reference to Exhibit C to registrant's Proxy
Statement for its 1989 Annual Meeting of
Stockholders.)
(l) Amendment No. 1 to the Stock Option Plan of
registrant.
(m) Amendment No. 2 to the Stock Option Plan of
registrant. (Incorporated by reference to Appendix
B to registrant's Proxy Statement for its 1996
Annual Meeting of Stockholders.)
(n) Amendment No. 3 to the Stock Option Plan of
registrant.
(o) Amendment No. 4 to the Stock Option Plan of
registrant.
(p) Amendment No. 5 to the Stock Option Plan of
registrant.
(q) Board of Directors Deferred Compensation Plan of
Registrant. (Incorporated by reference to Exhibit
10(i) to registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994.)
(r) The Senior Executive Incentive Compensation Plan of
registrant. (Incorporated by reference to Appendix
A to registrant's Proxy Statement for its 1996
Annual Meeting of Stockholders.)
(s) Amendment No. 1 to the Senior Executive Incentive
Compensation Plan of registrant.
(t) Executive Severance Policy. (Incorporated by
reference to Exhibit 10(a) to Registrant's Quarterly
Report on Form 10-Q for the quarter ended September
30, 1996.)
(u) Form of employment agreement, effective as of
November 2, 1996, between MCI and certain executive
officers of MCI.
(v) Amended and Restated Investment Agreement dated as
of January 31, 1994 between MCI Communications
Corporation and British Telecommunications plc.
(Incorporated by reference to Appendix I of
registrant's Notice of Special Meeting of
<PAGE>
PAGE 6
Stockholders and Proxy Statement dated February 4,
1994.)
(w) Modified Joint Venture Agreement dated as of July 1,
1994 between MCI Communications Corporation and
British Telecommunications plc and MCI Ventures
Corporation and Moorgate (Twelve) Limited and
Concert Communications Company. (Incorporated by
reference to Exhibit 10(l) to registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994.)
(x) Warrant Purchase Agreement by and between The News
Corporation Limited and MCI Communications
Corporation dated as of August 2, 1995. (Incorporated
by reference to Exhibit 10(p) to registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1995.)
(y) Preferred Stock Purchase Agreement by and among MCI,
News Triangle Finance, Inc. and News T Investments,
Inc. dated as of August 2, 1995. (Incorporated by
reference to Exhibit 10(q) to registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1995.)
(z) $2,000,000,000 Revolving Credit Agreement, dated as
of September 26, 1996, among the registrant, Bank of
America National Trust and Savings Association, as
agent, and the several financial institutions
parties thereto. (Incorporated by reference to
Exhibit 10 of registrant's Current Report on Form
8-K filed October 4, 1996).
11 Computation of Earnings per Common Share.
(Incorporated by reference to Exhibit 11 to
registrant's Current Report on Form 8-K filed
February 10, 1997.)
12 Computation of Ratio of Earnings to Fixed Charges.
(Incorporated by reference to Exhibit 12 to
registrant's Current Report on Form 8-K filed
February 10, 1997.)
13 Specified portions (pages 1 through 29) of the
registrant's Annual Report to Stockholders for the
year ended December 31, 1996. (Incorporated by
reference to Exhibit 13 to registrant's Current
Report on Form 8-K filed February 10, 1997.)
<PAGE>
PAGE 7
21 Significant Subsidiaries of MCI Communications
Corporation.
23 Consent of Independent Accountants. (Incorporated
by reference to Exhibit 23 to registrant's Current
Report on Form 8-K filed February 10, 1997.)
27 Financial Data Schedule. (Incorporated by reference
to Exhibit 27 to registrant's Current Report on Form
8-K filed February 10, 1997.)
99 (a) Valuation and Qualifying Accounts (Schedule II).
(Incorporated by reference to Exhibit 99(a) to
registrant's Current Report on Form 8-K filed
February 10, 1997.)
(b) Capitalization Schedule. (Incorporated by reference
to Exhibit 99(b) to registrant's Current Report on
Form 8-K filed February 10, 1997.)
(c) Accountant's Report on Financial Statement Schedule.
(Incorporated by reference to Exhibit 99(c) to
registrant's Current Report on Form 8-K filed
February 10, 1997.)
Exhibit 4(e)
SUPPLEMENT NO. 1
TO THE
INDENTURE,
DATED AS OF FEBRUARY 17, 1995,
BETWEEN
MCI COMMUNICATIONS CORPORATION
AND
CITIBANK, N.A., TRUSTEE
FOR
SENIOR DEBT SECURITIES
THIS SUPPLEMENT NO. 1, dated as of October 4, 1996 ("Supplement No. 1"), to
the Indenture, dated as of February 17, 1995, (the "Indenture") between MCI
Communications Corporation, a Delaware corporation (hereinafter called the
"Company"), with an office at 1801 Pennsylvania Avenue, N.W., Washington, D.C.
20006, and CITIBANK, N.A., a national banking association duly incorporated and
existing under the laws of the United States, as Trustee under the Indenture.
WHEREAS, pursuant to Section 1101(6) of the Indenture, the Company desires
to amend certain provisions contained in the Indenture to conform them to an
existing credit facility; WHEREAS, the parties hereto agree to amend such
provisions of the Indenture; NOW, THEREFORE, in consideration of the mutual
covenants and promises set forth herein and other good and valuable
consideration, the adequacy and receipt of which is hereby acknowledged, the
parties agree to amend the Indenture as follows:
1. In Article 1, at the end of the definition of Indebtedness after the
words "such Person" insert the words "; provided, however, that Indebtedness
shall not include obligations of a Person which are owed to a trust or other
special purpose entity all of whose common equity is beneficially owned by such
Person".
<PAGE>
2. In the fourth line of Section 501(7) delete the number "$50,000,000" and
insert the number "$75,000,000".
3. In the eighth line of Section 1208(d) delete the number "1993" and
insert the number "1995".
4. In the third line of the last paragraph of Section 1208 after the words
"equity investments," insert the words "intercompany receivables (but only if
the receivables in question are being transferred to the Company or any of its
Subsidiaries),".
5. This Supplement No. 1 shall be effective as of the date hereof, but only
with respect to Debt Securities initially issued under the Indenture on and
after the date hereof.
6. Capitalized terms not otherwise defined in this Supplement No. 1 shall
have the meanings provided for in the Indenture. This Supplement No. 1 may be
executed in counterparts, each of which together will constitute one and the
same instrument.
7. This Supplement No. 1 shall be deemed to be a contract made and to be
performed entirely in the State of New York, and for all purposes shall be
governed by and construed in accordance with the laws of said State without
regard to the conflicts of law rules of said State.
