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Section240.14a-12
MCI COMMUNICATIONS CORPORATION
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(Name of Registrant as Specified In Its Charter)
WORLDCOM, INC.
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<PAGE>
INTRODUCTION
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Bernard J. Ebbers
President
and
Chief Executive Officer
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WHY ARE WE HERE?
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Today We Are Announcing:
[Brooks Fiber Logo] o We have signed a definitive merger
agreement with Brooks Fiber
[MCI Logo] o We have made a superior offer to MCI
shareholders for a merger with WorldCom
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BROOKS FIBER MERGER
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Merger Agreement with Brooks Fiber
o Brooks Fiber shareholders will receive
1.65 shares of WorldCom for each share
of Brooks Fiber
[WorldCom & Brooks o Stock-for-stock transaction
Fiber Logo]
o Pooling of interest transaction --
accretive to WorldCom consensus
earnings
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BROOKS FIBER MERGER
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Merger Agreement with Brooks Fiber
(Continued)
[WorldCom & Brooks o Accelerates local market entry in
Fiber Logo] secondary markets by 1-2 years
o Brooks Fiber expands WorldCom's local
presence from 52 markets to 86 markets
o Fuels strong top-line revenue growth
o Adds additional local access expertise
o Adds significant local fiber networks
and local switching capacity
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MCI MERGER
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MCI
WorldCom Offers MCI
Shareholders Better Deal
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MCI MERGER
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WorldCom's Offer is More Attractive
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BT's Offer
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Initial Offer Revised Offer WorldCom's Offer
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Terms 0.54 BT ADS's 0.375 BT ADS's plus 1.038 to 1.221
plus $6.00 Cash $7.75 Cash WCOM Shares
less $3.22 Dividend
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Value of $41.98 $31.53 $41.50
Offer
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Premium to 43% 7% 41%
Latest MCI
Price
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Presentation contains forward-looking statements. Actual results may vary.
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MCI MERGER
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Greater Identifiable Synergy Benefits
(Estimates)
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Timing BT WorldCom
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1999 $400M $2,500M+
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Five Year
Cumulative Synergies $2,400M $15,000M+
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Presentation contains forward-looking statements. Actual results may vary.
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MCI MERGER
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Potential Offer Structure
[Line Graph]
The proposed offer would incorporate a fixed price of $41.50 within a band of
prices for WorldCom of $34 to $40 and a floating price outside the band.
Presentation contains forward-looking statements. Actual results may vary.
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MCI MERGER
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Our Objective Has Not Changed.
It is to be the most profitable,
single-source provider
of communications services to
business around the world.
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WORLDCOM'S SHAREHOLDERS
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Why a Merger with MCI is
Attractive for WorldCom
[WorldCom Logo] o Immediately adds value for shareholders
o Accretive from Day One
o More than triples WorldCom's revenues
o Provides WorldCom the assets and products
to better address large business customers
o Leverages WorldCom's substantial
investments in local business market
<PAGE>
WORLDCOM'S SHAREHOLDERS
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Why a Merger with MCI is
Attractive for WorldCom
(Continued)
[WorldCom Logo] o Enhances potential for greater stock
price performance
o Enhances WorldCom's position as the only
end-to-end facilities based provider of local,
long distance, Internet and international service
o Significantly expands network capacity
of WorldCom
o Adds management depth/expertise
o Compelling business fit
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MCI'S SHAREHOLDERS
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Why WorldCom's Offer is Superior
Price, Premium, Performance
[MCI Logo] o MCI shareholders get a higher premium
o MCI shareholders receive better
performing stock
o MCI shareholders end up owning more of
WorldCom versus BT
o WorldCom offer recognizes value of
underlying assets
o MCI benefits from much greater synergies
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MCI'S SHAREHOLDERS
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Why WorldCom's Offer is Superior
(Continued)
[MCI Logo] o Higher probability of market success
due to WorldCom's track record of:
-- Industry leading growth and
-- Successful mergers
o Better strategic fit with WorldCom
o Addresses MCI's local access dilemma
o More compatible entrepreneurial cultures
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BT'S SHAREHOLDERS
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Why WorldCom's Offer is
Also Good for BT
[BT Logo] o Provides BT over $1B gain on its investment
in MCI
o BT receives better performing stock for
their stake
o Potentially permits alliance with stronger
U.S. partner
o Addresses BT's institutional investors'
concerns about U.S. market risks
<PAGE>
COMPARATIVE ANALYSIS
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As a shareholder
comparing the two deals,
you have to ask yourself
one question...
