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, 1997
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: Western Union International, Inc.
401(k) Plan for Collectively Bargained Employees, 201 Centennial
Avenue, Piscataway, NJ 08854
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: MCI Communications
Corporation, 1801 Pennsylvania Avenue, NW, Washington, DC 20006
Page 1
<PAGE>
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Report of Independent Accountants 3
Statements of Net Assets Available for Benefits at
December 31, 1997 and 1996 4
Statements of Changes in Net Assets Available for
Benefits for the years ended December 31, 1997 and 1996 5
Notes to Financial Statements 6-24
Additional Information:
Schedule I. Schedule of Assets Held for Investment
Purposes at December 31, 1997 25
Schedule II. Schedule of Reportable Transactions
For the year ended December 31, 1997 26
Signature 27
Exhibits:
23. Consent of Independent Accountants 28
99. DOL Filing Confirmation 29
</TABLE>
Page 2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrative
Committee of the Western Union International, Inc.
401(k) Plan for Collectively Bargained 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 Western Union International, Inc. 401(k) Plan for Collectively
Bargained Employees at December 31, 1997 and 1996, 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
Washington, D.C.
June 8, 1998
Page 3
<PAGE>
<TABLE>
<CAPTION>
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
--------------------------------
1997 1996
------------ ------------
Assets
- ------
<S> <C> <C>
Non-interest bearing cash $ 0 $ 64
------------ ------------
Contributions receivable:
Participant 54,718 30,302
Employer 17,236 9,452
------------ ------------
Total contributions receivable 71,954 39,754
------------ ------------
Cash-in-transit 10,090 51,245
Other receivables 55 17
------------ ------------
Total receivables 82,099 91,016
------------ ------------
Investments, at fair value:
Participant loans 730,713 624,892
Employer securities 8,421,574 6,172,278
Common/collective trusts 4,149,992 3,090,301
Registered investment companies 7,834,182 5,427,745
Investments, at contract value:
Guaranteed investment contracts 1,802,046 1,682,434
------------ ------------
Total assets 23,020,606 17,088,730
------------ ------------
Liabilities
- -----------
Operating payables (10,090) (51,264)
------------ ------------
Net assets available for benefits $ 23,010,516 $ 17,037,466
============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31,
-----------------------------
1997 1996
---------- ----------
ADDITIONS
- ---------
Contributions:
<S> <C> <C>
Participant $1,747,035 $1,616,571
Non-cash employer 540,835 518,284
Rollovers 315,357 33,220
---------- ----------
Total contributions 2,603,227 2,168,075
---------- ----------
Earnings on investments:
Interest on participant loans 55,852 36,065
Interest on guaranteed investment
contracts 318,434 169,330
Interest on common/collective trusts 614 158,183
Dividends on employer securities 10,637 8,563
Net realized/unrealized gain from
registered investment companies 1,476,893 686,881
Net realized gain on sale of
employer securities 318,524 25,264
Unrealized appreciation of common stock 1,792,336 1,112,566
---------- ----------
Total earnings on investments 3,973,290 2,196,852
---------- ----------
Total additions 6,576,517 4,364,927
DEDUCTIONS
- ----------
Participant benefit payments 241,748 190,153
Participant account fees 1,261 780
---------- ----------
Net increase 6,333,508 4,173,994
Transfers to:
MCI 401(k) Plan for Exempt Employees (85,330) (209,933)
MCI 401(k) Plan for Non-Exempt Employees (275,128) (7,744)
Net assets available for benefits,
beginning of year 17,037,466 13,081,149
---------- ----------
Net assets available for benefits,
end of year $23,010,516 $17,037,466
=========== ===========
The accompanying notes are an integral part of these financial statements.
Page 5
<PAGE>
</TABLE>
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 and 1996
NOTE 1 - DESCRIPTION OF THE PLAN
The following brief description of the Western Union International, Inc.
401(k) Plan for Collectively Bargained Employees (the "Plan") 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 July 1, 1990, Western Union International, Inc. (the "Company")
established a defined contribution, deferred savings plan called the
Western Union International, Inc. 401(k) Plan for Collectively Bargained
Employees. The Plan sponsor is Western Union International, Inc., a wholly
owned subsidiary of MCI International, Inc., which is a wholly owned
subsidiary of MCI Communications Corporation. Employees of the Company who
are represented by American Communications Association Locals 9 or 111 and
the Communications Trade Division affiliated with the International
Brotherhood of Teamsters are generally eligible to participate in the Plan.
Effective July 1, 1996, the Company amended and restated the Plan.