8. Except as modified herein, all other terms and conditions of the
Indenture remain unchanged.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplement No. 1 to
the Indenture to be executed as of the date first written above.
MCI COMMUNICATIONS CORPORATION
BY: /s/ Jonelle St. John
---------------------------
NAME: Jonelle St. John
[CORPORATE SEAL] TITLE: Vice President and Treasurer
Attest:
BY: /s/ C. Bolton-Smith, Jr.
----------------------------
NAME: C. Bolton-Smith, Jr.
TITLE: Secretary
CITIBANK, N.A., as Trustee
BY: /s/ Carol Ng
--------------------------
NAME: Carol Ng
[CORPORATE SEAL] TITLE: Vice President
Attest:
BY: /s/ F. Mills
---------------------
NAME: F. Mills
TITLE: Senior Trust Officer
Exhibit 10(e)
AMENDMENT NO. 1
TO THE MCI COMMUNICATIONS CORPORATION
EXECUTIVE INCENTIVE COMPENSATION PLAN
The MCI Communications Corporation Executive Incentive Compensation Plan is
hereby amended in the following respects:
1. The following definitions are added to Section B:
"Common Stock" shall mean the common stock of MCI Communications
Corporation, par value $0.10.
"Incentive Stock Unit" shall mean an unsecured obligation of the Company to
transfer an unrestricted share of Common Stock to the holder thereof at the
specified maturity date of such Unit.
"Pricing Date" shall mean, with respect to each year for which the Plan is
in effect, a date during the first quarter of the following year, specified in
advance by the Committee, as of which the number of Incentive Stock Units
awarded to Participants pursuant to Section I shall be determined.
<PAGE>
2. Section I is restated in its entirety to read as follows:
"I. DISTRIBUTION OF INCENTIVE COMPENSATION
1. After the annual award, if any, for a Participant has been determined
pursuant to Section D, the Committee shall determine the portion, if any, of
such award to be paid in cash and, subject to Section J, the Company shall pay
such cash amount to such Participant after deduction of all legally required
amounts (including withholding taxes) and of amounts owed by the Participant to
the Company. The portion of an award not paid in cash shall be awarded in the
form of a number of Incentive Stock Units (including any fractional Unit) equal
to the quotient of the dollar amount of such noncash portion divided by the
closing market price of a share of Common Stock on the Pricing Date. Such
Incentive Stock Units shall be awarded pursuant to the MCI Communications
Corporation Stock Option Plan, subject to all the provisions thereof, and shall
become fully vested and nonforfeitable according to such schedule as the
Committee shall determine.
2. Notwithstanding any other provision of this Plan, the Company shall not
be required to pay an incentive compensation award to a person who is not an
Employee on the active payroll on the payment date (except as provided in
Section F or G), or to a Participant whose individual performance is determined
by the Chief Executive Officer to be unsatisfactory. Awards for a year will be
paid no later than March 31 of the following year."
<PAGE>
3. Section J is redesignated as Section K and the following new Section J.
is added:
"J. DEFERRAL OF BONUS
Subject to such rules as the Committee may promulgate from time to time, a
Participant may elect to defer receipt of part or all of the cash portion of an
annual incentive compensation award. An amount thus deferred shall be deemed
invested in a number of Incentive Stock Units equal to the quotient of such
dollar amount divided by the closing market price of a share of Common Stock on
the Pricing Date, increased in the Committee's discretion by an additional
number of Incentive Stock Units determined pursuant to such formula as the
Committee may establish. Such Incentive Stock Units shall be awarded pursuant to
the MCI Communications Corporation Stock Option Plan, subject to all the
provisions thereof, and shall become fully vested and nonforfeitable according
to such schedule as the Committee shall determine."
IN WITNESS WHEREOF, MCI Communications Corporation has caused this
Amendment No. 1 to be executed and attested to by its duly authorized officers
and its corporate seal to be affixed hereto this 5th day of June, 1996.
MCI COMMUNICATIONS CORPORATION
By:/s/ Bert C. Roberts, Jr.
--------------------------
Bert C. Roberts, Jr.
Chairman
ATTEST:
/s/ C. Bolton-Smith, Jr.
- ------------------------
C. Bolton-Smith, Jr.
Secretary
Exhibit 10(i)
AMENDMENT NO. 2
TO THE MCI COMMUNICATIONS CORPORATION
1988 DIRECTORS' STOCK OPTION PLAN
The MCI Communications Corporation 1988 Directors' Stock Option Plan is
hereby amended as follows effective as of November 1, 1996:
1. Section 2.3(c) is hereby restated in its entirety to read as follows:
"(c) If an optionee's directorship terminates and no Revocation of Options
has occurred, any option that the optionee is entitled to exercise under the
terms of paragraph (b) above must be exercised by the earlier of: (i) five years
following termination of the directorship, or (ii) the expiration date of the
option. In the event that an optionee dies while serving as a director, and if
no Revocation of Options has occurred, any option that the optionee is entitled
to exercise under the terms of paragraph (b) above must be exercised by the
earlier of: (i) five years after the optionee's death by the administrators or
executors of the optionee's estate or by the person or persons to whom the
optionee's rights under the option shall have passed by will or by the
applicable laws of descent or distribution, or (ii) the expiration date of the
option. If an optionee's directorship terminates due to the optionee's
disability within the meaning of Section 22(e)(3) of the Code, any option
granted to such optionee under the Plan may be exercised by the earlier of: (i)
five years of the termination of the optionee's directorship, or (ii) the
expiration date of the option. Any such exercise following the optionee's
disability may be made only by such optionee or his personal representative."
IN WITNESS WHEREOF, MCI COMMUNICATIONS CORPORATION has caused this
Amendment No. 2 to be executed and attested by its duly authorized officers and
its corporate seal to be affixed hereto as of this 1st day of November, 1996.
MCI COMMUNICATIONS CORPORATION
/s/ Bert C. Roberts, Jr.
--------------------------
Bert C. Roberts, Jr.
ATTEST: Chairman
/s/ C. Bolton-Smith, Jr.
- -------------------------
C. Bolton-Smith, Jr.
Secretary
Exhibit 10(j)
AMENDMENT NO. 3
TO THE MCI COMMUNICATIONS CORPORATION
DIRECTORS' STOCK OPTION PLAN
The MCI Communications Corporation Directors' Stock Option Plan is hereby
amended, effective November 1, 1996, in the following respects:
1. The Amendment No. 2 to the MCI Communications Corporation Directors'
Stock Option Plan shall become effective upon the closing of the proposed merger
between British Telecommunications plc, MCI Communications Corporation and
Tadworth Corporation (the "Merger") for options granted prior to November 1,
1996.
