SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For The Fiscal Year Ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-6547
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below: MCI Communications Corporation 401(k) Plan for
Exempt Employees
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office: MCI Communications Corporation, 1801
Pennsylvania Avenue, NW, Washington, DC 20006
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page(s)
-------
Report of Independent Accountants 3
Statements of Net Assets Available for Benefits
at December 31, 1996 and 1995 4
Statements of Changes in Net Assets Available for
Benefits for the years ended December 31, 1996 and 1995 5,6
Notes to Financial Statements 7-37
Additional Information:
Schedule I. Schedule of Assets Held for Investment
Purposes at December 31, 1996 38
Schedule II.Schedule of Reportable Transactions
for the year ended December 31, 1996 39
Signature 40
Exhibits:
23. Consent of Independent Accountants 41
99. Certification Regarding Certain
Investment Arrangements 42
Page 2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrative
Committee of the MCI Communications Corporation
401(k) Plan for Exempt Employees
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the MCI Communications Corporation 401(k) Plan for Exempt Employees (formerly
MCI Communications Corporation Retirement Savings Plan)at December 31, 1996 and
1995, and the changes in net assets available for benefits for the years then
ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I and II is presented for purposes of additional analysis and is not a
required part of the basic financial statements, but is additional information
required by the Employee Retirement Income Security Act of 1974, as amended.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.
PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Washington, D. C.
June 11, 1997
Page 3
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31
-----------
1996 1995
------------- -------------
Value of interest in master trust $ 713,959,033 $ 537,827,481
------------- -------------
Net assets available for benefits $ 713,959,033 $ 537,827,481
============= =============
See accompanying notes to the financial statements.
Page 4
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
ADDITIONS
- ---------
Contributions:
Participants $ 73,656,406
Non-cash employer 35,319,523
Rollovers 7,083,311
Transfers from ESOP 940,335
--------------
Total contributions 116,999,575
--------------
Earnings on investments:
Interest on participant loans 1,629,497
Interest on guaranteed investment contracts 6,255,490
Dividends on common stock 445,635
Net gain on sale of common stock 808,155
Unrealized appreciation 59,988,328
Net gain from registered investment companies 34,793,327
--------------
Total earnings on investments 103,920,432
--------------
Total additions 220,920,007
--------------
DEDUCTIONS
- ----------
Participant benefit payments 34,505,315
Account maintenance fees 98,473
--------------
Net increase 186,316,219
Net interplan transfers (10,184,667)
Net assets available for benefits, at
beginning of year 537,827,481
--------------
Net assets available for benefits, at
end of year $ 713,959,033
==============
See accompanying notes to the financial statements.
Page 5
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
ADDITIONS
- ---------
Contributions:
Participants $ 59,322,084
Non-cash employer 32,177,951
Rollovers 6,383,842
Transfers from ESOP 722,038
--------------
Total contributions 98,605,915
--------------
Earnings on investments:
Interest on participant loans 1,508,423
Interest on guaranteed investment contracts 6,443,825
Dividends on common stock 399,550
Net gain on sale of common stock 2,224,386
Unrealized appreciation 57,379,129
Net gain from registered investment companies 48,750,925
--------------
Total earnings on investments 116,706,238
--------------
Total additions 215,312,153
--------------
DEDUCTIONS
- ----------
Participant benefit payments 27,557,702
Account maintenance fees 80,508
--------------
Net increase 187,673,943
Net interplan transfers 2,592,696
Net assets available for benefits,
beginning of year 347,560,842
--------------
Net assets available for benefits,
end of year $ 537,827,481
==============
See accompanying notes to the financial statements.
Page 6
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
NOTES TO FINANCIAL STATEMENTS ON FORM 11-K
December 31, 1996 and 1995
NOTE 1- DESCRIPTION OF THE PLAN
The following brief description of the MCI Communications Corporation
401(k) Plan for Exempt Employees (the "Plan" or "401(k)") is provided for
general information purposes only. Participants should refer to the Plan
document for more complete information. The Plan is subject to the
applicable provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
Effective January 1, 1996, the MCI Communications Corporation Employee
Stock Ownership Plan and 401(k) and the MCI Consumer Markets 401(k) and
Employee Stock Ownership Plan ("CM Plan") were restructured and renamed the
MCI Communications Corporation ESOP and 401(k) Plan for Exempt Employees
("Exempt Plan") and the MCI Communications Corporation ESOP and 401(k) Plan
for Non-Exempt Employees ("Non-Exempt Plan"), respectively. The MCI
Communications Corporation ESOP and 401(k) Plan for Exempt Employees is
comprised of two parts: Part I is an employee stock ownership plan
("ESOP"), Part II is the 401(k) Plan. The accompanying financial statements
are solely those of Part II and are not intended to present the net assets
available for benefits or the changes in net assets available for benefits
of the MCI Communications Corporation ESOP and 401(k) Plan for Exempt
Employees taken as a whole. The Company separately prepares an annual
report on the overall MCI Communications Corporation ESOP and 401(k) plan
for Exempt Employees which is submitted to the Internal Revenue Service
("IRS") on Form 5500 and is made available to all employees upon request.
The assets of the Exempt Plan are combined with those of the Non-Exempt
Plan into the MCI Communications Corporation Defined Contribution Master
Trust. This facilitates the administration of the Plans as described below.
Under the terms of the master trust agreement, each plan has a specific
interest in all assets and liabilities of the trust.
Page 7
<PAGE>
Contributions
- -------------
The Plan is a defined contribution, deferred savings plan. Under the Plan,
employees become eligible to participate upon completion of one year of
service with 1,000 hours of service and attainment of age 21. As a result
of the restructuring of the Plan, the Plan was amended to include all
exempt participants from the CM Plan. (An exempt employee is an employee
who is exempt from the maximum hours limitation under the Fair Labor
Standards Act of 1938, as amended). All non-exempt participants in the Plan
were transferred to the Non-Exempt Plan. No further modifications were made
to the Plan's provisions. Eligible employees may elect to defer up to 15%
of eligible compensation on a pre-tax basis, to be contributed to the Plan
by the Company on behalf of such employees ("Elective Contributions"). The
first 6% of each participant's Elective Contributions is eligible for a
Company matching contribution in the form of MCI Communications Corporation
Common Stock. The Company provides a matching contribution of $.67 for each
eligible dollar of Elective Contributions made to the Plan. The Company's
matching contribution is made biweekly and is determined by the closing
price of MCI Communications Corporation Common Stock on the date posted to
the participants' accounts. Participants' Elective Contributions are
withheld from their biweekly paychecks and the Company transfers these
contributions to the Plan each pay period. Participants vest in the
Company's matching contributions at a rate of 20% per year of service and
are always 100% vested in their Elective Contributions. Participants
receive a year of service for vesting purposes for each Plan year during
which they complete at least 1,000 hours of service.
Effective July 1, 1995, the Plan decreased the number of investment options
from sixteen to seven funds. Participants with balances in the funds that
were eliminated were allowed to reallocate their fund balances into the
seven remaining funds. Elective Contributions are invested in any of the
seven investment funds in accordance with participants' instructions. The
available investment funds as of July 1, 1995 are:
- MCI Common Stock Fund
A fund investing in MCI Communications Corporation Common
Stock. These shares of stock are qualified employer securities as
defined by ERISA.
Page 8
<PAGE>
- EuroPacific Growth Fund
A long term growth fund invested primarily in securities of
issuers domiciled in Europe and the Pacific Basin. The fund is a member
of the American Funds Group and is managed by Capital Research and
Management Company.
- Dreyfus S&P 500 Stock Index Portfolio
An equity index mutual fund invested in common stock which is
comparable to the Standard & Poor's 500 Composite Index. All investment
decisions are made by Dreyfus Corporation, an affiliate of the Plan
trustee. The trustee oversees the fund in accordance with the trust
agreement.
- Putnam Voyager Fund
A long term growth fund invested in a diversified
portfolio of two types of common stocks: emerging growth stocks and
opportunity stocks. The fund is managed by Putnam Investment
Management, Inc.
- Putnam New Opportunities Fund
A growth fund invested primarily in common stock of
companies in economic sectors with above-average prospects for
growth. Putnam Investment Management, Inc. makes the investment
decisions for the fund and is subject to the policies established by
the fund's trustee.
- Putnam Balanced Retirement Fund
A growth and income fund invested in a diversified
portfolio of equity and debt securities.Putnam Investment
Management, Inc. makes the investment decisions for the fund and
is subject to the policies established by the fund's trustee.