Contributions
- -------------
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
(age 18 prior to July 1, 1996). 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 cash or MCI Communications
Corporation Common Stock ("MCI Common Stock") at a rate of $.50 for each
eligible dollar of Elective Contributions made to the Plan. The
Page 6
<PAGE>
Company's matching contribution is made weekly and, when made in the form
of MCI Communications Corporation Common Stock, is determined by the
closing price of MCI Communications Corporation Common Stock on the date
posted to the participants' accounts. Prior to July 1, 1996, the Company's
matching contribution was made monthly and, when made in the form of MCI
Communications Corporation Common Stock, was determined by the closing
price of MCI Communications Corporation Common Stock on the last trading
day of the month. Participants' Elective Contributions are withheld from
their weekly 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. Participants also receive credit for years
of service for each calendar year prior to July 1, 1990 during which they
completed 1,000 hours of service.
As of July 1, 1996, the investment funds available for Elective
Contributions were increased from four to seven funds. Elective
Contributions are invested in any of the following investment funds in
accordance with participants' instructions. The available investment funds
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.
The closing price for MCI Communications Corporation Common Stock was
$42.8125 and $32.6875 at December 31, 1997 and 1996, respectively.
- 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. The net asset value for EuroPacific Growth Fund was $26.02 and
$26.04 at December 31, 1997 and 1996, respectively.
Page 7
<PAGE>
- Dreyfus Basic S&P 500 Stock Index Fund
An equity index mutual fund invested in common stock that 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. The
net asset value for Dreyfus Basic 500 Stock Index Fund was $20.57 and
$15.91 at December 31, 1997 and 1996, respectively.
- Putnam Voyager Fund
A long-term growth fund invested in a diversified portfolio of
primarily two types of common stocks: emerging growth stocks and
opportunity stocks. The fund is managed by Putnam Investment
Management, Inc. The net asset value for Putnam Voyager Fund was $19.05
and $16.12 at December 31, 1997 and 1996, respectively.
- 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 trustees. The
net asset value for Putnam New Opportunities Fund was $48.65 and $40.63
at December 31, 1997 and 1996, respectively.
- 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 trustees. The net asset value for Putnam
Balanced Retirement Fund was $10.89 and $10.34 at December 31, 1997 and
1996, respectively.
- Stable Value Fund
This fund consists of investments in the Putnam Stable Value Fund and
individually - held guaranteed investment contracts
Page 8
<PAGE>
(GICs) issued by insurance companies that offer fixed interest rates on
investments. The fund seeks to maintain a constant book value of $1.00
per share. The guaranteed rates of interest range from 5.90% to 8.05%
at December 31, 1997.
The Putnam Stable Value Fund is a collective investment trust created
and maintained by Putnam Fiduciary Trust Company. The fund is invested
primarily in guaranteed investment contracts or funding agreements,
synthetic guaranteed investment contracts or separate accounts issued
or wrapped by insurance companies, banks, or other financial
institutions. The following guaranteed investment contracts were held
individually by the Plan as of December 31:
<TABLE>
<CAPTION>
Contract Value
--------------
Contract
1997 1996 Rate
---- ---- ----
<S> <C> <C> <C>
Allstate Life Insurance $ 779,404 $ 735,981 5.90%
John Hancock Mutual Life Insurance 1,022,642 946,453 8.05%
</TABLE>
Proceeds from matured guaranteed investment contracts will be invested
in the Putnam Stable Value Fund.
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. Prior to July 1, 1996, all investments except the MCI
Common Stock Fund were valued on a dollar value basis with each fund's
activity allocated to participants' accounts on a pro rata 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. For plan years beginning on or after January 1, 1997,
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.
Page 9
<PAGE>
Participant Loans
- -----------------
A loan feature allows participants to borrow up to one-half of their
Loanable Amounts (or $50,000, whichever is less). The Loanable Amount
includes a participant's Elective Contributions Account, Rollover Account,
and Matching Contributions Account, only if fully vested. The minimum loan
amount is $1,000 and the minimum term of a loan is one year. The maximum
term of a loan is five years for a general purpose loan and fifteen years
for a primary residence loan. Only one loan of each type, general purpose
and primary residence, may be outstanding at any time.
Effective July 1, 1996, the Plan charges a $30 origination fee to
participants for loans. Loan proceeds are disbursed pro rata from each of
the participants' investment funds, and are repaid through weekly payroll
deductions. Loans can be repaid in full, at any time prior to maturity, by
a cashier's or certified check. 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. During Plan years ended December 31, 1997 and 1996, $383,400
and $439,910 in loans were disbursed and principal repayments of $246,141
and $171,797, 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.