IN WITNESS WHEREOF, MCI COMMUNICATIONS CORPORATION has caused this
Amendment No.3 to be executed and attested by its duly authorized officers and
its corporate seal to be affixed hereto this 10th day of March, 1997.
MCI COMMUNICATIONS CORPORATION
By: /s/ Bert C. Roberts, Jr.
---------------------------------
Bert C. Roberts, Jr.
Chairman
ATTEST:
/s/ C. Bolton-Smith, Jr.
- ------------------------------
C. Bolton-Smith, Jr.
Secretary
Exhibit 10 (l)
AMENDMENT NO.1 TO THE
MCI COMMUNICATIONS CORPORATION
STOCK OPTION PLAN
Effective January 1, 1995, the MCI Communications Corporation Stock Option
Plan is hereby amended in the following respects:
1. The following language is added to the end of Section 1.6(c):
Notwithstanding the foregoing, the term "fair market value" shall mean for
purposes of determining the key employee's tax obligation, the gross sale price
of Common Stock obtained by the key employee upon the exercise of a nonqualified
stock option if the key employee's date of sale is the same day as the Tax Date
and all shares of Common Stock on such Tax Date are sold. If such key employee
does not sell all the shares of Common Stock exercised, the fair market value
for purposes of determining the key employee's tax obligation shall be the sale
price obtained by the key employee for those shares he or she does sell
multiplied by the total number of options exercised. The Company shall be
entitled to verify such key employee's sale price by whatever method the Company
deems advisable, appropriate or administratively convenient.
2. Section 3.4 is hereby amended in its entirety to read as follows:
3.4 Withholding Taxes
Whenever under the Plan shares of Common Stock are to be transferred or
payment is to be made to a key employee, the Company shall be entitled to
require as a condition of transfer or payment that the key employee remit an
amount sufficient in the Company's opinion, to satisfy all FICA, federal and
other withholding tax requirements related thereto. The Company shall be
entitled to deduct such amount from any cash payment. If the key employee has
used cash as payment of the purchase price, the key employee must satisfy the
foregoing condition by making a cash payment to the Company equal to the tax to
be withheld. If the key employee has used shares of Common Stock as payment of
the purchase price for the shares being purchased, the key employee must satisfy
the foregoing condition by having the Company withhold shares with a value equal
to the amount of tax to be withheld. Such shares shall be valued at their fair
market value on the date as of which the amount of tax to be withheld is
<PAGE>
determined (the "Tax Date"), except that shares received pursuant to Section 2.9
shall be valued as set forth therein. Fractional share amounts shall be settled
in cash. A key employee whose transactions in the Common Stock of the Company
are subject to Section 16(b) of the Act, shall to the extent required
thereunder, (i) be irrevocable, (ii) be made no sooner than six months after the
grant of the award with respect to which the election is made (except that this
limitation will not apply in the event of the key employee's disability during
such six-month period), and (iii) be made at least six months prior to the Tax
Date, or be made prior to the Tax Date in a "window period." If the Tax Date of
such a key employee making such an election is deferred for six months after the
date of exercise of the award, the full number of shares for which the exercise
is made shall be delivered to him or her, but he or she shall be unconditionally
obligated to surrender to the Company the number of shares necessary to satisfy
the income tax withholding obligation on the Tax Date.
IN WITNESS WHEREOF, the board of directors of MCI Communications
Corporation has caused this instrument to be executed, as of the effective date
hereof.
MCI COMMUNICATIONS CORPORATION
By: /s/ Bert C. Roberts, Jr.
--------------------------
Bert C. Roberts, Jr.
Chairman
ATTEST:
/s/ C. Bolton-Smith, Jr.
- -------------------------
C. Bolton-Smith, Jr.
Secretary
Exhibit 10(n)
AMENDMENT NO. 3
TO THE MCI COMMUNICATIONS CORPORATION
STOCK OPTION PLAN
The MCI Communications Corporation Stock Option Plan is hereby amended,
effective November 1, 1996, in the following respects:
1. Section 1.4 is restated in its entirety to read as follows:
"1.4 Types of Awards Under the Plan
Awards may be made under the Plan in the form of stock options ("options"),
stock appreciation rights, restricted stock, performance shares and incentive
stock units, and other awards as may be permitted under the Plan from time to
time, all as more fully set forth in Article II."
2. Sections 2.7, 2.8 and 2.9 are renumbered 2.8, 2.9 and 2.10,
respectively, references in the Plan to such sections are modified accordingly,
and a new Section 2.7 is added to read as follows:
"2.7 Grant of Incentive Stock Units
(a) The Committee may grant an award of incentive stock units, each of
which shall entitle the grantee to receive one share of Common Stock at the
maturity date specified in such award. Incentive stock unit awards may be made
independently of or in connection with any other award under the Plan.
<PAGE>
(b) At the time of grant, the Committee shall specify the date or dates on
which the incentive stock units shall become fully vested and nonforfeitable,
and may specify such conditions to vesting as it deems appropriate. Such dates
may be earlier than the maturity date of the award. In the event of the
termination of the grantee's employment by the Company and its subsidiaries for
any reason, incentive stock units that have not become nonforfeitable shall be
forfeited and cancelled. The Committee at any time may accelerate vesting dates
and otherwise waive or amend any conditions of an award.
(c) At the maturity date applicable to a grant of incentive stock units,
the Company shall transfer to the grantee one unrestricted, fully transferable
share of Common Stock for each such incentive stock unit. The Committee shall
specify the purchase price, if any, to be paid by the grantee to the Company for
such shares of Common Stock; provided, however, that such price shall be no less
than par value in the case of any newly issued share of Common Stock, if
required by applicable law."
3. The first sentence of Section 3.4 is deleted and replaced by the
following two sentences:
"Whenever under the Plan there is a transfer of shares of Common Stock, or
a cash payment, or the vesting of an award, such transfer, payment or vesting
shall be subject to applicable withholding requirements imposed by any tax
(including, without limitation, FICA) or other law. The Company shall have the
right to require as a condition of any such transfer, payment or vesting that
the key employee remit an amount sufficient in the opinion of the Company to
satisfy all withholding requirements related thereto."
<PAGE>
4. Section 3.11(b) is amended by the addition of the following sentence at
the end thereof:
"The maturity date of any outstanding incentive stock unit shall likewise
be automatically accelerated and unrestricted shares of Common Stock shall be
transferred to the holders thereof in accordance with Section 2.7(c)."
5. The first sentence of Section 2.5(a) is restated in its entirety to read
as follows:
"The Committee may grant a restricted stock award entitling the recipient
to acquire shares of Common Stock for a purchase price, if any, determined by
the Committee; provided, however, that such price shall be no less than par
value in the case of any newly issued share of Common Stock, if required by
applicable law."