- Stable Asset Fund
The fund consists primarily of guaranteed investment
contracts (GICs)issued by insurance companies and contracts with
other financial institutions that offer fixed interest rates on
investments. This fund was formerly known as the Long-Term Fixed
Income Fund. The fund seeks to maintain a constant book value of
$1.00 per share. The guaranteed rates of interest range from 5.6%
to 8.08% at December 31, 1996.
Page 9
<PAGE>
The following guaranteed investment contracts were held individually by
the Master Trust as of December 31:
Contract Value
--------------
Contract
1996 1995 Rate
---- ---- ----
Aetna Life Insurance $ 20,306,182 $ 19,041,899 6.63%
Allstate Life Insurance 6,474,248 6,113,549 5.90%
Allstate Life Insurance 4,000,628 0 5.90%
John Hancock Mutual Life Insurance 14,261,226 13,198,728 8.05%
Metropolitan Life Insurance 0 13,623,754 8.96%
New York Life Insurance 8,847,294 8,281,679 6.82%
New York Life Insurance 5,803,475 5,369,604 8.08%
Pacific Mutual Life Insurance 4,642,586 0 7.30%
Pacific Mutual Life Insurance 1,287,816 0 7.36%
Peoples Security Insurance Company 7,000,905 7,400,229 5.72%
Peoples Security Insurance Company 5,220,011 5,219,396 5.86%
Principal Mutual Life Insurance 3,409,732 0 6.60%
Principal Mutual Life Insurance 0 14,445,534 9.10%
Prudential Life Insurance 6,028,870 5,634,458 7.00%
TransAmerica Life Insurance 3,423,163 3,426,163 5.60%
TransAmerica Life Insurance 4,071,194 2,543,520 7.25%
This fund also includes investment in the Mellon Bank Temporary
Investment Fund (TIF) to satisfy any liquidity needs and also serves as
a temporary account to hold funds from maturing interests.
Page 10
<PAGE>
Participant Accounts
- --------------------
Each individual's investment in the funds is recorded in their participant
account on a unit value basis with the exception of MCI Common Stock Fund
which is recorded on a per share basis. The Plan is processed on a daily
valuation basis.
Participants may transfer all or part of the balance in their Elective
Contributions and related earnings from one fund to another once each
calendar month. Participants may reallocate their matching contributions
balance that is 100% vested as of the prior year end once per plan year.
Participants may change the allocation of their future contributions among
the funds with unlimited frequency. Participants' allocations are affected
by the last change placed prior to payroll processing.
Certain participants have the right to diversify a portion of their account
in the ESOP, Part I of the Exempt Plan, and transfer that portion of their
account to the 401(k). Participants in the ESOP, who have attained at least
55 years of age and have been a participant in the ESOP for at least 10
years, are eligible to diversify under these provisions. During 1996 and
1995, 36,696 and 32,820 shares of MCI Communications Corporation Common
Stock at a fair market value on the diversification date of $940,335 and
$722,038, respectively, were transferred from the ESOP to the 401(k)
pursuant to these provisions. Participants who are 100% vested are
permitted to diversify amounts in their Employer Matching Contribution
accounts once per calendar year. During 1996 and 1995, 284,842 and 238,173
shares of MCI Communications Corporation Common Stock at a fair market
value on the diversification date of $7,950,763 and $5,656,455,
respectively, were transferred from the Employer Matching Contributions
accounts to the Elective Contributions accounts pursuant to these
provisions.
Participant Loans
- -----------------
The Plan allows participants to borrow up to one-half of the vested account
balance (or $50,000, whichever is less). The minimum loan amount is $1,000
and the minimum term of a loan is one year. The maximum term of a loan is
five years for a general purpose loan and fifteen years for a primary
residence loan. Only one loan of each type, general purpose and primary
Page 11
<PAGE>
residence, may be outstanding at any time. Effective January 1, 1995, the
Plan charges a $30 origination fee for loans. Loan proceeds are disbursed
pro rata from each of the participants' investment funds, and are repaid
through biweekly payroll deductions. Loan repayments of principal and
interest are invested based on the participants' current investment
elections. Interest rates for new loans are determined monthly based on the
prime rate as published on the first business day of each month in THE WALL
STREET JOURNAL, plus one percentage point. The interest rate is fixed for
the term of the loan. Loans can be repaid in full by a cashier's or
certified check. During Plan years ended December 31, 1996 and 1995,
$13,001,099 and $11,419,704 in loans were disbursed and principal
repayments of $7,284,330 and $6,720,130, respectively, were made.
Participant Benefit Payments
- ----------------------------
Distribution of the benefits in a participant's Plan account is normally
made only after the participant ceases to be an employee of the Company.
However, the account of a participant's Elective Contributions may be
withdrawn prior to termination of employment if the participant is under
age 59 1/2 and can demonstrate an economic hardship (as defined in the
Plan). A participant who has attained age 59 1/2 may withdraw all or any
portion of his Elective Contributions account in accordance with the terms
of the Plan. Upon termination of employment, a participant receives all
vested assets in accounts established on his behalf under the Plan.
Non-vested portions of a terminated participant's accounts are forfeited
and used to offset future Company matching contributions. Effective January
1, 1995, participants who terminate employment and elect to keep their
funds in the Plan are charged a $20 annual account maintenance fee. The
Plan was amended effective January 24, 1995, to provide for the
distribution in a lump sum of terminated participant accounts with a vested
balance of less than $3,500. This distribution generally occurs no sooner
than six months after the participant's termination of employment date. As
of December 31, 1996 and 1995, forfeitures included in the Plan were
$120,854 and $695,734, respectively, which included 3,211 and 26,163
forfeited shares of MCI Communications Corporation Common Stock, at
year-end fair market values of $104,974 and $683,508, respectively.
Page 12
<PAGE>
Plan Administration
- -------------------
The Plan is not a defined benefit plan and accordingly, Plan benefits are
not guaranteed by the Pension Benefit Guaranty Corporation. The Company is
the plan administrator and has appointed an Administrative Committee to
administer the Plan. The Administrative Committee is responsible for
carrying out the provisions of the Plan and may employ such experts as
deemed necessary. Plan assets are held by the trustee, Mellon Bank, N.A. of
Pittsburgh, Pennsylvania. The recordkeeper for the Plan is Putnam
Investments, Inc. The Company reserves its rights under the Plan to
discontinue its contributions and to terminate the Plan at any time. Upon
such termination, all amounts funded shall become nonforfeitable and shall
be provided for and paid from the Plan's trust in accordance with the order
of priority set forth in Section 4044 of ERISA. The Company has not
expressed any intent to discontinue its contributions nor to terminate the
Plan.
The Plan's holdings of MCI Communications Corporation Common Stock, various
Putnam Investments, Inc. mutual funds, and a Mellon Bank mutual fund and
collective trust account are party-in-interest investments.
NOTE 2 - DESCRIPTION OF ACCOUNTING PRINCIPLES AND PRACTICES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of changes in net assets available for benefits during the
reporting period, such as those regarding fair value. Actual results could
differ from those estimates.
The financial statements for the Plan are prepared on the accrual basis of
accounting.
The Plan's distribution of the Company's Common Stock to participants is at the
fair market value as of the distribution date. The difference between the fair
market value on the date of distribution and the carrying value of the
distributed shares is recorded as a net gain or loss on disposition of assets.
Purchase and sales of securities are recorded on the trade date.
Page 13
<PAGE>
The Plan's interest in registered investment companies and employer securities
are stated at fair value, measured by the quoted current market price. Units in
collective trusts are valued at the net asset value as reported by such trusts
at the end of each period. Funds invested in guaranteed investment contracts are
stated at contract value, measured as cost plus earned interest income. During
1996, the Plan adopted American Institute of Certified Public Accountants
Statement of Position 94-4, "Reporting of Investment Contracts Held by Health
and Welfare Benefit Plans and Defined Contribution Pension Plans." Defined
contribution plans should report fully-benefit responsive investment contracts
at contract value, which may or may not be equal to fair value, and all other
investment contracts at fair value. All guaranteed investment contracts held by
the Plan at December 31, 1996 and 1995 were fully-benefit responsive, and
therefore are valued at contract value.
Participant loans are valued at cost which approximates fair value.
Administrative expenses of the Plan are paid by the Company.
NOTE 3 - MASTER TRUST
MCI Communications Corporation established the MCI Communications Corporation
Defined Contribution Master Trust (the "Master Trust") for the purpose of
facilitating administration of the Plan. The Master Trust is intended to be a
tax-exempt trust within the meaning of Section 501(a) of the Internal Revenue
Code. The administration of the Master Trust is the responsibility of the
trustee. All Plan investments are included in the Master Trust.