Page 10
<PAGE>
Effective July 1, 1996 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 July 1, 1996, to provide for the
automatic distribution in a lump sum of terminated participant accounts
with a vested balance of $3,500 or less. This distribution generally occurs
no sooner than six months after the participant's termination of employment
date. As of December 31, 1997 and 1996, forfeitures included in the Plan
were $10,974 and $5,385, respectively.
Plan Administration
-------------------
The Plan is not a defined benefit plan and accordingly, Plan benefits are
not guaranteed by the Pension Benefit Guaranty Corporation. The Company is
the Plan Administrator and has 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. Prior to June 1, 1996, the recordkeeper for the Plan was
Buck Consultants, 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, a collective investment trust
created and maintained by Putnam Fiduciary Trust Company, a Mellon Bank
mutual fund and collective trust account, and loans to participants are
party-in-interest investments.
Page 11
<PAGE>
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 amounts reported in the financial statements, 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 MCI Communications Corporation Common Stock to
participants is at the quoted current market price as of the distribution date.
The difference between the fair market value on the date of distribution and the
carrying value to the Plan of the distributed shares is recorded as a net gain
or loss on disposition of assets. Purchases and sales of securities are recorded
on the trade date.
The Plan's interest in registered investment companies and employer securities
are stated at fair value, measured by the quoted current market price. Units in
collective trusts are valued at the net asset value as reported by such trusts
at the end of each period. Funds invested in guaranteed investment contracts are
stated at contract value, measured as cost plus contributions and earned
interest income, less withdrawals and participant account fees. The Plan has
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" (SOP 94-4). SOP 94-4 states that
defined contribution plans are to 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, 1997 and 1996 were fully-benefit
responsive, and therefore are stated at contract value.
Participant loans are valued at cost, which approximates fair value.
Administrative expenses of the Plan are paid by MCI Communications Corporation.
Benefit payments are recorded when paid.
Page 12
<PAGE>
NOTE 3 - 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 as of and for the years ended December 31, 1997 and 1996
are presented on the following pages.
Page 13
<PAGE>
NOTE 3 - Continued
<TABLE>
<CAPTION>
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
EuroPacific Dreyfus Basic Putnam Stable
Growth S&P 500 Stock Voyager Value
Fund Index Fund Fund Fund
------------- ------------- ------------- -------------
ASSETS
------
<S> <C> <C> <C> <C>
Non-interest bearing cash $ 0 $ 0 $ 0 $ 0
------------- ------------- ------------- -------------
Contributions receivable:
Participant 2,139 8,543 11,556 15,786
Employer 0 0 0 0
------------- ------------- ------------- -------------
Total contributions receivable 2,139 8,543 11,556 15,786
Cash-in-transit 0 0 6,153 0
Other receivables 0 0 0 0
------------- ------------- ------------- -------------
Total receivables 2,139 8,543 17,709 15,786
Investments, at fair value:
Participant loans 0 0 0 0
Employer securities 0 0 0 0
Common/collective trusts 0 1,262 206 4,141,544*
Registered investment companies 199,234 2,768,769* 3,584,039* 0
Investments, at contract value:
Guaranteed investment contracts 0 0 0 1,802,046*
------------- ------------- ------------- -------------
Total assets 201,373 2,778,574 3,601,954 5,959,376
------------- ------------- ------------- -------------
LIABILITIES
-----------
Operating payables 0 0 0 10,090
------------- ------------- ------------- -------------
Net assets available for benefits $ 201,373 $ 2,778,574 $ 3,601,954 $ 5,949,286
============= ============= ============= =============
* Investment represents 5% or more of the Plan's net assets.
Page 14
</TABLE>
<PAGE>
NOTE 3 - Continued
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Putnam New Putnam Balanced MCI
Opportunities Retirement Common Stock Participant
Fund Fund Fund Loans Total
------------- ------------- ------------- ------------ -------------
ASSETS
------
<S> <C> <C> <C> <C> <C>
Non-interest bearing cash $ 0 $ 0 $ 0 $ 0 $ 0
------------- ------------- ------------- ------------ -------------
Contributions receivable:
Participant 2,628 2,314 11,752 0 54,718
Employer 0 0 17,236 0 17,236
------------- ------------- ------------- ------------ -------------
Total contributions receivable 2,628 2,314 28,988 0 71,954
Cash-in-transit 3,937 0 0 0 10,090
Other receivables 0 0 55 0 55
------------- ------------- ------------- ------------- -------------
Total receivables 6,565 2,314 29,043 0 82,099
Investments, at fair value:
Participant loans 0 0 0 730,713 730,713
Employer securities 0 0 8,421,574* 0 8,421,574
Common/collective trusts 29 54 6,897 0 4,149,992
Registered investment companies 454,197 827,943 0 0 7,834,182
Investments, at contract value:
Guaranteed investment contracts 0 0 0 0 1,802,046
------------- ------------- ------------- ------------ -------------
Total assets 460,791 830,311 8,457,514 730,713 23,020,606
------------- ------------- ------------- ------------ -------------
LIABILITIES
-----------
Operating payables 0 0 0 0 10,090
------------- ------------- ------------- ------------ -------------
Net assets available for benefits $ 460,791 $ 830,311 $ 8,457,514 $ 730,713 $ 23,010,516
============= ============= ============= ============ =============
* Investment represents 5% or more of the Plan's net assets.