MCI COMMUNICATIONS CORPORATION
By: /s/ Bert C. Roberts, Jr.
---------------------------
Bert C. Roberts, Jr.
Chairman
ATTEST:
/s/ C. Bolton-Smith, Jr.
- -------------------------
C. Bolton-Smith, Jr.
Secretary
Exhibit 10(o)
AMENDMENT NO. 4
TO THE MCI COMMUNICATIONS CORPORATION
STOCK OPTION PLAN
The MCI Communications Corporation Stock Option Plan is hereby amended,
effective November 1, 1996, in the following respects:
1. Section 2.8(c) is restated in its entirety to read as follows:
"(c) If a key employee retires after attaining age 55 and having been
credited with at least ten years of service with the Company and its
subsidiaries ("early retirement"), and provided that no event has occurred which
would give rise to a Dismissal for Cause, any award that he is entitled to
exercise under the terms of paragraph (b) above must be exercised by the earlier
of: (i) five years from the date of early retirement, or (ii) the option
expiration date.
If a key employee retires after attaining age 65, or before age 65 but
after attaining age 62 and having been credited with at least five years of
service with the Company and its subsidiaries ("retirement"), and provided that
no event has occurred which could give rise to a Dismissal for Cause, such key
employee's options shall become fully exercisable and any award that he is
entitled to exercise under the terms of paragraph (b) above must be exercised by
the earlier of: (i) five years from the date of retirement, or (ii) the option
expiration date. However, to the extent required for compliance with the rules
under Section 16 of the Act, such an option shall not become exercisable until
outstanding for six months."
IN WITNESS WHEREOF, MCI COMMUNICATIONS CORPORATION has caused this
Amendment No. 4 to be executed and attested by its duly authorized officers and
its corporate seal to be affixed hereto this 1st day of November, 1996.
MCI COMMUNICATIONS CORPORATION
By: /s/ Bert C. Roberts, Jr.
-------------------------
Bert C. Roberts, Jr.
Chairman
ATTEST:
/s/ C. Bolton-Smith, Jr.
- ------------------------
C. Bolton-Smith, Jr.
Secretary
Exhibit 10(p)
AMENDMENT NO. 5
TO THE MCI COMMUNICATIONS CORPORATION
STOCK OPTION PLAN
The MCI Communications Corporation Stock Option Plan is hereby amended,
effective November 1, 1996, in the following respects:
1. The Amendment No. 4 to the MCI Communications Corporation Stock Option
Plan shall become effective upon the closing of the proposed merger between
British Telecommunications plc, MCI Communications Corporation and Tadworth
Corporation (the "Merger") for options granted prior to November 1, 1996.
2. The corporation is hereby delegated authority and discretion to accord
the benefits of Amendment No. 4. to employees who terminate employment prior to
the close of the Merger.
IN WITNESS WHEREOF, MCI COMMUNICATIONS CORPORATION has caused this
Amendment No. 5 to be executed and attested by its duly authorized officers and
its corporate seal to be affixed hereto this 10th day of March, 1997.
MCI COMMUNICATIONS CORPORATION
By: /s/ Bert C. Roberts, Jr.
----------------------------------
Bert C. Roberts, Jr.
Chairman
ATTEST:
/s/ C. Bolton-Smith, Jr.
- ---------------------------------
C. Bolton-Smith, Jr.
Secretary
Exhibit 10(s)
AMENDMENT NO. 1
TO THE MCI COMMUNICATIONS CORPORATION
SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN
The MCI Communications Corporation Senior Executive Incentive Compensation
Plan is hereby amended in the following respects:
1. Sections 2(k) and 2(n) are restated in their entirety to read as follows:
"(k) "Maximum Restricted Stock/Incentive Stock Units Award": a number of
restricted shares of Common Stock of the Company and/or a number of incentive
stock units totalling 100,000 in the aggregate.
(n) "Performance Award": the cash bonus and/or shares of restricted stock
and/or incentive stock units that may be awarded to a Participant for a Plan
Year under the terms of the Plan."
2. The term "Maximum Restricted Stock Award" is amended to read "Maximum
Restricted Stock/Incentive Stock Units Award" where it appears in Section 2(j).
3. Section 6 is restated in its entirety to read as follows:
"Section 6. Payment of Awards.
Subject to Section 16, Performance Awards for a given Plan Year shall be
paid as soon as practicable following the close of that Plan Year to the extent
such Awards consist of cash bonuses. To the extent that the Committee shall have
specified that a Performance Award is payable in shares of restricted stock
and/or in incentive stock units, such Award shall be made by the Committee
pursuant to the MCI Communications Corporation Stock Option Plan, subject to all
the provisions thereof."
<PAGE>
4. Section 7 is restated in its entirety to read as follows:
"Section 7. Restricted Stock and Incentive Stock Units with
Performance-Based Vesting.
Notwithstanding the foregoing provisions of this Plan, the Committee may
make an award to a Participant under this Plan of restricted stock and/or
incentive stock units that is not contingent upon prior satisfaction of
Performance Goals as described in Section 4; provided, however, that, in such
event, the nonforfeitability of the restricted stock and/or incentive stock
units shall be contingent upon satisfaction of one or more Performance Goals as
described in Section 4, under terms and conditions specified by the Committee in
writing at or prior to the time the award of restricted stock and/or incentive
stock units is made. In no event shall any restricted stock and/or incentive
stock units awarded under this Section 7, together with any restricted stock
and/or incentive stock units awarded under Section 5.1 in the same Plan Year,
exceed the Maximum Restricted Stock/Incentive Stock Units Award."
5. The words "restricted stock" in Section 15.7 are replaced with the words
"restricted stock and/or incentive stock units."
<PAGE>
6. A new Section 16 is added to the Plan to read as follows:
"Section 16. Deferral of Awards.
Subject to such rules as the Committee may promulgate from time to time, a
Participant may elect to defer receipt of part or all of the cash bonus portion
of a Performance Award. An amount thus deferred shall be deemed invested in a
number of incentive stock units equal to the quotient of such cash bonus divided
by the closing market price of a share of Common Stock on the date such bonus
would otherwise be payable. Such incentive stock units shall be awarded pursuant
to the MCI Communications Corporation Stock Option Plan, subject to all the
provisions thereof."
IN WITNESS WHEREOF, MCI Communications Corporation has caused this
Amendment No. 1 to be executed and attested to by its duly authorized officers
and its corporate seal to be affixed hereto this 5th day of June, 1996.
MCI COMMUNICATIONS CORPORATION
By: /s/ Bert C. Roberts, Jr.