Effective November 20, 1996, the assets of the Darome Teleconferencing, Inc.
401(k) Plan were transferred into the MCI Communications Corporation Defined
Contribution Master Trust. The Darome Teleconferencing, Inc. 401(k) Plan had a
specific interest in the Master Trust of $658,541 representing approximately
.08% of the net assets of the Master Trust as of December 31, 1996.
The Master Trust consists of a pool of individual investments in which the Plan,
the Non-Exempt Plan, and the Darome Teleconferencing, Inc. 401(k) Plan have
shared participation through Master Trust units. Net assets and net investment
gains
Page 14
<PAGE>
and losses are allocated to each participating plan based on units of
participation held by the respective plans. Each unit represents a
proportionate, specific interest in the Master Trust.
The Plan had a specific interest in the Master Trust of $713,959,033 and
$537,827,481 representing approximately 87% and 89% of the net assets of the
Master Trust as of December 31, 1996 and 1995, respectively.
The fund information below presents the percentage interest of each plan in the
Master Trust using specific identification:
<TABLE>
<CAPTION>
Percentage Interest
Master Trust -------------------
Plan Name Investment Account 12/31/96 12/31/95
- --------------------- ---------------------------------- -------- --------
<S> <C> <C> <C>
MCI Communications EuroPacific Growth Fund 88.39% 87.35%
Corporation Dreyfus S&P 500 Stock Index 88.44% 88.43%
401(k) Plan Putnam Voyager Fund 90.92% 92.20%
For Exempt Putnam Balanced Retirement Fund 86.21% 87.94%
Employees Stable Asset Fund 86.40% 90.52%
EIN: 52-0886267 Putnam New Opportunities 88.34% 88.39%
MCI Common Stock 85.88% 88.40%
Participant Loans 80.73% 87.88%
MCI Communications EuroPacific Growth Fund 11.33% 12.65%
Corporation Dreyfus S&P 500 Stock Index 11.41% 11.57%
401(k) Plan Putnam Voyager Fund 09.08% 07.80%
For Non-Exempt Putnam Balanced Retirement Fund 13.25% 12.06%
Employees Stable Asset Fund 13.35% 09.48%
EIN: 52-0886267 Putnam New Opportunities 11.60% 11.61%
MCI Common Stock 14.12% 11.60%
Participant Loans 19.18% 12.12%
Darome EuroPacific Growth Fund 00.28% 00.00%
Teleconferencing, Dreyfus S&P 500 Stock Index 00.15% 00.00%
Inc. 401(k) Plan Putnam Voyager Fund 00.00% 00.00%
EIN: 13-2745892 Putnam Balanced Retirement Fund 00.53% 00.00%
Stable Asset Fund 00.25% 00.00%
Putnam New Opportunities 00.06% 00.00%
MCI Common Stock 00.00% 00.00%
Participant Loans 00.09% 00.00%
</TABLE>
The following pages present the net assets available for benefits and changes in
net assets available for benefits for the Master Trust in which the Plan, the
Non-Exempt Plan, and Darome Teleconferencing, Inc. 401(k) Plan participate.
Page 15
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable
Growth S&P 500 Voyager Asset
Fund Stock Index Fund Fund
ASSETS ------------- ------------- ------------- -------------
------
<S> <C> <C> <C> <C>
Contributions receivable:
Employee $ 727 $ 427 $ 838 $ 182
Employer 0 0 0 0
----------- ----------- ------------ ------------
Total contributions receivable 727 427 838 182
Non-interest bearing cash 0 0 16 628,668
Other receivables 938 24,358 34,113 7,882,658
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 227 27,198 4,705 2,136,200
Registered investment companies 25,677,109 77,615,093* 133,656,939* 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 94,780,330*
----------- ----------- ------------ ------------
Total assets 25,679,001 77,667,076 133,696,611 105,428,038
----------- ----------- ------------ ------------
LIABILITIES
------------
Operating payables 21,541 24,835 34,943 158,253
----------- ----------- ------------ ------------
Net assets available for benefits $25,657,460 $77,642,241 $133,661,668 $105,269,785
=========== =========== ============ ============
Participating Plan Interests
- ----------------------------
MCI 401(k) Plan for Exempt Employees $22,678,619 $68,670,124 $121,528,239 $ 90,950,784
MCI 401(k) Plan for Non-Exempt Employees 2,907,841 8,857,738 12,133,429 14,054,922
Darome Teleconferencing, Inc. 401(k) Plan 71,000 114,379 0 264,079
----------- ----------- ------------ ------------
Total $25,657,460 $77,642,241 $133,661,668 $105,269,785
=========== =========== ============ ============
<FN>
* Investment represents 5% or more of the Trust's net assets.
</FN>
</TABLE>
Page 16
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
ASSETS ------------- ------------- ------------- ------------ -------------
------
<S> <C> <C> <C> <C> <C>
Contributions receivable:
Employee $ 1,348 $ 288 $ 1,135 $ 0 $ 4,945
Employer 0 0 2,199 0 2,199
------------- ------------- ------------- ------------ -------------
Total contributions receivable 1,348 288 3,334 0 7,144
Non-interest bearing cash 0 0 0 0 628,684
Other receivables 74,230 4,712 109,760 0 8,130,769
Investments, at fair value:
Common stock 0 0 369,352,337* 0 369,352,337
Common/collective trusts 43,655 4,536 8,844 0 2,225,365
Registered investment companies 52,455,498* 29,329,101 0 0 318,733,740
Participant loans 0 0 0 26,210,945 26,210,945
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 94,780,330
------------- ------------- ------------- ------------ -------------
Total assets 52,574,731 29,338,637 369,474,275 26,210,945 820,069,314
------------- ------------- ------------- ------------ -------------
LIABILITIES
-----------
Operating payables 75,514 4,993 67 0 320,146
------------- ------------- ------------- ------------ -------------
Net assets available for benefits $ 52,499,217 $ 29,333,644 $369,474,208 $26,210,945 $819,749,168
============= ============= ============= ============ =============
Participating Plan Interests
- ----------------------------
MCI 401(k) Plan for Exempt Employees $ 46,378,741 $ 25,289,835 $317,302,646 $ 21,160,045 $713,959,033
MCI 401(k) Plan for Non-Exempt Employees 6,090,028 3,887,960 52,171,562 5,028,114 105,131,594
Darome Teleconferencing, Inc. 401(k) Plan 30,448 155,849 0 22,786 658,541
------------- ------------- ------------- ------------- ------------
Total $ 52,499,217 $ 29,333,644 $369,474,208 $ 26,210,945 $819,749,168
============= ============= ============= ============= ============
<FN>
* Investment represents 5% or more of the Trust's net assets.
</FN>
</TABLE>
Page 17
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable
Growth S&P 500 Voyager Asset
Fund Stock Index Fund Fund
ASSETS ------------- ------------- ------------- -------------
------
<S> <C> <C> <C> <C>
Contributions receivable:
Employee $ 14,237 $ 22,898 $ 46,507 $ 40,196
Employer 0 0 0 0
----------- ----------- ------------ ------------
Total contributions receivable 14,237 22,898 46,507 40,196
Non-interest bearing cash 1,652 72,460 88,919 144,577
Other receivables 258,009 334,968 60,967 1,478
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 14 12,491 1,703 1,584,427
Registered investment companies 14,850,336 58,410,869* 107,447,827* 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 104,298,513*
----------- ----------- ------------ ------------
Total assets 15,124,248 58,853,686 107,645,923 106,069,191
----------- ----------- ------------ ------------
LIABILITIES
------------
Operating payables 258,009 334,957 88,909 25,089
----------- ----------- ------------ ------------
Net assets available for benefits $14,866,239 $58,518,729 $107,557,014 $106,044,102
=========== =========== ============ ============
Participating Plan Interests
- ----------------------------
MCI Communications Retirement Savings Plan $12,985,468 $51,748,402 $ 99,167,158 $ 95,991,937
MCI Consumer Markets 401(k) Plan 1,880,771 6,770,327 8,389,856 10,052,165
----------- ----------- ------------ ------------
Total $14,866,239 $58,518,729 $107,557,014 $106,044,102
=========== =========== ============ ============
<FN>
* Investment represents 5% or more of the Trust's net assets.