Page 15
</TABLE>
<PAGE>
NOTE 3 - Continued
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
EuroPacific Dreyfus Basic Putnam Stable
Growth S&P 500 Stock Voyager Value
Fund Index Fund Fund Fund
------------- ------------- ------------- -------------
ASSETS
------
<S> <C> <C> <C> <C>
Non-interest bearing cash $ 0 $ 0 $ 0 $ 64
------------- ------------- ------------- -------------
Contributions receivable:
Participant 670 3,616 7,942 9,575
Employer 0 0 0 0
------------- ------------- ------------- -------------
Total contributions receivable 670 3,616 7,942 9,575
Cash-in-transit 0 12,051 21,859 11,641
Other receivables 0 4 0 0
------------- ------------- ------------- -------------
Total receivables 670 15,671 29,801 21,216
Investments, at fair value:
Participant loans 0 0 0 0
Employer securities 0 0 0 0
Common/collective trusts 0 2,555 58 3,078,966*
Registered investment companies 46,512 1,936,795* 2,807,491* 0
Investments, at contract value:
Guaranteed investment contracts 0 0 0 1,682,434*
------------- ------------- ------------- -------------
Total assets 47,182 1,955,021 2,837,350 4,782,680
------------- ------------- ------------- -------------
LIABILITIES
-----------
Operating payables 0 12,051 21,859 11,641
------------- ------------- ------------- -------------
Net assets available for benefits $ 47,182 $ 1,942,970 $ 2,815,491 $ 4,771,039
============= ============= ============= =============
* Investment represents 5% or more of the Plan's net assets.
Page 16
</TABLE>
<PAGE>
NOTE 3 - Continued
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Putnam New Putnam Balanced MCI
Opportunities Retirement Common Stock Participant
Fund Fund Fund Loans Total
------------- ------------- ------------- ------------ -------------
ASSETS
------
<S> <C> <C> <C> <C> <C>
Non-interest bearing cash $ 0 $ 0 $ 0 $ 0 $ 64
------------- ------------- ------------- ------------ -------------
Contributions receivable:
Participant 1,514 862 6,123 0 30,302
Employer 0 0 9,452 0 9,452
------------- ------------- ------------- ------------ -------------
Total contributions receivable 1,514 862 15,575 0 39,754
Cash-in-transit 5,694 0 0 0 51,245
Other receivables 0 0 13 0 17
------------- ------------- ------------- ------------- ------------
Total receivables 7,208 862 15,588 0 91,016
Investments, at fair value:
Participant loans 0 0 0 624,892 624,892
Employer securities 0 0 6,172,278* 0 6,172,278
Common/collective trusts 7 0 8,715 0 3,090,301
Registered investment companies 381,773 255,174 0 0 5,427,745
Investments, at contract value:
Guaranteed investment contracts 0 0 0 0 1,682,434
------------- ------------- ------------- ------------ -------------
Total assets 388,988 256,036 6,196,581 624,892 17,088,730
------------- ------------- ------------- ------------ -------------
LIABILITIES
-----------
Operating payables 5,713 0 0 0 51,264
------------- ------------- ------------- ------------ -------------
Net assets available for benefits $ 383,275 $ 256,036 $ 6,196,581 $ 624,892 $ 17,037,466
============= ============= ============= ============ =============
* Investment represents 5% or more of the Plan's net assets.