--------------------------
Bert C. Roberts, Jr.
Chairman
ATTEST:
/s/ C. Bolton-Smith, Jr.
- -------------------------
C. Bolton-Smith, Jr.
Secretary
Exhibit 10(u)
FORM OF
EMPLOYMENT AGREEMENT
AGREEMENT, made on this 2nd day of November, 1996, by and between MCI
Communications Corporation, a Delaware corporation (the "Company"), and [Name of
Executive] ("Executive").
RECITALS
WHEREAS, the Company and British Telecommunications plc intend to effect a
merger (the "Merger") pursuant the Agreement and Plan of Merger dated as of
November 3, 1996 (the "Merger Agreement");
WHEREAS, in order to induce Executive to continue serve as an executive
officer of the Company during the period prior to the Merger and as an executive
officer of any parent company thereof (the "Parent") thereafter, the Company
desires to provide Executive with compensation and other benefits on the terms
and conditions set forth in this Agreement;
WHEREAS, Executive is willing to accept such employment and perform
services for the Company and, on and after the date of the Merger, the Parent,
on the terms and conditions hereinafter set forth;
NOW THEREFORE, it is hereby agreed by and between the parties as follows:
1. Employment.
(a) Prior to the Merger, Executive shall serve as [Officer Title] of the
Company and shall have the duties and responsibilities equivalent to those of
[officer title] of corporations of the size, type and nature of the Company.
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<PAGE>
(b) On and after the date of the Merger, Executive shall serve as [Officer
Title] of the Parent. In such capacity, Executive will be responsible for Parent
[areas of responsibility] . The offices of [areas of responsibilities] will
report to Executive.
(c) Prior to the Merger, Executive shall report to the [Reporting
Relationship] of the Company. On and after the date of the Merger, Executive
shall report to the [Reporting Relationship] of Parent.
(d) During the Term, and except for illness or incapacity, Executive shall
devote all of his business time, attention, skill and efforts to the business
and affairs of the Company and after the Merger, the Parent, and their
subsidiaries and affiliates; provided, however, that nothing in this Agreement
shall preclude Executive from devoting time during reasonable periods required
for:
(i) serving, in accordance with the Company's policies and with the
prior approval of the Company's Board of Directors, as a director or member
of a committee of any company or organization involving no conflict of
interest with the Company or any of its subsidiaries or affiliates, and as
a director of those companies for which he currently serves as a director.
(ii) delivering lectures and fulfilling speaking engagements,
(iii) engaging in charitable and community activities,
(iv) investing his personal assets in such form and in such manner as
will not violate Section 14, and
(v) other activities that do not otherwise conflict with the
provisions of this Agreement and that are approved in advance by the
Company's Board of Directors.
2
<PAGE>
(e) Executive's principal place of business shall be in Washington, D.C.,
except that on and after the date of the Merger, Executive shall, to the degree
necessary to perform his duties for the Parent, perform his services in the
principal offices of the Parent in [Primary Office Location (UK or US)].
2. Term of Employment. Executive's term of employment under this Agreement
shall commence on the date hereof (the "Commencement Date") and shall terminate
on the earlier of (i) December 31, 1999 (the "Termination Date") or (ii)
termination of Executive's employment pursuant to this Agreement (alternatively,
the "Term").
3. Compensation.
3.1 Salary. During the Term, the Company (and, where applicable, the
Parent) shall pay Executive a base salary at the rate of $[Base Salary] per
annum, subject to increases (but not decreases) at the discretion of the
Company. The base salary, as increased from time to time, shall be the "Base
Salary" hereunder. Base Salary shall be payable in accordance with the ordinary
payroll practices of the Company (and, where applicable, the Parent), but no
less frequently than monthly.
3.2 Annual Bonus. In addition to his Base Salary, Executive shall be paid
an annual bonus (the "Bonus") for each Company fiscal year ending during the
term of his employment hereunder with a target amount no less than the target
established for Executive's grade on the date hereof (the "Target Bonus") in
accordance with the terms of the Company's annual bonus plan for senior
executives based on performance criteria determined by the
3
<PAGE>
Company in its reasonable discretion. The Bonus will be paid within 75 days
after the end of the applicable fiscal year of the Company, unless further
deferred by Executive.
3.3 Long Term Incentive Compensation Plans and Programs. Executive shall be
eligible to participate in any long term incentive compensation plan or program
maintained by the Company in which other senior executives of the Company
participate on terms comparable to those applicable to such other senior
executives; provided, that all such programs in existence immediately prior to
the Merger shall be maintained for at least two years following the effective
time of the Merger or be replaced by programs that are no less favorable to
Executive. In addition, Section 5.8 of the Merger Agreement, as it relates to
Executive, is hereby incorporated by reference, so that in the event the Merger
is consummated, Executive shall be entitled to share in the equity grants
described therein.
4. Employee Benefits.
4.1 Employee Benefit Programs, Plans and Practices. The Company shall
provide Executive during the term of his employment hereunder with coverage
under all employee pension and welfare benefit programs, plans and practices
(commensurate with his positions in the Company and to the extent permitted
under any employee benefit plan) in accordance with the terms thereof, which the
Company makes available to its senior executives; provided, that all such
programs, plans and practices in existence immediately prior to the Merger shall
be maintained for at least two years following the effective time of the Merger
or be replaced by programs that are no less favorable to Executive. The Parent
shall also provide appropriate benefit coverage (e.g., medical reimbursement) to
ensure continuity of benefits in respect of Executive's service in the United
Kingdom.
4.2 Vacation and Fringe Benefits. Executive shall be entitled to
twenty-five (25) business days paid vacation in each calendar year, which shall
be taken at such times as
4
<PAGE>
are consistent with Executive's responsibilities hereunder. In addition,
Executive shall be entitled to the perquisites and other fringe benefits made
available to senior executives of the Company, including, without limitation, a
Company automobile and use of a Company airplane, and, on and after the date of
the Merger, senior executives of the Parent, commensurate with his position with
the Company and the Parent.
5. Expenses. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities. The Company and the Parent shall reimburse Executive for
all such expenses upon presentation by Executive from time to time of
appropriately itemized and approved (consistent with the Company's and Parent's,
as the case may be, policy) accounts of such expenditures. In addition, all
expenses pertaining to lodging and transportation in the United Kingdom related
to Executive's performance of duties in the United Kingdom shall be borne by the
Company or the Parent and shall be tax-effected (i.e., any such reimbursements
shall be grossed-up so as to be received net of any taxes) to Executive.