</FN>
</TABLE>
Page 18
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
ASSETS ------------- ------------- ------------- ------------ -------------
------
<S> <C> <C> <C> <C> <C>
Contributions receivable:
Employee $ 26,865 $ 19,313 $ 51,919 $ 0 $ 221,935
Employer 0 0 126,693 0 126,693
----------- ----------- ------------ ----------- ------------
Total contributions receivable 26,865 19,313 178,612 0 348,628
Non-interest bearing cash 0 0 0 0 307,608
Other receivables 17,119 177,650 0 0 850,191
Investments, at fair value:
Common stock 0 0 246,431,822* 0 246,431,822
Common/collective trusts 1,395 1,213 22,393 0 1,623,636
Registered investment companies 28,406,193 19,099,867 0 0 228,215,092
Participant loans 0 0 0 20,447,333 20,447,333
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 104,298,513
----------- ----------- ------------ ----------- ------------
Total assets 28,451,572 19,298,043 246,632,827 20,447,333 602,522,823
----------- ----------- ------------ ----------- ------------
LIABILITIES
------------
Operating payables 0 193,585 0 0 900,549
----------- ----------- ------------ ----------- ------------
Net assets available for benefits $28,451,572 $19,104,458 $246,632,827 $20,447,333 $601,622,274
=========== =========== ============ =========== ============
Participating Plan Interests
- ----------------------------
MCI Communications Retirement Savings Plan $25,147,778 $16,800,069 $218,017,594 $17,969,075 $537,827,481
MCI Consumer Markets 401(k) Plan 3,303,794 2,304,389 28,615,233 2,478,258 63,794,793
----------- ----------- ------------ ----------- ------------
Total $28,451,572 $19,104,458 $246,632,827 $20,447,333 $601,622,274
=========== =========== ============ =========== ============
<FN>
* Investment represents 5% or more of the Trust's net assets.
</FN>
</TABLE>
Page 19
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable Putnam Putnam
Growth S&P 500 Voyager Asset New Balanced
Fund Stock Index Fund Fund Opportunities Retirement
------------ ------------ ----------- ----------- -------------- ------------
ADDITIONS
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 7,252,491 $ 11,138,992 $ 21,643,332 $ 10,657,509 $ 14,051,271 $ 7,166,398
Non-cash employer 0 0 0 0 0 0
Rollovers 738,656 722,245 1,607,984 906,949 1,969,435 684,448
Transfers from ESOP 84,030 86,897 334,056 92,767 343,735 123,300
------------ ------------ ------------- ------------- ------------ ------------
Total contributions 8,075,177 11,948,134 23,585,372 11,657,225 16,364,441 7,974,146
------------ ------------ ------------- ------------- ------------ ------------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0
Interest on guaranteed investment
contracts 0 0 0 7,188,820 0 0
Dividends on common stock 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0
Net gain from registered investment
companies 3,598,035 14,154,926 14,497,797 0 3,295,115 3,239,957
------------ ------------ ------------- ------------- ------------ ------------
Total earnings on investments 3,598,035 14,154,926 14,497,797 7,188,820 3,295,115 3,239,957
------------ ------------ ------------- ------------- ------------ ------------
Total additions 11,673,212 26,103,060 38,083,169 18,846,045 19,659,556 11,214,103
DEDUCTIONS
- ----------
Participant benefit payments 984,231 3,597,461 6,993,973 8,873,275 2,135,703 1,520,211
Account maintenance fees 6,163 14,225 27,072 27,308 11,396 7,390
------------ ------------ ------------- ------------- ------------ ------------
Net increase 10,682,818 22,491,374 31,062,124 9,945,462 17,512,457 9,686,502
Transfers from (to):
Other master trust investment accounts 137,996 (2,725,774) (3,558,778) (9,805,983) 6,817,424 575,236
Net loans (96,843) (788,574) (1,439,817) (1,215,837) (313,333) (182,289)
Western Union International
Collectively Bargained Plan 215 38,526 41,125 42,069 88 29
Darome Teleconferencing, Inc.
401(k) Plan 67,035 107,960 0 259,972 31,009 149,708
Net assets available for benefits, at
beginning of year 14,866,239 58,518,729 107,557,014 106,044,102 28,451,572 19,104,458
------------ ------------ ------------- ------------- ------------ ------------
Net assets available for benefits, at
end of year $ 25,657,460 $ 77,642,241 $ 133,661,668 $ 105,269,785 $ 52,499,217 $ 29,333,644
============ ============ ============= ============= ============ ============
</TABLE>
Page 20
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MCI
Common Participant
Stock Loans Total
ADDITIONS -------------- -------------- ------------
- ---------
<S> <C> <C> <C>
Contributions:
Participants $ 16,670,642 $ 0 $ 88,580,635
Non-cash employer 42,788,843 0 42,788,843
Rollovers 977,692 0 7,607,409
Transfers from ESOP 53,920 0 1,118,705
------------- ----------- ------------
Total contributions 60,491,097 0 140,095,592
------------- ----------- ------------
Earnings on investments:
Interest on participant loans 0 1,978,777 1,978,777
Interest on guaranteed investment contracts 0 0 7,188,820
Dividends on common stock 525,391 0 525,391
Net gain on sale of common stock 1,003,548 0 1,003,548
Unrealized appreciation of assets 69,875,942 0 69,875,942
Net gain from registered investment
companies 0 0 38,785,830
------------- ----------- ------------
Total earnings on investments 71,404,881 1,978,777 119,358,308
------------- ----------- ------------
Total additions 131,895,978 1,978,777 259,453,900
DEDUCTIONS
- ------------
Participant benefit payments 16,137,642 1,801,966 42,044,462
Account maintenance fees 47,232 0 140,786
------------- ----------- ------------
Net increase 115,711,104 176,811 217,268,652
Transfers from (to):
Other master trust investment accounts 8,559,879 0 0
Net loans (1,514,441) 5,551,134 0
Western Union International Collectively
Bargained Plan 84,839 10,786 217,677
Darome Teleconferencing, Inc. 401(k) Plan 0 24,881 640,565
Net assets available for benefits, at
beginning of year 246,632,827 20,447,333 601,622,274
------------- ----------- ------------
Net assets available for benefits, at
end of year $ 369,474,208 $26,210,945 $819,749,168
============= =========== ============
</TABLE>
Page 21
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
EuroPacific Putnam Scudder Dreyfus Putnam Putnam Putnam
Growth Balanced Income S&P 500 Growth & Investors Vista
Fund Fund Fund Stock Index Income Fund Fund
ADDITIONS ------------ ------------ ----------- ------------ ----------- ---------- -----------
- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 5,251,972 $ 1,248,922 $ 577,090 $ 8,827,241 $ 565,945 $ 123,673 $ 243,681
Non-cash employer 0 0 0 0 0 0 0
Rollovers 791,446 241,301 119,561 745,493 227,021 37,701 90,302
Transfers from ESOP 66,721 0 0 54,377 0 0 0
------------ ------------ ----------- ------------ ----------- ---------- -----------
Total contributions 6,110,139 1,490,223 696,651 9,627,111 792,966 161,374 333,983
------------ ------------ ----------- ------------ ----------- ---------- -----------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 0 0 0 0
Dividends on common stock 0 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0 0
Net gain from registered investment
companies 1,280,651 710,463 247,679 14,536,948 432,773 109,244 208,851
------------ ------------ ----------- ------------ ----------- ---------- ----------
Total earnings on investments 1,280,651 710,463 247,679 14,536,948 432,773 109,244 208,851
------------ ------------ ----------- ------------ ----------- ---------- ----------
Total additions 7,390,790 2,200,686 944,330 24,164,059 1,225,739 270,618 542,834
DEDUCTIONS
- ----------
Participant benefit payments 530,494 195,674 79,766 2,450,337 61,244 10,369 24,012
Account maintenance fees 3,587 920 440 11,812 340 130 168
------------ ------------ ----------- ------------ ----------- ---------- ----------
Net increase 6,856,709 2,004,092 864,124 21,701,910 1,164,155 260,119 518,654
Transfers from (to):
Other master trust investment accounts 1,567,927 (5,496,998) (2,728,202) 1,451,525 (3,060,910) (678,260) (1,514,509)
Net loans (5,685) (31,753) (7,405) (710,327) (15,566) (12,686) 7,781
Western Union International Collectively
Bargained Plan 0 0 0 7,922 0 0 0
Net assets available for benefits,