Page 17
</TABLE>
<PAGE>
NOTE 3 - Continued
<TABLE>
<CAPTION>
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
EuroPacific Dreyfus Basic Putnam Stable
Growth S&P 500 Stock Voyager Value
Fund Index Fund Fund Fund
ADDITIONS ------------- ------------- ------------- -------------
- ---------
Contributions:
<S> <C> <C> <C> <C>
Participant $ 47,731 $ 252,964 $ 411,370 $ 513,169
Non-cash employer 0 0 0 0
Rollovers 0 42,610 5,129 158,102
------------- ------------- ------------- -------------
Total contributions 47,731 295,574 416,499 671,271
------------- ------------- ------------- -------------
Earnings on investments
Interest on participant loans 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 318,434
Interest on common/collective trusts 0 0 0 0
Dividends on employer securities 0 0 0 0
Net realized/unrealized gain from registered investment companies 2,331 655,359 672,533 0
Net realized gain on sale of employer securities 0 0 0 0
Unrealized appreciation of common stock 0 0 0 0
------------- ------------- ------------- -------------
Total earnings on investments 2,331 655,359 672,533 318,434
------------- ------------- ------------- -------------
Total additions 50,062 950,933 1,089,032 989,705
------------- ------------- ------------- -------------
DEDUCTIONS
- ----------
Participant benefit payments 187 16,318 16,099 75,811
Participant account fees 24 193 257 497
------------- ------------- ------------- -------------
Net increase 49,851 934,422 1,072,676 913,397
------------- ------------- ------------- -------------
Transfers (to)/from:
Interfund transfers 105,096 (43,386) (184,794) (412,927)
Net loans (756) (22,212) (13,402) (35,705)
MCI 401(k) Plan for Exempt Employees 0 (10,767) (8,653) (21,553)
MCI 401(k) Plan for Non-Exempt Employees 0 (22,453) (79,364) (90,819)
Net assets available for benefits, beginning of year 47,182 1,942,970 2,815,491 4,771,039
------------- ------------- ------------- -------------
Net assets available for benefits, end of year $ 201,373 $ 2,778,574 $ 3,601,954 $ 5,949,286
============= ============= ============= =============
Page 18
</TABLE>
<PAGE>
NOTE 3 - Continued
<TABLE>
<CAPTION>
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
Putnam New Putnam Balanced MCI
Opportunities Retirement Common Stock Participant
Fund Fund Fund Loans Total
ADDITIONS ------------- ------------- ------------- ------------- -----------
- ---------
Contributions:
<S> <C> <C> <C> <C> <C>
Participant $ 63,871 $ 48,043 $ 409,887 $ 0 $ 1,747,035
Non-cash employer 0 0 540,835 0 540,835
Rollovers 12,724 33,551 63,241 0 315,357
------------ ------------- ------------- ------------ -------------
Total contributions 76,595 81,594 1,013,963 0 2,603,227
Earnings on investments
Interest on participant loans 0 0 0 55,852 55,852
Interest on guaranteed investment contracts 0 0 0 0 318,434
Interest on common/collective trusts 0 0 614 0 614
Dividends on employer securities 0 0 10,637 0 10,637
Net realized/unrealized gain from registered
investment companies 79,741 66,929 0 0 1,476,893
Net realized gain on sale of employer securities 0 0 318,524 0 318,524
Unrealized appreciation of common stock 0 0 1,792,336 0 1,792,336
------------ ------------- ------------- ------------ -------------
Total earnings on investments 79,741 66,929 2,122,111 55,852 3,973,290
------------ ------------- ------------- ------------ -------------
Total additions 156,336 148,523 3,136,074 55,852 6,576,517
------------ ------------- ------------- ------------ -------------
DEDUCTIONS
- ----------
Participant benefit payments 14,801 0 102,166 16,366 241,748
Participant account fees 0 38 252 0 1,261
------------ ------------- ------------- ------------ -------------
Net increase 141,535 148,485 3,033,656 39,486 6,333,508
------------ ------------- ------------- ------------ -------------
Transfers (to)/from:
Interfund transfers (62,274) 424,548 (652,117) 0 0
Net loans 4,616 1,242 (15,190) 81,407 0
MCI 401(k) Plan for Exempt Employees 0 0 (31,937) (12,420) (85,330)
MCI 401(k) Plan for Non-Exempt Employees (6,361) 0 (73,479) (2,652) (275,128)
Net assets available for benefits, beginning of year 383,275 256,036 6,196,581 624,892 17,037,466
------------ ------------- ------------- ------------ -------------
Net assets available for benefits, end of year $ 460,791 $ 830,311 $ 8,457,514 $ 730,713 $ 23,010,516
============ ============= ============= ============ =============
Page 19
</TABLE>
<PAGE>
NOTE 3 - Continued
<TABLE>
<CAPTION>
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
EuroPacific Dreyfus Basic Putnam Stable
Growth S&P 500 Stock Voyager Value
Fund Index Fund Fund Fund
ADDITIONS ------------- ------------- ------------- -------------
- ---------
Contributions:
<S> <C> <C> <C> <C>
Participant $ 12,178 $ 247,943 $ 530,588 $ 587,841
Non-cash employer 0 0 0 0
Rollovers 0 3,149 23,448 163
------------- ------------- ------------- -------------
Total contributions 12,178 251,092 554,036 588,004
------------- ------------- ------------- -------------
Earnings on investments