6. Termination of Employment.
6.1 Compensation Upon Termination of Employment. (a) If, prior to the
Termination Date, Executive's employment shall be terminated by the Company or
the Parent for any reason other than (i) Executive's Disability or (ii) for
Cause, or if during the term hereof, Executive terminates his employment for
Good Reason, the Company and the Parent shall pay or cause to be paid to
Executive a cash amount equal to three times (1.5 times in the event of a
termination by the Executive for Good Reason after December 31, 1998 (a "Final
Year Constructive Termination")) the sum of (x) Executive's Base Salary as in
effect on the date of termination (without regard to any decrease in Base Salary
which could constitute Good
5
<PAGE>
Reason under this Agreement) and (y) the greater of (A) the average annual bonus
paid to or accrued for Executive by the Company (and, where applicable, the
Parent) in respect of the three calendar years preceding the termination of
employment or (B) the annual bonus paid to or accrued for Executive in respect
of 1995. Such cash amounts shall be paid as follows: the amount attributable to
Base Salary shall be paid over a one-year period (six-month period in the event
of a Final Year Constructive Termination) in equal installments in accordance
with the ordinary payroll practices of the Company (and, where applicable, the
Parent), but no less frequently than monthly, and the amount attributable to the
annual bonus shall be paid in a lump sum within 10 business days following the
termination of Executive's employment.
In addition, Executive shall be entitled to (i) the unpaid portion of his
Base Salary accrued to the date of termination, and any accrued vacation as of
the date of termination; (ii) be paid the unpaid portion of his Bonus accrued
with respect to the last full fiscal year of the Company ended prior to the date
of termination, at such time as the Bonus would otherwise be payable; (iii)
continued medical, dental and life insurance coverage for Executive and
Executive's eligible dependents on the same basis as in effect immediately prior
to Executive's termination of employment (without regard to any decreases in
such benefits which would constitute "Good Reason" under this Agreement) until
the earlier of (A) 36 months (18 months, in the event of a Final Year
Constructive Termination) after Executive's termination of employment or (B) the
commencement of coverage with a subsequent employer, but only to the extent such
coverage duplicates or exceeds the coverage provided by the Company; provided,
however, that with respect to any such continued coverage, the Consolidated
Omnibus Budget and Reconciliation Act of 1985 coverage period shall not run
during the period of continued coverage; (iv) unless otherwise expressly elected
by Executive prior to such termination and as provided in (vi) below, payment,
in a cash lump sum, of all
6
<PAGE>
amounts deferred by Executive under any non-qualified plan of deferred
compensation maintained by the Company of the Parent (notwithstanding the
payment provisions of any such plan to the contrary); (v) full acceleration of
vesting and exercisability of any equity-based awards (including, but not
limited to, stock options, restricted stock and incentive stock units) granted
to Executive prior to Executive's termination of employment and (vi) 36 months
(18 months, in the event of a Final Year Constructive Termination) of age and
service credit for all purposes under all defined benefit plans of the Company;
provided, however, that to the extent any increase in benefits which would
result from such additional age and service credits cannot be paid under the
terms of any plan, the amount of such increase shall be calculated under the
terms of each such plan and paid to Executive directly by the Company in the
same form and at the same time that the benefits under each such plan would
otherwise be paid. Payments required hereunder shall be made within 10 business
days following the termination of Executive's employment except as otherwise
provided in this Section 6.1.
(b) In the event of the termination of Executive's employment prior to the
Termination Date due to Executive's death or Disability, the Company shall pay
to Executive (or Executive's beneficiaries, if applicable) a lump sum cash
amount equal to (i) the annual rate of Executive's Base Salary as in effect on
the date of termination and (ii) the highest bonus paid to or accrued in respect
of Executive by the Company (and, where applicable, the Parent) during the three
fiscal years preceding the termination of employment. In addition, Executive
shall be entitled to (i) the unpaid portion of his Base Salary accrued to the
date of termination, and any accrued vacation as of the date of termination;
(ii) be paid the unpaid portion of his Bonus accrued with respect to the last
full fiscal year of the Company ended prior to the date of termination, when the
Bonus would otherwise be payable; and (iii) unless otherwise expressly elected
by Executive prior to such termination, payment, in a cash lump
7
<PAGE>
sum, of all amounts deferred by Executive under any non-qualified plan of
deferred compensation (other than a defined benefit plan) maintained by the
Company or Parent (notwithstanding the payment provisions of any such plans to
the contrary). Payments required hereunder shall be made within 10 business days
following the termination of Executive's employment except as otherwise provided
in this Section 6.1.
(c) If Executive's employment is terminated by the Company or by Parent for
Cause or if Executive resigns from his employment without Good Reason, Executive
shall be entitled to receive: (i) the Base Salary provided for in Section 3.1
accrued through the date of such resignation or termination and any accrued
vacation as of the date of termination; and (ii) the unpaid portion of his Bonus
accrued in respect of the last fiscal year of the Company (or Parent, as the
case may be) prior to the year of termination, when the Bonus would otherwise be
paid.
(d) In the event of any termination of employment hereunder, Executive
shall also receive, when due, any other compensation or benefit payable to him
under any plan, program or arrangement maintained by the Company (or Parent, as
the case may be), other than a severance plan or arrangement.
6.2 Definitions. For purposes of this Agreement, the following definitions
shall apply:
(a) Disability. "Disability" shall mean Executive's absence from the full-
time performance of Executive's duties for a period of 180 consecutive days as a
result of Executive's incapacity due to physical or mental illness.
(b) Cause. For purposes of this Agreement, "Cause" shall mean:
(1) a deliberate and material breach by Executive of his duties and
responsibilities under this Agreement that result in material harm to the
Company or,
8
<PAGE>
on and after the date of the Merger, the Parent, which breach is (A) either
the product of willful malfeasance or gross neglect, (B) committed in bad
faith or without reasonable belief that such breach is in, or not contrary
to, the best interests of the Company and (C) not remedied within 30 days
after receipt of written notice from the Company specifying such breach;
(2) Executive's willful and material breach of the provisions of
Section 14 of this Agreement which is not remedied within 30 days after
receipt of written notice from the Company specifying such breach; or
(3) Executive's plea of guilty or nolo contendere to, or nonappealable
conviction of, a felony, which conviction or plea causes material damage to
the reputation or financial position of the Company (or the Parent).
Termination of Executive for Cause shall be made by delivery to Executive of a
copy of a resolution duly adopted by the affirmative vote of not less than a
two-thirds majority of the Directors of the Company at a meeting of the Board of
Directors of the Company (or, on and after the date of the Merger, the Parent)
called and held for such purpose (after 30 days prior written notice to
Executive specifying the basis for such termination and the particulars thereof
and reasonable opportunity for Executive to be heard before such Board prior to
such vote), finding that in the reasonable judgment of such Board, the conduct
or event set forth in any of clauses (1) through (3) above has occurred and that
such occurrence warrants Executive's termination.