beginning of year 6,447,288 3,524,659 1,871,483 36,067,699 1,912,321 430,827 988,074
------------ ------------ ----------- ------------ ----------- ---------- -----------
Net assets available for benefits,
end of year $14,866,239 $ 0 $ 0 $58,518,729 $ 0 $ 0 $ 0
============ ============ =========== ============ =========== ========== ===========
</TABLE>
Page 22
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Putnam Putnam Putnam Putnam Putnam Putnam
Voyager Convertible High Yield Global Gov't OTC Emerging Diversified
Fund Income-Growth Advantage Income Growth Income
ADDITIONS ------------- ------------- ---------- ------------ ------------ -----------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 16,872,907 $ 198,879 $ 130,518 $ 60,923 $ 1,036,061 $ 81,012
Non-cash employer 0 0 0 0 0 0
Rollovers 1,286,559 59,077 25,654 7,986 189,639 26,713
Transfers from ESOP 81,661 0 0 0 0 0
------------- ----------- --------- --------- ----------- ---------
Total contributions 18,241,127 257,956 156,172 68,909 1,225,700 107,725
------------- ----------- --------- --------- ----------- ---------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 0 0 0
Dividends on common stock 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0
Net gain from registered investment
companies 28,079,036 107,684 57,739 16,807 663,984 40,082
------------- ----------- --------- --------- ----------- ---------
Total earnings on investments 28,079,036 107,684 57,739 16,807 663,984 40,082
------------- ----------- --------- --------- ----------- ---------
Total additions 46,320,163 365,640 213,911 85,716 1,889,684 147,807
DEDUCTIONS
- ----------
Participant benefit payments 5,020,074 12,105 17,737 4,797 109,631 19,295
Account maintenance fees 21,203 239 136 42 646 58
------------- ----------- --------- --------- ----------- ---------
Net increase 41,278,886 353,296 196,038 80,877 1,779,407 128,454
Transfers from (to):
Other master trust investment accounts 4,780,658 (1,045,665) (611,710) (296,290) (4,812,448) (485,856)
Net loans (1,268,072) (21,765) (442) 1,853 (10,051) (5,941)
Western Union International Collectively
Bargained Plan 31,562 0 0 0 0 0
Net assets available for benefits, at
beginning of year 62,733,980 714,134 416,114 213,560 3,043,092 363,343
------------- ----------- --------- --------- ----------- ---------
Net assets available for benefits, at
end of year $ 107,557,014 $ 0 $ 0 $ 0 $ 0 $ 0
============= =========== ========= ========= =========== =========
</TABLE>
Page 23
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Stable Putnam Putnam MCI
Asset New Balanced Common Participant
Fund Opportunities Retirement Stock Loans Total
ADDITIONS ------------- ------------- ------------- ------------- ------------- ------------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 11,915,844 $ 5,436,882 $ 3,080,954 $ 15,451,668 $ 0 $ 71,104,172
Non-cash employer 0 0 0 38,743,079 0 38,743,079
Rollovers 1,214,460 1,006,870 396,986 752,466 0 7,219,235
Transfers from ESOP 334,063 55,454 53,836 75,926 0 722,038
------------- ------------- ------------- ------------- ------------- -------------
Total contributions 13,464,367 6,499,206 3,531,776 55,023,139 0 117,788,524
------------- ------------- ------------- ------------- ------------- -------------
Earnings on investments:
Interest on participant loans 0 0 0 0 1,668,598 1,668,598
Interest on guaranteed investment contracts 7,160,055 0 0 0 0 7,160,055
Dividends on common stock 0 0 0 456,852 0 456,852
Net gain on sale of common stock 0 0 0 2,798,630 0 2,798,630
Unrealized appreciation of assets 0 0 0 66,162,577 0 66,162,577
Net gain from registered investment
companies 0 5,545,511 1,701,843 0 0 53,739,295
------------- ------------- ------------- ------------- ------------- -------------
Total earnings on investments 7,160,055 5,545,511 1,701,843 69,418,059 1,668,598 131,986,007
------------- ------------- ------------- ------------- ------------- -------------
Total additions 20,624,422 12,044,717 5,233,619 124,441,198 1,668,598 249,774,531
DEDUCTIONS
- ----------
Participant benefit payments 8,079,761 722,038 558,121 14,459,032 1,480,795 33,835,282
Account maintenance fees 28,684 3,424 2,619 34,554 0 109,002
------------- ------------- ------------- ------------- ------------- -------------
Net increase 12,515,977 11,319,255 4,672,879 109,947,612 187,803 215,830,247
Transfers from (to):
Other master trust investment accounts (5,022,366) 12,473,352 14,416,962 (8,937,210) 0 0
Net loans (1,493,070) 40,952 14,617 (791,294) 4,308,854 0
Western Union International Collectively
Bargained Plan 40,298 0 0 39,706 9,350 128,838
Net assets available for benefits,
beginning of year 100,003,263 4,618,013 0 146,374,013 15,941,326 385,663,189
------------- ------------- ------------- ------------- ------------- -------------
Net assets available for benefits,
end of year $106,044,102 $ 28,451,572 $ 19,104,458 $246,632,827 $ 20,447,333 $601,622,274
============= ============= ============= ============= ============= =============
</TABLE>
Page 24
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
SCHEDULE OF MASTER TRUST PARTICIPATION
<TABLE>
<CAPTION>
Current Value of Interest Year Ended December 31, 1996
----------------------------- -------------------------------------------------------------------------
Participant
Investment Account December 31, December 31, Benefit Net
Interest: 1996 1995 Contributions Payments Net Loans Net Transfers Appreciation
-------------- -------------- -------------- --------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
EuroPacific Growth Fund $ 22,678,619 $ 12,985,468 $ 6,941,688 $ (828,594) $ (47,687) $ 434,823 $ 3,192,921
Dreyfus S&P 500
Stock Index 68,670,124 51,748,402 10,304,900 (3,141,941) (633,926) (2,166,772) 12,559,461
Putnam Voyager Fund 121,528,239 99,167,158 20,354,441 (6,062,941) (1,081,454) (4,080,261) 13,231,296
Putnam Balanced
Retirement Fund 25,289,835 16,800,069 6,516,742 (1,239,791) (135,546) 536,459 2,811,902
Stable Asset Fund 90,950,784 95,991,937 9,255,398 (7,325,393) (837,997) (12,388,651) 6,255,490
Putnam New Opportunities 46,378,741 25,147,778 13,918,520 (1,809,320) (235,690) 6,359,706 2,997,747
MCI Common Stock 317,302,646 218,017,594 49,707,886 (12,743,123) (1,114,972) 2,193,143 61,242,118
Participant Loans
(interest rates
range 7% - 11%) 21,160,045 17,969,075 0 (1,452,685) 4,087,272 (1,073,114) 1,629,497
-------------- -------------- -------------- --------------- ------------- ------------- --------------
Total $ 713,959,033 $ 537,827,481 $ 116,999,575 $ (34,603,788) $ 0 $(10,184,667) $ 103,920,432
============== ============== ============== =============== ============= ============= ==============
</TABLE>
Page 25
<PAGE>
NOTE 4 - NET ASSETS AVAILABLE FOR BENEFITS AND CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS BY FUND
The net assets available for benefits and the changes in net assets among the
Plan's investment funds for the years ended December 31, 1996 and 1995 are
presented on the following pages.
Page 26
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable
Growth S&P 500 Voyager Asset
Fund Stock Index Fund Fund
------------- ------------- ------------- -------------
ASSETS
------
<S> <C> <C> <C> <C>
Contributions receivable:
Employee $ 638 $ 401 $ 720 $ 65
Employer 0 0 0 0
Other receivables 437 22,434 40,643 6,901,871
----------- ----------- ----------- ------------
Total receivables 1,075 22,835 41,364 6,901,936
Non-interest bearing cash 0 0 15 543,155
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 200 24,055 4,278 1,845,630
Registered investment companies 22,695,987 68,646,113* 121,523,940* 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 81,784,837*
------------- ------------ ------------ ------------
Total assets 22,697,262 68,693,003 121,569,597 91,075,558
------------- ------------ ------------ ------------
LIABILITIES
-----------
Operating payables 18,643 22,879 41,358 124,774
------------- ------------- ------------- ------------
Net assets available for benefits $22,678,619 $ 68,670,124 $ 121,528,239 $ 90,950,784
============= ============= ============= =============
<FN>
* Investment represents 5% or more of the Plan's net assets.