Interest on participant loans 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 169,330
Interest on common/collective trusts 0 322 635 157,226
Dividends on employer securities 0 0 0 0
Net realized/unrealized gain (loss) from registered
investment companies 3,251 380,301 295,392 0
Net realized gain on sale of employer securities 0 0 0 0
Unrealized appreciation of common stock 0 0 0 0
------------- ------------- ------------- -------------
Total earnings on investments 3,251 380,623 296,027 326,556
------------- ------------- ------------- -------------
Total additions 15,429 631,715 850,063 914,560
------------- ------------- ------------- -------------
DEDUCTIONS
- ----------
Participant benefit payments 0 5,546 5,194 67,977
Participant account fees 7 129 175 360
------------- ------------- ------------- -------------
Net increase 15,422 626,040 844,694 846,223
------------- ------------- ------------- -------------
Transfers (to)/from:
Interfund transfers 31,640 (194,089) (209,100) (567,150)
Net loans 335 ( 31,282) ( 29,392) (111,891)
MCI 401(k) Plan for Exempt Employees (164) ( 36,136) ( 38,925) ( 41,454)
MCI 401(k) Plan for Non-Exempt Employees (51) ( 2,390) ( 2,200) ( 615)
Net assets available for benefits, beginning of year 0 1,580,827 2,250,414 4,645,926
------------- ------------- ------------- -------------
Net assets available for benefits, end of year $ 47,182 $ 1,942,970 $ 2,815,491 $ 4,771,039
============= ============= ============= =============
Page 20
</TABLE>
<PAGE>
NOTE 3 - Continued
<TABLE>
<CAPTION>
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
Putnam New Putnam Balanced MCI
Opportunities Retirement Common Stock Participant
Fund Fund Fund Loans Total
ADDITIONS ------------- ------------- ------------- ------------- -----------
- ---------
Contributions:
<S> <C> <C> <C> <C> <C>
Participant $ 32,491 $ 8,885 $ 196,645 $ 0 $ 1,616,571
Non-cash employer 0 0 518,284 0 518,284
Rollovers 6,297 0 163 0 33,220
------------ ------------- ------------- ------------ -------------
Total contributions 38,788 8,885 715,092 0 2,168,075
Earnings on investments
Interest on participant loans 0 0 0 36,065 36,065
Interest on guaranteed investment contracts 0 0 0 169,330
Interest on common/collective trusts 0 0 0 0 158,183
Dividends on employer securities 0 0 8,563 0 8,563
Net realized/unrealized gain (loss) from
registered investment companies (3,536) 11,473 0 0 686,881
Net realized gain on sale of employer securities 0 0 25,264 0 25,264
Unrealized appreciation of common stock 0 0 1,112,566 0 1,112,566
------------ ------------- ------------- ------------ -------------
Total earnings on investments (3,536) 11,47 1,146,393 36,065 2,196,852
------------ ------------- ------------- ------------ -------------
Total additions 35,252 20,358 1,861,485 36,065 4,364,927
------------ ------------- ------------- ------------ -------------
DEDUCTIONS
- ----------
Participant benefit payments 0 0 88,134 23,302 190,153
Participant account fees 0 0 109 0 780
------------ ------------- ------------- ------------ -------------
Net increase 35,252 20,358 1,773,242 12,763 4,173,994
------------ ------------- ------------- ------------ -------------
Transfers (to)/from:
Interfund transfers 350,773 234,752 353,174 0 0
Net loans (2,662) 955 (58,082) 232,019 0
MCI 401(k) Plan for Exempt Employees 0 0 (82,468) (10,786) (209,933)
MCI 401(k) Plan for Non-Exempt Employees (88) (29) (2,371) 0 (7,744)
Net assets available for benefits, beginning of year 0 0 4,213,086 390,896 13,081,149
------------ ------------- ------------- ------------ -------------
Net assets available for benefits, end of year $ 383,275 $ 256,036 $ 6,196,581 $ 624,892 $ 17,037,466
============ ============= ============= ============ =============
Page 21
</TABLE>
<PAGE>
NOTE 4 - PARTICIPANTS' ACCOUNTS
As of December 31, 1997 and 1996, the Plan held 196,706 and 188,824 shares,
respectively, of MCI Communications Corporation Common Stock at fair market
values of $8,421,574 and $6,172,278, respectively. Of these shares, 26,027 and
18,484 were contributed by the Company during the Plan years ended December 31,
1997 and 1996, respectively, as the Company's matching contributions. During the
Plan years ended December 31, 1997 and 1996, 3,092 and 3,060 shares,
respectively, of MCI Communications Corporation Common Stock were distributed to
participants. As of December 31, 1997 and 1996, the Plan's benefit claims
payable were $2,054,710 and $565,907, which includes 4,127 and 5,782 shares of
MCI Communications Corporation Common Stock at fair market values of $698,150
and $188,999, 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 5 - TRANSFER OF ASSETS FROM THE PLAN
During the year ended December 31, 1997 and 1996, certain participants
transferred between the Plan and the MCI Communications Corporation 401(k) Plan
for Exempt Employees. During the years ended December 31, 1997 and 1996, assets
valued at $85,330 and $209,933, respectively, including 872 and 3,012 shares of
MCI Communications Corporation Common Stock at a fair value of $31,937 and
$82,468, respectively, were transferred from the Plan.