(c) Good Reason. For purposes of this Agreement, "Good Reason" shall mean
the occurrence of any of the following without Executive's express written
consent:
(1) The assignment to Executive of any duties inconsistent with
the Executive's current (and, after the Merger, post-merger)
positions, duties,
9
<PAGE>
responsibilities and status with the Company and its subsidiaries, as
set forth herein, a change in Executive's reporting responsibilities,
title or offices, as set forth herein or any removal of Executive from
or failure to elect or re-elect Executive to any position with the
Company or the Parent (including membership on the Board of Directors
of the Company and the Parent) or any subsidiary thereof except in
connection with Executive's promotion or a termination of employment
for Cause;
(2) A reduction in Executive's Base Salary or target annual Bonus
or long- term incentive, as such salary, target Bonus and incentive
may be increased from time to time thereafter;
(3) The failure to continue in effect any employee benefit plan
or compensation plan in which Executive currently participates unless
Executive is provided with participation in other plans that provide
substantially comparable benefits to Executive; or the taking of any
action that would adversely affect Executive's participation in or
reduce Executive's benefits under any such plan;
(4) Any relocation of Executive's principal place of business
from the locations (including the United Kingdom) set forth herein;
(5) Any reduction in fringe benefits and perquisites provided to
Executive;
(6) Any material breach by the Company or the Parent of any
provisions of this Agreement; and
(7) Failure by the Parent expressly to assume, as of the date of
the Merger, all obligations of the Company and the Parent under this
Agreement;
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<PAGE>
provided, however, that an event specified in (1), (2), (3), (5) or (6) shall
not constitute "Good Reason" if it is remedied within 30 days after receipt of
written notice from Executive specifying such event.
6.3 Notice of Termination. Any purported termination of Executive's
employment with the Company or the Parent shall be communicated by a 30 day
advance Notice of Termination to Executive, if such termination is by the
Company or the Parent, or to the Parent, if such termination is by Executive.
For purposes of this Agreement, "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provisions so indicated. For purposes of this Agreement, no purported
termination of Executive's employment by the Company or the Parent shall be
effective without such a Notice of Termination having been given.
6.4 Gross Up. (a) In the event it shall be determined that any payment,
benefit or distribution, or any acceleration of vesting (or combination thereof)
by the Company, the Parent or one or more trusts established by the Company or
the Parent for the benefit of its employees, to or for the benefit of Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement, or under the terms of any other plan, program agreement or
arrangement) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, hereinafter collectively referred to as the "Excise Tax"), Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by Executive of all taxes (including any interest
or penalties imposed with respect to such taxes),
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including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.
(b) Subject to the provisions of Section 6.4(c), all determinations
required to be made under this Section 6.4, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by a
nationally recognized certified public accounting firm as may be designated by
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Parent and Executive within fifteen (15) business days
after the receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by the Parent. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment shall
be paid by the Company to Executive within five (5) days after the receipt of
the Accounting Firm's determination.
(c) As soon as practicable, Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. If the Company notifies
Executive in writing that it desires to contest such claim, Executive shall
cooperate in all reasonable ways with the Company in such contest and the
Company shall be entitled to participate in all proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 6.4, the Company shall control all proceedings taken in
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connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest- free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and
provided, further, that if Executive is required to extend the statute of
limitations to enable the Company to contest such claim, Executive may limit
this extension solely to such contested amount. The Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
7. Obligations Absolute. Except as provided in Section 14(d), the
obligations of the Company and the Parent to make the payments to, or other
arrangements with respect to, Executive provided for herein shall be absolute
and unconditional and shall not be reduced by any circumstances, including
without limitation any setoff, counterclaim, recoupment, defense or other right
which the Company may have against Executive or any third party at any time.
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8. No Mitigation. Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise. No amounts paid to or earned by Executive following his
termination of employment with the Company or the Parent shall reduce or be set
off against any amounts payable to Executive under this Agreement.
9. Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be resolved exclusively by arbitration in
Washington D.C. or, at the option of Executive, in the county where Executive
then resides in accordance with the Rules of the American Arbitration
Association then in effect, except that if Executive institutes an action
relating to this Agreement, Executive may, at Executive's option bring such
action in a court of competent jurisdiction. Judgment may be entered on an
arbitrator's award relating to this Agreement in any court having jurisdiction.
10. Legal Fees. The Company shall pay all costs and expenses, including
attorney's fees and disbursements, at least monthly, of Executive in connection
with any legal proceeding (including arbitration) instituted by the Company
relating to the interpretation or enforcement of any provision of this
Agreement. The Company shall pay one half of all costs and expenses, including
attorney's fees and disbursements, at least monthly, of Executive in connection
with any legal proceeding (including arbitration) instituted by Executive
relating to the interpretation or enforcement of any provision of this
Agreement; provided, however, that if Executive prevails on any substantive
issue, the Company shall pay all costs and expenses of Executive. The Company
shall pay prejudgment interest on any judgment obtained by Executive as a result
of such a proceeding, calculated at the prime rate of Chase Bank, as in effect
from time to time, from the date that the payment should have been made to
Executive under this Agreement.
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11. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
MCI Communications Corporation
1801 Pennsylvania Avenue, NW
Washington, DC 20006
Attn: Michael H. Salsbury, Esq.
To the Parent:
British Telecommunications plc
BT Centre
81 Newgate Street
London EC1A 7AJ
England
Attn: Colin Green
To Executive:
MCI Communications Corporation
1801 Pennsylvania Avenue, NW
Washington, DC 20006
Attn: Douglas L. Maine
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
12. Assignment. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company and the Parent, but neither this Agreement nor any
rights or obligations hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation of the laws of
intestate succession) or by the Company or the Parent, except that the
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<PAGE>
Company or the Parent must assign this Agreement to any successor (whether by
merger, purchase or otherwise) to all or substantially all of the stock, assets
or businesses of the Company (or the Parent, as the case may be), and shall
require such successor to assume expressly the obligations of the Company
hereunder.
13. Entire Agreement; Modification. This Agreement sets forth the entire
understanding between the parties hereto regarding the subject matter contained
herein. There are no terms, conditions, representations, warranties or covenants
with respect to Executive's employment other than those contained herein. No
term or provision of this Agreement may be amended, waived, released, discharged
or otherwise modified in any respect except in writing and signed by the
parties. No waiver of any breach or default shall constitute a waiver of any
other breach or default, whether of the same or any other covenant or condition
contained herein. A delay or failure to assert any right or breach of this
Agreement shall not be deemed to be a waiver of such right or breach either with
respect to that right or breach or any subsequent right or breach.