</FN>
</TABLE>
Page 27
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
------------- ------------- ----------- ------------ -----------
ASSETS
------
<S> <C> <C> <C> <C> <C>
Contributions receivable:
Employee $ 1,149 $ 174 $ 989 $ 0 $ 4,136
Employer 0 0 1,691 0 1,691
Other receivables 74,714 4,657 84,104 0 7,128,861
----------- ------------ ------------ ------------ -----------
Total receivables 75,863 4,831 86,784 0 7,134,688
Non-interest bearing cash 0 0 0 0 543,170
Investments, at fair value:
Common stock 0 0 317,208,325* 0 317,208,325
Common/collective trusts 38,566 3,911 7,595 0 1,924,235
Registered investment companies 46,340,117* 25,285,749 0 0 284,491,906
Participant loans 0 0 0 21,160,045 21,160,045
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 81,784,837
------------ ------------ ------------ ------------ -----------
Total assets 46,454,546 25,294,491 317,302,704 21,160,045 714,247,206
------------ ------------ ------------ ------------ -----------
LIABILITIES
-----------
Operating payables 75,805 4,656 58 0 288,173
------------ ------------ ------------ ------------ ------------
Net assets available for benefits $ 46,378,741 $ 25,289,835 $317,302,646 $21,160,045 $713,959,033
============= =========== ============ ============ ============
<FN>
* Investment represents 5% or more of the Plan's net assets.
</FN>
</TABLE>
Page 28
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable
Growth S&P 500 Voyager Asset
Fund Stock Index Fund Fund
------------ ------------- ------------- -------------
ASSETS
------
<S> <C> <C> <C> <C>
Non-interest bearing cash $ 1,443 $ 64,077 $ 81,983 $ 130,872
Other receivables 225,584 295,590 66,146 1,338
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 12 11,046 1,571 1,434,180
Registered investment companies 12,984,013 51,637,924* 99,032,315* 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 94,448,258*
------------ ------------- ------------- -------------
Total assets 13,211,052 52,008,637 99,182,015 96,014,648
------------ ------------- ------------- -------------
LIABILITIES
-----------
Operating payables 225,584 260,235 14,857 22,711
------------ ------------- ------------- -------------
Net assets available for benefits $ 12,985,468 $ 51,748,402 $ 99,167,158 $ 95,991,937
============ ============= ============= =============
<FN>
* Investment represents 5% or more of the Plan's net assets.
</FN>
</TABLE>
Page 29
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
------------- ------------- ------------- ------------- -------------
ASSETS
------
<S> <C> <C> <C> <C> <C>
Non-interest bearing cash $ 0 $ 0 $ 0 $ 0 $ 278,375
Other receivables 21,387 161,058 51 0 771,154
Investments, at fair value:
Common stock 0 0 217,997,790* 0 217,997,790
Common/collective trusts 1,233 1,067 19,753 0 1,468,862
Registered investment companies 25,125,158 16,808,405 0 0 205,587,815
Participant loans 0 0 0 17,969,075 17,969,075
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 94,448,258
------------ ------------- ------------- ------------- -------------
Total assets 25,147,778 16,970,530 218,017,594 17,969,075 538,521,329
------------ ------------- ------------- ------------- -------------
LIABILITIES
-----------
Operating payables 0 170,461 0 0 693,848
------------ ------------- ------------- ------------- -------------
Net assets available for benefits $ 25,147,778 $ 16,800,069 $218,017,594 $ 17,969,075 $537,827,481
============ ============= ============= ============= =============
<FN>
* Investment represents 5% or more of the Plan's net assets.
</FN>
</TABLE>
Page 30
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable Putnam Putnam
Growth S&P 500 Voyager Asset New Balanced
Fund Stock Index Fund Fund Opportunities Retirement
ADDITIONS ------------ ------------ ----------- ----------- -------------- ------------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 6,157,553 $ 9,538,036 $ 18,553,560 $ 8,382,022 $11,735,103 $ 5,855,906
Non-cash employer 0 0 0 0 0 0
Rollovers 702,527 684,102 1,491,567 829,537 1,892,158 555,336
Transfers from ESOP 81,608 82,762 309,314 43,839 291,259 105,500
----------- ----------- ---------- ---------- ----------- ----------
Total contributions 6,941,688 10,304,900 20,354,441 9,255,398 13,918,520 6,516,742
----------- ----------- ---------- ---------- ----------- ----------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 6,255,490 0 0
Dividends on common stock 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0
Net gain from registered investment
companies 3,192,921 12,559,461 13,231,296 0 2,997,747 2,811,902
----------- ------------ ------------ ----------- ------------ ------------
Total earnings on investments 3,192,921 12,559,461 13,231,296 6,255,490 2,997,747 2,811,902
----------- ------------ ------------ ----------- ------------ ------------
Total additions 10,134,609 22,864,361 33,585,737 15,510,888 16,916,267 9,328,644
DEDUCTIONS
- ----------
Participant benefit payments 824,288 3,131,545 6,043,256 7,307,455 1,801,178 1,234,830
Account maintenance fees 4,306 10,396 19,685 17,938 8,142 4,961
----------- ------------ ------------ ----------- ------------ ------------
Net increase 9,306,015 19,722,420 27,522,796 8,185,495 15,106,947 8,088,853
Transfers from (to):
Other master trust investment accounts 200,129 (2,490,292) (3,365,427) (9,219,889) 5,968,885 526,814
Net loans (47,687) (633,926) (1,081,454) (837,997) (235,690) (135,546)
Western Union International Collectively
Bargained Plan 164 36,136 38,925 41,454 0 0
MCI 401(k) Plan for Non-Exempt Employees 234,530 287,384 (753,759) (3,210,216) 390,821 9,645
Net assets available for benefits,
beginning of year 12,985,468 51,748,402 99,167,158 95,991,937 25,147,778 16,800,069
----------- ------------ ----------- ----------- ----------- -----------
Net assets available for benefits,
end of year $22,678,619 $68,670,124 $121,528,239 $90,950,784 $46,378,741 $ 25,289,835
=========== ============ =========== =========== =========== ============
</TABLE>
Page 31
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MCI
Common Participant
Stock Loans Total
ADDITIONS -------------- --------------- ------------
- ---------
<S> <C> <C> <C>
Contributions:
Participants $ 13,434,226 $ 0 $ 73,656,406
Non-cash employer 35,319,523 0 35,319,523
Rollovers 928,084 0 7,083,311
Transfers from ESOP 26,053 0 940,335
------------- ------------- ------------
Total contributions 49,707,886 0 116,999,575
-------------- ------------- ------------
Earnings on investments:
Interest on participant loans 0 1,629,497 1,629,497
Interest on guaranteed investment contracts 0 0 6,255,490
Dividends on common stock 445,635 0 445,635
Net gain on sale of common stock 808,155 0 808,155
Unrealized appreciation of assets 59,988,328 0 59,988,328
Net gain from registered investment
companies 0 0 34,793,327
------------- ------------ ------------
Total earnings on investments 61,242,118 1,629,497 103,920,432
------------- ------------ ------------
Total additions 110,950,004 1,629,497 220,920,007
DEDUCTIONS
- ----------
Participant benefit payments 12,710,078 1,452,685 34,505,315
Account maintenance fees 33,045 0 98,473
------------- ------------ ------------
Net increase 98,206,881 176,812 186,316,219
Transfers from (to):
Other master trust investment accounts 8,379,780 0 0
Net loans (1,114,972) 4,087,272 0
Western Union International Collectively
Bargained Plan 82,468 10,786 209,933
MCI Plan for Non-Exempt Employees (6,269,105) (1,083,900) (10,394,600)
Net assets available for benefits,
beginning of year 218,017,594 17,969,075 537,827,481
-------------- ------------- ------------
Net assets available for benefits,
end of year $317,302,646 $ 21,160,045 $713,959,033
============= ============ ============
</TABLE>
Page 32
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
EuroPacific Putnam Scudder Dreyfus Putnam Putnam Putnam
Growth Balanced Income S&P 500 Growth & Investors Vista
Fund Fund Fund Stock Index Income Fund Fund
ADDITIONS ------------- ----------- ----------- ------------- ----------- --------- -----------
- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 4,390,561 $1,036,121 $ 483,658 $ 7,433,945 $ 445,674 $102,315 $ 211,700
Non-cash employer 0 0 0 0 0 0 0
Rollovers 726,922 221,987 110,740 633,595 169,421 16,863 78,024
Transfers from ESOP 66,721 0 0 54,377 0 0 0