During the years ended December 31, 1997 and 1996, certain participants
transferred between the Plan and the MCI Communications Corporation 401(k) Plan
for Non-Exempt Employees. During the years ended December 31, 1997 and 1996,
assets valued at $275,128 and $7,744, including 1,878 and 85 shares of MCI
Communications Corporation Common Stock at a fair value of $73,479 and $2,371
were transferred from the Plan.
NOTE 6 - FEDERAL INCOME TAX STATUS
The Plan Administrator has received a favorable determination letter, dated
September 3, 1992, from the Internal Revenue Service covering the Plan as
amended through February 1, 1990 stating that the Plan, as designed, is a
qualified plan in
Page 22
<PAGE>
accordance with Section 401(a) of the Internal Revenue Code ("Code"), and its
corresponding trust is exempt from taxation under Section 501(a) of the Code.
The Plan has been amended and restated effective July 1, 1996; however, the Plan
Administrator believes the Plan is being operated in a manner designed to
maintain its tax-qualified status.
In addition, the Company will apply for, and expects to receive, a new
determination letter covering the Plan, as restated.
NOTE 7 - MCI WORLDCOM MERGER AGREEMENT
Effective November 9, 1997, MCI Communications Corporation (the "Company")
entered into an Agreement and Plan of Merger (the MCI WorldCom Merger Agreement)
with WorldCom, Inc. ("WorldCom") a Georgia corporation, and TC Investments
Corporation ("Merger Sub") a Delaware corporation and a wholly-owned subsidiary
of WorldCom, pursuant to which the Company will merge with and into Merger Sub
(the Merger). As a result of the Merger, (a) each outstanding share of the
Company's common stock, par value $.10 per share, (other than shares owned by
WorldCom or Merger Sub or held by the Company) will be converted into the right
to receive that number of shares of WorldCom common stock, par value $.01 per
share, equal to the quotient determined by dividing $51.00 by the average of the
high and low sale prices of WorldCom common stock as reported on the NASDAQ
National Market on each of the 20 consecutive trading days ending with the third
trading day immediately preceding the effective time of the Merger (the
"Exchange Ratio"), provided that the Exchange Ratio shall not be less than
1.2439 or greater than 1.7586; and (b) each outstanding share of the Company's
Class A common stock shall be converted into the right to receive $51.00 in
cash, without interest thereon. On March 11, 1998, the stockholders of the
Company and shareholders of WorldCom approved the Merger. The Merger will be
accounted for as a purchase in accordance with generally accepted accounting
principles.
Concurrent with the MCI WorldCom Merger Agreement, the Company, WorldCom and
British Telecommunications, plc ("BT") entered into an agreement (the BT
Termination Agreement) whereby (i) the Agreement and Plan of Merger, dated as of
November 3, 1996, as last amended on August 21, 1997 (the MCI BT Merger
Agreement), among the Company, BT and Tadworth Corporation was terminated;
Page 23
<PAGE>
(ii) WorldCom agreed to pay BT a fee of $450 million and expenses not in excess
of $15 million in order to induce BT to waive its rights under and agree to
terminate, the MCI BT Merger Agreement; (iii) BT agreed to support and vote its
shares of Class A common stock in favor of the Merger; and (iv) BT agreed to
exercise its call option to acquire the Company's share in Concert
Communications Services ("Concert CS") immediately following the effective time
of the Merger. The Company will be a distributor of Concert CS services on a
nonexclusive basis to customers in the U.S. for at least two years and as many
as five years following BT's exercise of its call option.