14. Nondisclosure of Confidential Information; Non-Competition. (a)
Executive shall not, without the prior written consent of the Parent, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Parent or any of its affiliates, except (i) while employed by
the Company or the Parent, in the business of and for the benefit of the Company
or the Parent, (ii) when required to do so by a court of competent jurisdiction,
by any governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Executive to divulge, disclose or
make accessible such information or (iii) to Executive's legal counsel, and,
with respect to the terms of this Agreement, his financial
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<PAGE>
advisor. For purposes of this Section 14(a), "Confidential Information" shall
mean non-public information concerning the financial data, strategic business
plans, product development (or other proprietary product data), customer lists,
marketing plans and other non-public, proprietary and confidential information
of the Company, the Parent, or their respective affiliates (the "Restricted
Group") or customers, that, in any case, is not otherwise available to the
public (other than by Executive's breach of the terms hereof).
(b) During the period of his employment hereunder and (i) for the shorter
of (A) one year thereafter or (B) the period ending on December 31, 1999, in the
event of a termination other than a Final Year Constructive Termination, and
(ii) for the period ending six months after the date of termination, in the
event of a Final Year Constructive Termination, Executive agrees that, without
the prior written consent of the Parent, (x) he will not, directly or
indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee or in any other capacity,
carry on, be engaged in or have any financial interest in, any business which is
in competition with the business of the Parent or the Company or any other
member of the Restricted Group with which Executive has been principally
employed during the term of this Agreement (an "Applicable Group Member") and
(y) he shall not, on his own behalf or on behalf of any person, firm or company,
other than the Restricted Group, solicit for employment any person who has been
employed by the Restricted Group at any time during the 12 months immediately
preceding such solicitation.
(c) For purposes of this Section 14, a business shall be deemed to be in
competition with the Parent, Company or Applicable Group Member if it is
principally involved in the purchase, sale or other dealing in any property or
the rendering of any service purchased, sold, dealt in or rendered by the Parent
or the Company (or any entity which is a successor to or transferee of
substantially all the business of the Parent or the Company) or
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<PAGE>
Applicable Group Member as a material part of the business of the Parent Company
or Applicable Group Member within the same geographic area in which the Parent,
Company or Applicable Group Member makes such purchases, sales or dealings or
renders such services. Nothing in this Section 14 shall be construed so as to
preclude Executive from investing in any publicly or privately held company,
provided Executive's beneficial ownership of any class of such company's
securities does not exceed 1% of the outstanding securities of such class.
(d) Executive and the Company agree that this covenant not to compete is a
reasonable covenant under the circumstances, and further agree that if in the
opinion of any court of competent jurisdiction such restraint is not reasonable
in any respect, such court shall have the right, power and authority to excise
or modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
amended. Executive agrees that any breach of the covenants contained in this
Section 14 would irreparably injure the Company and the Parent. Accordingly,
Executive agrees that the Company and the Parent may, in addition to pursuing
any other remedies it may have in law or in equity, withhold payment of any
amounts due hereunder and obtain an injunction against Executive from any court
having jurisdiction over the matter restraining any further violation of this
Agreement by Executive.
15. Beneficiaries; References. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company or the Parent written notice thereof. In the event of Executive's death
or a judicial determination of his incompetence, reference in this Agreement to
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative. Any reference to the masculine gender in
this
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Agreement shall include, where appropriate, the feminine. Any reference to the
Company in this Agreement shall include, where appropriate to give effect to the
intent of the terms of this Agreement, the Parent.
16. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 16 are in addition to the survivorship provisions of
any other section of this Agreement.
17. Separability. If any provision of this Agreement shall be declared to
be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
18. Governing Law. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of New York, without reference
to rules relating to conflicts of law.
19. Indemnification. The Company and Parent shall indemnify Executive for
any actions taken and omitted in his capacity as an officer and director of the
Company, the Parent and their subsidiaries and affiliates and shall provide
expense advances to Executive in connection therewith to the maximum extent
permitted by law. This obligation shall survive this Agreement.
20. Withholding. The Company and the Parent shall be entitled to withhold
from payment any amount of withholding required by law.
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21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
By
Gerald H. Taylor
Chief Executive Officer
EXECUTIVE
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<TABLE>
<CAPTION>
SCHEDULE OF EMPLOYMENT AGREEMENTS NOT FILED AND
MATERIAL DIFFERENCES BETWEEN SUCH AGREEMENTS AND
THE FORM OF AGREEMENT FILED
OFFICER TITLE
---------------------------
SEC. 3.1
PRE POST BASE 1997 RESPONSIBILITY REPORTING
NAME MERGER MERGER SALARY SALARY POST MERGER RELATIONSHIP
<S> <C> <C> <C> <C> <C> <C>
Scott Ross President, MCI Chief Operating $300,000 $325,000 MCI Systemhouse & Chief Executive Officer
Systemhouse Officer, Parent Syntegra
Systems Integration
Fred Briggs Chief Engineering Chief Technology $250,000 $300,000 Global Network Design, Chief Executive Officer
Officer Officer Engineering Development,
Research
Michael Salsbury* Exec. Vice General Counsel and $262,000 $300,000 Regulatory, Public Chief Executive Officer/
President, Deputy Secretary Policy, Litigation, Chief Legal Officer
General Counsel Intellectual Property
Michael Rowny Exec. Vice Exec. Vice $310,000 $350,000 Global Alliances, Chief Executive Officer
President President, Strategic Strategic Initiatives and
Development Mergers & Acquisitions
& Alliances
Douglas Maine* Exec. Vice Chief Financial $290,000 $330,000 Treasury, Audit, Chief Executive Officer
President, Chief Officer and Director Comptroller, Tax
Financial Officer
Timothy Price President, Chief President, Chief $460,000 $550,000 Marketing, Sales, Chief Executive Officer
Operating Operating Officer Service
Officer
Gerald H. Taylor Chief Executive President, Chief $565,000 $700,000 Chief Executive Officer Board of Directors/
Officer Executive Officer Co-Chairman
and Director
Bert C. Roberts, Jr. Chairman/Co- Co-Chairman and $960,000 $1,000,000 Co-Chairman Board of Directors
Chairman Director
- --------
* The standard of "material harm" in the definition of "Cause ' is an amount in
excess of $500,000.
</TABLE>
Exhibit 21
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(1 of 1)
Significant Subsidiaries of MCI Communications Corporation at
December 31, 1996
Subsidiary State of Incorporation
---------- ----------------------
MCI International, Inc. Delaware
MCI International Telecommunications Corporation Delaware
MCI Telecommunications Corporation Delaware
Telecom*USA, Inc. Delaware