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COMPARATIVE ANALYSIS
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...whose stock do you want
to own?
<PAGE>
CREATION OF SHAREHOLDER VALUE
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WorldCom: #1 Among All Telecoms
[excerpt from Wall Street Journal]
Shareholder Scoreboard
[Chart Regarding Telephone Service]
<PAGE>
CREATION OF SHAREHOLDER VALUE
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WorldCom: #2 Among 500 Companies Ranked
By Total Return to Investors
[excerpt from Fortune regarding Highest 500 Total Return To Investors]
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CREATION OF SHAREHOLDER VALUE
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$100 Invested in 1989 common stock
WCOM $3,137
BT 191
MCI 132
AT&T 198
SPRINT 183
September 18, 1997
Note: WorldCom does not pay dividends on its common stock. Other companies'
dividends were assumed to be reinvested.
<PAGE>
CREATION OF SHAREHOLDER VALUE
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If you were a shareholder
of MCI...which stock
would you want to own?
<PAGE>
FINANCIAL HIGHLIGHTS
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Scott D. Sullivan
Chief Financial Officer
<PAGE>
FINANCIAL HIGHLIGHTS
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We are absolutely
on track with the
current business plan.
<PAGE>
FINANCIAL HIGHLIGHTS
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Announced Acquisitions Accretive
[AOL Logo] o ANS and CNS transactions moving on track
and will be accretive in the first year
[CSi Logo]
[Brooks Fiber Logo] o Brooks Fiber is expected to close
Q1 1998 and will be neutral to
accretive in the first year
-- Accelerates our target of reaching
70% of business market
<PAGE>
FINANCIAL HIGHLIGHTS
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Key Messages -- MCI Offer
o WorldCom's offer is more
attractive financially to MCI's
shareholders
o WorldCom/MCI combination
generates greater indentifiable
synergy benefits
o More than 20% accretive
from Day One
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FINANCIAL HIGHLIGHTS
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Synergies Are Real
Annual Savings Estimate
($ millions)
Line Costs 1999 2002
------------ ------------
o Originating Line Cost--DALs $300 - 400 $500 - 600
o Avoided Access Costs--Switched Minutes $100 - 150 $400 - 600
o Variable Line Cost $50 - 100 $100 - 150
o International $100 - 150 $350 - 450
Presentation contains forward-looking statements. Actual results may vary.
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FINANCIAL HIGHLIGHTS
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Synergies Are Real
(Continued)
Annual Savings Estimate
($ millions)
1999 2002
--------------- --------------
o Avoided MCI Local Losses $500 - 900 $1,400 - 1,500
o SG&A $900 - 1,000 $1,200 - 1,300
o Depreciation $100 - 200 $450 - 550
o Capital Expenditures $1,000 - 1,500 $1,500 - 1,600
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FINANCIAL HIGHLIGHTS
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Synergy Summary
Anticipated Annual Savings
($ in billions)
Category 1999 2002
- ------------------------------------------- -------- --------
Core SG&A $1.0 $1.3
Avoided MCI Local Losses $0.7 $1.5
Domestic Line Costs $0.6 $1.3
International Line Costs $0.1 $0.3
Capex--Long Distance $0.8 $1.2
Capex--Local $0.7 $0.3
Potential revenue benefits are not included
Presentation contains forward-looking statements. Actual results may vary.
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FINANCIAL HIGHLIGHTS
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Cost Synergies Are Reasonable
Pre-tax Operating Costs
Fiscal Year Ended December 31,
1999 2000 2001 2002
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Total pretax operating $2,350 $2,964 $3,770 $4,444
cost synergies
As a % of combined < ----- 8% to 9% ----- >
operating expenses
Presentation contains forward-looking statements. Actual results may vary.
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FINANCIAL HIGHLIGHTS
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Purchase Accounting EPS Impact
Offer Price $41.50
Premium to Market 41%
EPS MCI
WorldCom Accretion % Ownership
Price 1999 of WorldCom
-------- --------- -----------
$40.00 28% 42%
$35.38 21% 45%
$34.00 20% 46%
Presentation contains forward-looking statements. Actual results may vary.
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FINANCIAL HIGHLIGHTS
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Combination Strengthens Position As
World Class Competitor
[BAR GRAPH OMITTED] o Triples 1998 Proforma WorldCom
revenues from approximately
$10B to $30B
o More than doubles 1998 Proforma
WorldCom EBITDA from $3B to
approx. $7B
o More than 20% accretive to
WorldCom's EPS under purchase
accounting
Presentation contains forward-looking statements. Actual results may vary.