------------- ----------- ----------- ------------- ----------- --------- -----------
Total contributions 5,184,204 1,258,108 594,398 8,121,917 615,095 119,178 289,724
------------- ----------- ----------- ------------- ----------- --------- -----------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0 0
Interest on guaranteed investment contract 0 0 0 0 0 0 0
Dividends on common stock 0 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0 0
Net gain from registered investment
companies 1,129,858 627,036 223,175 12,843,841 383,901 99,870 185,802
------------- ----------- ----------- ------------- ----------- --------- -----------
Total earnings on investments 1,129,858 627,036 223,175 12,843,841 383,901 99,870 185,802
------------- ----------- ----------- ------------- ----------- --------- -----------
Total additions 6,314,062 1,885,144 817,573 20,965,758 998,996 219,048 475,526
DEDUCTIONS
- ----------
Participant benefit payments 453,332 182,456 67,840 2,074,793 49,062 9,451 19,622
Account maintenance fees 2,791 726 366 8,476 277 95 143
------------- ----------- ----------- ------------- ----------- --------- -----------
Net increase 5,857,939 1,701,962 749,367 18,882,489 949,657 209,502 455,761
Transfers from (to):
Other master trust investment accounts 1,299,583 (4,828,727) (2,422,280) 1,273,832 (2,638,716) (598,543) (1,330,877)
Net loans (2,097) (31,170) (7,580) (550,185) (16,903) (9,081) 14,264
MCI Consumer Markets 401(k) Plan 83,937 20,346 183 364,557 5,121 (906) (44,438)
Western Union International Collectively
Bargained Plan 0 0 0 7,922 0 0 0
Net assets available for benefits,
beginning of year 5,746,106 3,137,589 1,680,310 31,769,787 1,700,841 399,028 905,290
------------- ----------- ----------- ------------- ----------- --------- -----------
Net assets available for benefits,
end of year $ 12,985,468 $ 0 $ 0 $ 51,748,402 $ 0 $ 0 $ 0
============= =========== =========== ============= =========== ========= ===========
</TABLE>
Page 33
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Putnam Putnam Putnam Putnam Putnam Putnam
Voyager Convertible High Yield Global Gov't OTC Emerging Diversified
Fund Income-Growth Advantage Income Growth Income
ADDITIONS ------------- ------------- ---------- ------------ ------------ -----------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 14,346,390 $ 166,684 $ 111,042 $ 49,139 $ 894,852 $ 64,948
Non-cash employer 0 0 0 0 0 0
Rollovers 1,132,926 46,148 25,654 7,986 154,784 26,713
Transfers from ESOP 81,661 0 0 0 0 0
------------- ------------- ---------- ------------ ------------ -----------
Total contributions 15,560,977 212,832 136,696 57,125 1,049,636 91,661
------------- ------------- ---------- ------------ ------------ -----------
Earnings on investments:
Interest on participant loans 0 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 0 0 0
Dividends on common stock 0 0 0 0 0 0
Net gain on sale of common stock 0 0 0 0 0 0
Unrealized appreciation of assets 0 0 0 0 0 0
Net gain from registered investment
companies 26,000,640 97,125 52,849 15,071 604,501 34,453
------------ ------------- ---------- ------------ ------------ -----------
Total earnings on investments 26,000,640 97,125 52,849 15,071 604,501 34,453
------------ ------------- ---------- ------------ ------------ -----------
Total additions 41,561,617 309,957 189,545 72,196 1,654,137 126,114
DEDUCTIONS
- ----------
Participant benefit payments 4,465,024 10,919 16,008 4,572 99,188 18,151
Account maintenance fees 16,535 214 108 35 520 47
------------ ------------- ---------- ------------ ------------ -----------
Net increase 37,080,058 298,824 173,429 67,589 1,554,429 107,916
Transfers from (to):
Other master trust investment accounts 4,523,355 (950,771) (549,601) (265,628) (4,353,550) (416,410)
Net loans (1,107,613) (15,069) (554) 1,639 7,856 (7,565)
MCI Consumer Markets 401(k) Plan 428,679 1,120 (591) 446 (11,115) 498
Western Union International Collectively
Bargained Plan 31,562 0 0 0 0 0
Net assets available for benefits,
beginning of year 58,211,117 665,896 377,317 195,954 2,802,380 315,561
------------- ------------- ---------- ------------ ------------ -----------
Net assets available for benefits,
end of year $ 99,167,158 $ 0 $ 0 $ 0 $ 0 $ 0
============= ============= ========== ============ ============ ===========
</TABLE>
Page 34
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Stable Putnam Putnam MCI
Asset New Balanced Common Participant
Fund Opportunities Retirement Stock Loans Total
ADDITIONS ------------- ------------- ------------- ------------- ------------- -------------
- ---------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 9,767,877 $ 4,464,435 $ 2,491,906 $ 12,860,837 $ 0 $ 59,322,084
Non-cash employer 0 0 0 32,177,951 0 32,177,951
Rollovers 1,128,971 844,648 363,898 694,562 0 6,383,842
Transfers from ESOP 334,063 55,454 53,836 75,926 0 722,038
------------- ------------- ------------- ------------- ------------- -------------
Total contributions 11,230,911 5,364,537 2,909,640 45,809,276 0 98,605,915
------------- ------------- ------------- ------------- ------------- -------------
Earnings on investments:
Interest on participant loans 0 0 0 0 1,508,423 1,508,423
Interest on guaranteed investment contracts 6,443,825 0 0 0 0 6,443,825
Dividends on common stock 0 0 0 399,550 0 399,550
Net gain on sale of common stock 0 0 0 2,224,386 0 2,224,386
Unrealized appreciation of assets 0 0 0 57,379,129 0 57,379,129
Net gain from registered investment
companies 0 4,951,744 1,501,059 0 0 48,750,925
------------- ------------- ------------- ------------- ------------- -------------
Total earnings on investments 6,443,825 4,951,744 1,501,059 60,003,065 1,508,423 116,706,238
------------- ------------- ------------- ------------- ------------- -------------
Total additions 17,674,736 10,316,281 4,410,699 105,812,341 1,508,423 215,312,153
DEDUCTIONS
- ----------
Participant benefit payments 6,409,570 644,545 480,864 11,398,405 1,153,900 27,557,702
Account maintenance fees 20,572 2,623 1,928 25,052 0 80,508
------------- ------------- ------------- ------------- ------------- -------------
Net increase 11,244,594 9,669,113 3,927,907 94,388,884 354,523 187,673,943
Transfers from (to):
Other master trust investment accounts (4,161,296) 11,111,612 12,790,110 (8,482,093) 0 0
Net loans (1,179,222) 58,223 37,843 (606,989) 3,414,203 0
MCI Consumer Markets 401(k) Plan 407,343 68,883 44,209 1,021,414 74,172 2,463,858
Western Union International Collectively
Bargained Plan 40,298 0 0 39,706 9,350 128,838
Net assets available for benefits
beginning of year 89,640,220 4,239,947 0 131,656,672 14,116,827 347,560,842
------------- ------------- ------------- ------------- ------------- -------------
Net assets available for benefits
end of year $ 95,991,937 $ 25,147,778 $ 16,800,069 $218,017,594 $ 17,969,075 $537,827,481
============= ============= ============= ============= ============= =============
</TABLE>
Page 35
<PAGE>
NOTE 5 - PARTICIPANTS' ACCOUNTS
As of December 31, 1996 and 1995, the Plan held 9,703,805 and 8,343,760 shares,
respectively, of MCI Communications Corporation Common Stock at fair market
values of $317,193,126 and $217,980,730, respectively. Of these shares,
1,282,338 and 1,446,123 were contributed by the Company during the Plan years
ended December 31, 1996 and 1995, respectively, as the Company's matching
contributions. As of December 31, 1996 and 1995, the Plan's benefit claims
payable was $106,395,205 and $67,482,454, which includes 1,289,814 and 956,517
shares of MCI Communications Corporation Common Stock at fair market values of
$42,160,817 and $24,989,007, respectively. Net assets include account balances
of participants who have terminated from the Company and have not received a
distribution as of year end.
NOTE 6 - TRANSFER OF ASSETS TO (FROM) THE PLAN
During the years ended December 31, 1996 and 1995, certain participants
transferred between the Plan and the Non-Exempt Plan. During the plan year ended
December 31, 1996, assets valued at $10,394,600 were transferred from the Plan,
including 235,152 shares of MCI Communications Corporation Common Stock at a
fair value of $6,269,575. During the plan year ended December 31, 1995, assets
valued at $2,463,858 were transferred to the Plan, including 47,040 shares of
MCI Communications Corporation Common Stock at a fair value of $1,021,414.