Page 24
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
NUMBER
OF CURRENT
SHARES COST VALUE
-------- ------ ----------
DESCRIPTION/ISSUER
- -------------------
LOANS TO PARTICIPANTS
*Participant loan accounts
<S> <C> <C> <C> <C>
(rates range 7%-10%) $ 0 $ 730,713
(maturities range 1998-2012) -----------
INTEREST IN COMMON/COLLECTIVE TRUSTS
*Putnam Stable Value Fund 4,141,544 4,141,544
*Mellon Bank Temporary
Investment Fund 8,448 $ 8,448
-----------
Total interest in common/collective
trusts $ 4,149,992
-----------
INTEREST IN REGISTERED INVESTMENT COMPANIES
American Funds EuroPacific Growth Fund 7,656 211,605 199,234
*Dreyfus Basic S&P 500 Stock Index Fund 134,602 1,834,610 2,768,769
*Putnam Voyager Fund 188,139 2,806,046 3,584,039
*Putnam New Opportunities Fund 9,336 408,135 454,197
*Putnam Balanced Retirement Fund 76,028 848,925 827,943
-----------
Total interest in registered investment companies 7,834,182
-----------
GUARANTEED INVESTMENT CONTRACTS**
Allstate Life Insurance (5.90% matures 7/1/98) 779,404 779,404
John Hancock Mutual Life (8.05% matures 6/30/99) 1,022,642 1,022,642
-----------
Total guaranteed investment contracts 1,802,046
-----------
COMMON STOCK
* MCI Communications Corporation 196,706 4,144,435 8,421,574
-----------
TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $22,938,507
===========
* Denotes a party-in-interest
** Current value is considered to be contract value
Page 25
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE II
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
ITEM 27d SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Transaction or series of transactions exceeding 5% of beginning fair value of
plan assets for the plan year January 1, 1997 to December 31, 1997 are
considered reportable transactions. Fair value at January 1, 1997 is
$17,088,730. Five percent (5%) of fair value is $854,437.
Expense Current Value
Identity of Description Purchase Selling Lease Incurred With Cost of of Asset on Net
Party Involved of Asset Price Price Rental Transaction Asset Transaction Date Gain/(Loss)
- -------------- ----------- -------- ------- ------ ------------- ------- ---------------- -----------
Mellon Trust
<S> <C> <C> <C> <C> <C>
EB Temporary $ 867,373 $ 870,041 $1,737,413 $1,737,413 $ 0
Investment Fund 488 Purchases 197 Sales
Dreyfus Basic
S&P 500 Stock 880,164 594,110 1,261,089 1,474,274 213,185
Index Fund 78 Purchases 37 Sales
Putnam 1,410,185 746,152 2,156,337 2,421,814 265,477
Voyager Fund 74 Purchases 55 Sales
MCI
Common Stock 2,324,033 2,672,529 4,996,562 4,996,562 0
Fund 44 Purchases 107 Sales
Putnam 2,190,510 1,326,753 3,517,263 3,517,263 0
Stable Value 77 Purchases 70 Sales
Fund
Putnam 760,901 178,520 928,547 939,420 11,056
Balanced 83 Purchases 16 Sales
Retirement Fund
</TABLE>
Page 26
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan sponsor of the Western Union International, Inc. 401(k) Plan
for Collectively Bargained Employees has duly caused this annual report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY
BARGAINED EMPLOYEES
Date: June 26, 1998
By: Frank R. Conrad
---------------------------------
Frank R. Conrad
Controller
Western Union International, Inc.
Page 27
<PAGE>
Exhibit 23
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
EIN: 13-1989550
CONSENT OF INDEPENDENT ACCOUNTANTS
-----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (No.
333-12849) of MCI Communications Corporation of our report dated June
8, 1998, appearing on page 3 of this Form 11-K.
PRICE WATERHOUSE LLP
Washington, D.C.
June 26, 1998
Page 28
<PAGE>
Exhibit 99
DOL FILING CONFIRMATION
I certify that the Plan Administrator of the Western Union
International, Inc. 401(k) Plan for Collectively Bargained Employees
has received a Statement of Assets and Liabilities and also that this
statement has been filed directly with the United States Department of
Labor by:
1) Mellon Bank, N.A. (EIN # 25-0659206)
for the following investment arrangement(s):
EIN#
-------------
Mellon Bank Temporary Investment Fund 25-078093-980
And
2) Putnam Fiduciary Trust Company (EIN # 04-2777224) for the following
investment arrangement(s):
EIN#
-------------
Putnam Stable Value Fund 04-3159710
WESTERN UNION INTERNATIONAL, INC.
401(k) PLAN FOR COLLECTIVELY
BARGAINED EMPLOYEES
Date: June 26, 1998
By: Frank R. Conrad
---------------------------------
Frank R. Conrad
Controller
Western Union International, Inc.
Page 29