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FINANCIAL HIGHLIGHTS
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Roadmap to Completing Exchange Offer
Timing
------
o WorldCom obtains FCC approval of voting trust Q4/97
o MCI shareholders vote "NO" to merger with BT Q4/97
o WorldCom shareholders approve WorldCom share issuance Q4/97
o MCI amends rights plan Q1/98
o WorldCom receives antitrust clearances Q1/98
o Exchange offer closed Q1/98
Presentation contains forward-looking statements. Actual results may vary.
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FINANCIAL HIGHLIGHTS
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Example: Stock Price of $100 within 3 years
o 3x Revenues -- reasonable given $50 B revenue growing
20% per annum
o 22x P/E -- less than one times 25% EPS growth
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FINANCIAL HIGHLIGHTS
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Conclusion
Superior Offer
o Higher value today and in future
o Larger ownership in faster growth company
Superior Stock
o Superior shareholder return history
-- 53% annual return to investors (1986-1996)
Greater Identifiable Synergies
o Reasonable at 8 - 9% of operating expenses
Track Record of Performance
o Operating and financial
o Delivering synergies
<PAGE>
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John W. Sidgmore
Vice Chairman
and Chief Operations Officer
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NETWORK HIGHLIGHTS
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Impact on U.S. Network
o Substantially increases reach and
capacity
o With Brooks Fiber and MCImetro,
we will accelerate our local city
network deployment in secondary
markets by one to two years
o With MCI, we more than double
domestic fiber system route
miles from 20,000 miles to
45,000 miles
<PAGE>
NETWORK AND OPERATIONAL HIGHLIGHTS
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Brooks Fiber Further Expands
WorldCom's Local Presence
o Adds over 40 cities to WorldCom's
local networks
o Increases route miles by 2000 miles
o Expands buildings connected by 2000
buildings
o Increases local switches by 22 switches
o Adds 1600 employees with proven
competitive local exchange expertise
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BROOKS FIBER'S LOCAL NETWORKS
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Brooks Fiber's Local Networks
[Map listing locations of Brooks Fiber's networks in operation or development]
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MCI'S LOCAL NETWORKS
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MCImetro Local Networks
[Map listing locations of MCImetro networks in operation or development]
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WORLDCOM'S LOCAL NETWORKS...
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WorldCom Local Networks
[Map listing locations of WorldCom networks in operation or development]
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COMBINED LOCAL NETWORKS...
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Combined Local Networks
(WorldCom/MCI/Brooks)
[Map listing locations of WorldCom/MCI/Brooks networks in operation or
development]
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NETWORK HIGHLIGHTS
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Network Statistics
(Approximate)
Brooks
WorldCom Fiber MCI Combined
-------- ------- --- --------
Domestic Cities 52 45 35 92(Net)
(Fiber Networks)
Local Route Miles 4,000 2,000 3,000 9,000
Long Distance Route Miles 20,000 -- 25,000 45,000
International Route Miles 5,000 -- -- 5,000
Local Switches 38 22 24 84
Employees 15,000 1,600 50,000 66,600
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NETWORK HIGHLIGHTS
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Owning the Right Networks (Combined)
Long Distance (Domestic)
o 45,000 route miles
o OC-48 and OC-192 plus Wave Division Multiplexing
Local Access (MFS/MCI/Brooks Fiber)
o 92 Domestic local city networks
o 70% of U.S. business market
Internet (UUNET/MCI/CNS/ANS)
o OC-12 backbone
o Significant increase in capacity
International (Gemini/Ulysses)
o Build/Expand 35 networks in key financial cities
o Build pan-European network and trans-Atlantic cable
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PRODUCT HIGHLIGHTS
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WorldCom/MCI Combination Increases
Value-Added Products and Services:
[WorldCom/MCI Logo] o Adds leading information technology and
systems integration platform
o Enhances scale and range of Internet offerings
-- Added to CompuServe Intranet/Extranet
expertise
o Enhances full service bundled offerings
<PAGE>
NETWORK HIGHLIGHTS
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Summary of Network Services Benefits
o Leverages large long distance "footprint"
o Leverages local network investments and
international investments
o Enhances end-to-end service portfolio
o Adds substantial capacity and expands local reach
<PAGE>
NETWORK HIGHLIGHTS
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New Value-Added Products and
Services Round Out Portfolio
Data Networking Telecommunication Services
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Network and Systems Local
Integration Services
Long Distance
Public Internet
Wireless
Intranets and VPN
International
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SUMMARY
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Path to $100 Stock Price
[Chart]
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WORLDCOM