During the years ended December 31, 1996 and 1995, certain participants
transferred between the Plan and the Western Union International 401(k) Plan for
Collectively Bargained Employees. During the years ended December 31, 1996 and
1995, assets valued at $209,933 and $128,838, respectively, including 3,013 and
2,101 shares of MCI Communications Corporation Common Stock at a fair value of
$82,468 and $39,706, respectively, were transferred to the Plan.
NOTE 7 - FEDERAL INCOME TAX STATUS
As described in Note 1, the Plan is Part II of the MCI Communications
Corporation ESOP and 401(k) for Exempt Employees, which, as amended through
January 24, 1995, has been determined by letter dated January 31, 1996, by the
IRS to be qualified under Section 401 of the Internal Revenue Code.
Page 36
<PAGE>
NOTE 8- MERGER AGREEMENT
Effective November 3, 1996, MCI Communications Corporation ("MCI") and British
Telecommunications, plc ("BT") entered into an Agreement and Plan of Merger
("the Merger"). As a result of the proposed merger, the stockholders of MCI and
BT will become the owners of a combined company, renamed Concert plc (Concert).
Under the terms of the Merger, each outstanding share of the MCI's common stock
(other than treasury shares and shares owned by BT including the shares of Class
A common stock) will be converted into the right to receive (i) .54 American
Depository Share (ADS) of Concert, each ADS representing ten ordinary shares of
25 pence each of Concert (with cash being paid in lieu of fractional ADSs), and
(ii) $6.00 in cash.
The shareholders of the respective companies approved the Merger at meetings
held on April 2, 1997 and April 15, 1997, respectively. Completion of the Merger
is subject to certain conditions, including the receipt of required regulatory
approvals. MCI expects to complete the Merger in the fall of 1997.
NOTE 9- SUBSEQUENT EVENTS
Effective January 1, 1997, the eligibility requirements under the Plan were
amended to permit an employee to become a participant and eligible for elective
contributions on the entry date coincident with or next following the close of
the three consecutive, full, calendar months period from his or her date of
hire. The participant shall be eligible to receive matching contributions after
completing a 12-consecutive-month period starting on his or her date of hire in
which the participant has completed 1,000 hours of service.
Page 37
<PAGE>
SCHEDULE I
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CURRENT
NUMBER VALUE AT
DESCRIPTION/ISSUER OF SHARES COST 12/31/96
- ------------------ --------- ------------ ------------
<S> <C> <C> <C>
*LOANS TO PARTICIPANTS
Participant loan accounts (rates range 7% - 11%) $ 0 $ 26,210,945
(maturities range 1997-2011) ------------
<CAPTION>
INTEREST IN COLLECTIVE INVESTMENT
FUNDS OF TRUSTEE
* Mellon Bank Temporary
Investment Fund 2,225,365 2,225,365
------------
<CAPTION>
INTEREST IN REGISTERED INVESTMENT
COMPANIES
EuroPacific Growth Fund 986,064 22,903,818 25,677,109
* Dreyfus S&P 500 Stock Index 4,878,384 55,973,987 77,615,093
* Putnam Voyager Fund 8,291,373 102,466,644 133,656,939
* Putnam New Opportunities 1,291,053 44,871,300 52,455,498
* Putnam Balanced Retirement 2,836,470 27,895,654 29,329,101
------------
Total investment in registered
investment companies 318,733,740
------------
<CAPTION>
GUARANTEED INVESTMENT CONTRACTS **
Stable Asset Fund
Aetna Life Insurance (6.63% Matures 6/30/00) 20,306,182 20,306,182
Allstate Life Insurance Company (5.90% Matures 7/1/98) 6,474,248 6,474,248
John Hancock Mutual Life Insurance (8.05% Matures 6/30/99) 4,000,628 4,000,628
Metropolitan Life Insurance (8.96% Matures 6/30/96) 14,261,226 14,261,226
New York Life Insurance (6.82% Matures 3/31/98) 8,847,294 8,847,294
New York Life Insurance (8.08% Matures 12/31/99) 5,803,475 5,803,475
Pacific Mutual Life Insurance (7.30% Matures 12/31/01) 4,642,586 4,642,586
Pacific Mutual Life Insurance(7.36% Matures 12/31/01) 1,287,816 1,287,816
Peoples Security Insurance Company (5.72% Matures 6/30/94) 7,000,905 7,000,905
Peoples Security Insurance Company (5.86% Matures 3/31/98) 5,220,011 5,220,011
Principal Mutual Life Insurance (6.60% Matures 4/02/01) 3,409,732 3,409,732
Prudential Life Insurance (7.00% Matures 9/30/98) 6,028,870 6,028,870
TransAmerica Life Insurance (5.60% Matures 6/30/95) 3,426,163 3,426,163
TransAmerica Life Insurance (7.25% Matures 12/31/98) 4,071,194 4,071,194
------------
Total guaranteed investment contracts 94,780,330
------------
<CAPTION>
COMMON STOCK
* MCI Communications Corporation 11,299,325 248,485,916 369,352,337
------------
TOTAL INVESTMENTS $811,302,717
============
<FN>
* Denotes a party-in-interest
** Current value is considered to be contract value.
</FN>
</TABLE>
Page 38
<PAGE>
SCHEDULE II
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
Transactions or series of transactions exceeding 5% of the beginning fair values
of master trust assets for the plan year January 1, 1996 to December 31, 1996
are considered reportable transactions. Fair value at January 1, 1996 is
$602,522,823. Five percent (5%) of fair value is $30,126,141.
<TABLE>
<CAPTION>
Identity Expense Current
of incurred value of asset
party Purchase Selling Lease with Cost of on transaction Net gain
involved Description of asset price price rental transaction asset date or (loss)
- -------- ----------------------- -------------- ------------- ------ ----------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
* Putnam Voyager Fund $ 26,805,559 $ 26,805,559 $ 26,805,559 $ 0
(129 purchases)
* Putnam Voyager Fund $ 15,121,764 $ 10,559,468 $ 15,121,764 $4,562,296
(126 sales)
* MCI Communications $ 10,197,229 $ 10,197,229 $ 10,197,229 $ 0
Corporation Common Stock (202 deliveries)
* MCI Communications $ 38,361,503 $ 38,361,503 $ 38,361,503 $ 0
Corporation Common Stock (209 receipts)
Stable Asset Fund $ 35,230,443 $ 35,230,443 $ 35,230,443 $ 0
(207 purchases)
Stable Asset Fund $ 34,678,608 $ 34,678,608 $ 34,678,608 $ 0
(179 sales)
* Mellon Bank Temporary $ 37,705,175 $ 37,705,175 $ 37,705,175 $ 0
Investment Fund (100 purchases)
* Mellon Bank Temporary $ 37,558,568 $ 37,558,568 $ 37,558,568 $ 0
Investment Fund (62 sales)
<FN>
* Denotes a party-in-interest
</FN>
</TABLE>
Page 39
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
sponsor of the MCI Communications Corporation ESOP and 401(k) Plan for Exempt
Employees has duly caused this annual report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MCI COMMUNICATIONS CORPORATION
ESOP AND 401(K) FOR EXEMPT
EMPLOYEES
Date: June 27, 1997 By:David M. Case
------------------------------
David M. Case
Vice President and Controller
MCI Communications Corporation
Page 40
<PAGE>
Exhibit 23
----------
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT EMPLOYEES
(FORMERLY MCI COMMUNICATIONS CORPORATION
RETIREMENT SAVINGS PLAN)
EIN: 52-0886267
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement of Form S-8 (No. 333-12845) of
MCI Communications Corporation of our report dated June 11, 1997, appearing on
page 3 of this Form 11-K.
PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Washington, D.C.
June 27, 1997
Page 41
Exhibit 99
----------
DOL Filing Confirmation
I certify that the Plan Administrator of the MCI Communications Corporation ESOP
and 401(k) for Exempt Employees has received a Statement of Assets and
Liabilities and also that the statement has been filed directly with the United
States Department of Labor by Mellon Bank, N.A. (EIN # 25-0659206) for the
following investment arrangements:
EIN #
--------------
Mellon Bank Temporary Investment Fund 25-6078903-980
MCI COMMUNICATIONS CORPORATION
401(K) PLAN FOR EXEMPT
EMPLOYEES - PART II OF THE MCI
COMMUNICATIONS CORPORATION
ESOP AND 401(K) FOR EXEMPT
EMPLOYEES
Date: June 27, 1997 By:David M. Case
------------------------------
David M. Case
Vice President and Controller
MCI Communications Corporation
Page 42
