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: MCI Communications Corporation 401(k) Plan
for Non-Exempt Employees
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office: MCI Communications Corporation,
1801 Pennsylvania Avenue, NW, Washington, DC 20006
Page 1
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
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 5,6
Notes to Financial Statements 7-36
Additional Information:
Schedule I.
Schedule of Assets Held for
Investment Purposes at
December 31, 1997 37
Schedule II.
Schedule of Reportable
Transactions for the year
ended December 31, 1997 38
Signature 39
Exhibits:
23. Consent of Independent Accountants 40
99. Certification Regarding Certain
Investment Arrangements 41
</TABLE>
Page 2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrative
Committee of the MCI Communications Corporation
401(k) Plan for Non-Exempt Employees
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the MCI Communications Corporation 401(k) Plan for Non-Exempt Employees 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
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MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
DECEMBER 31
-----------
1997 1996
------------- -------------
<S> <C> <C>
Value of interest in master trust $ 141,384,776 $ 105,131,594
------------- -------------
Net assets available for benefits $ 141,384,776 $ 105,131,594
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ADDITIONS
- ---------
Contributions:
<S> <C>
Participants $ 17,023,474
Non-cash employer 8,218,103
Rollovers 1,014,702
Transfers from ESOP 35,755
--------------
Total contributions 26,292,034
--------------
Earnings on investments:
Interest on participant loans 394,637
Interest on guaranteed investment contracts 837,471
Dividends on common stock 87,670
Net realized gain on sale of common stock 435,539
Unrealized appreciation of common stock 16,851,632
Net realized/unrealized gain from registered
investment companies 7,805,679
--------------
Total earnings on investments 26,412,628
--------------
Total additions 52,704,662
--------------
DEDUCTIONS
- ----------
Participant benefit payments 8,658,660
Account maintenance fees 41,492
--------------
Net increase 44,004,510
Transfers to plan (7,751,328)
Net assets available for benefits,
beginning of year 105,131,594
--------------
Net assets available for benefits,
end of year $ 141,384,776
==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 5
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ADDITIONS
- ---------
Contributions:
<S> <C>
Participants $ 14,924,229
Non-cash employer 7,469,320
Rollovers 524,098
Transfers from ESOP 178,370
--------------
Total contributions 23,096,017
--------------
Earnings on investments:
Interest on participant loans 349,003
Interest on guaranteed investment contracts 930,446
Dividends on common stock 79,756
Net realized gain on sale of common stock 195,393
Unrealized appreciation of common stock 9,887,614
Net realized/unrealized gain from registered
investment companies 3,977,511
--------------
Total earnings on investments 15,419,723
--------------
Total additions 38,515,740
--------------
DEDUCTIONS
- ----------
Participant benefit payments 7,538,970
Account maintenance fees 42,313
--------------
Net increase 30,934,457
Net interplan transfers 10,402,344
Net assets available for benefits,
beginning of year 63,794,793
--------------
Net assets available for benefits,
end of year $ 105,131,594
==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 6
<PAGE>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
NOTES TO FINANCIAL STATEMENTS ON FORM 11-K
December 31, 1997 and 1996
NOTE 1- DESCRIPTION OF THE PLAN
The following brief description of the MCI Communications Corporation 401(k)
Plan for Non-Exempt Employees (the "Plan" or "401(k)") is provided for general
information purposes only. Participants should refer to the Plan document for
more complete information. The Plan is subject to the applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Effective January 1, 1996, the MCI Consumer Markets 401(k) and Employee Stock
Ownership Plan and the MCI Communications Corporation Employee Stock Ownership
and 401(k) Plan ("MCI Plan") were restructured and renamed the MCI
Communications Corporation ESOP and 401(k) Plan for Non-Exempt Employees
("Non-Exempt Plan") and the MCI Communications Corporation ESOP and 401(k) Plan
for Exempt Employees ("Exempt Plan"), respectively. Also, the plan sponsorship
changed from MCI Telecommunications Corporation to MCI Communications
Corporation (the "Company"). The Non-Exempt Plan is comprised of two parts: Part
I is an employee stock ownership plan ("ESOP"), Part II is an Internal Revenue
Code Section 401(k) plan. The accompanying financial statements are solely those
of Part II and are not intended to present the net assets available for benefits
or the changes in net assets available for benefits of the MCI Communications
Corporation ESOP and 401(k) Plan for Non-Exempt Employees taken as a whole. The
Company separately prepares an annual report on the overall MCI Communications
Corporation ESOP and 401(k) plan for Non-Exempt Employees which is submitted to
the Internal Revenue Service ("IRS") on Form 5500 and is made available to all
employees upon request.
The 401(k) assets of the Non-Exempt Plan, along with the 401(k) assets of the
Exempt Plan, the Darome Teleconferencing, Inc. 401(k) Plan, the Systemhouse Inc.
401(k) Savings Plan, and the MCI Wireless, Inc. Employees Savings Plan,
participate in the MCI Communications Corporation Defined Contribution Master
Trust (the "Master Trust"). This arrangement facilitates the administration of
the plans as described below. Under the terms of the master trust agreement,
each plan has a specific interest in all assets and liabilities of the trust.
Page 7
<PAGE>
Contributions
- -------------
The Plan is a defined contribution, deferred savings plan. Effective January 1,
1997, non-exempt employees become eligible to participate under the Plan upon
completion of a three consecutive, full calendar month period from his or her
date of hire and attainment of age 21. Prior to 1997, non-exempt employees
became eligible to participate under the Plan upon completion of one year of
service with 1,000 hours of service and attainment of age 21. A non-exempt
employee is an hourly employee who is not exempt from the overtime pay
requirements of the Fair Labor Standards Act of 1938, as amended. As a result of
the restructuring of the Plan, the Plan was amended to include all non-exempt
participants from the MCI Plan. All exempt participants in the Plan were
transferred to the Exempt Plan. No further modifications were made to the Plan's
provisions. Eligible employees may elect to defer up to 15% of eligible
compensation on a pre-tax basis, to be contributed to the Plan by the Company on
behalf of such employees ("Elective Contributions"). A participant who has
completed a 12-consecutive-month period starting on his or her date of hire in
which the participant has completed 1,000 hours of service is eligible to
receive a Company matching contribution on the first 6% of the participant's
Elective Contributions. Company matching contributions are made 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.
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.
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. The net asset value for EuroPacific Growth Fund was $26.02 and
$26.04 at December 31, 1997 and 1996, respectively.
- Dreyfus Basic 500 Stock Index Fund
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. 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 trustee. 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 trustee. The net asset value for Putnam Balanced Retirement Fund was
$10.89 and $10.34 at December 31, 1997 and 1996, respectively.
Page 9
<PAGE>
The fund consists primarily of individually held guaranteed investment
contracts (GICs) issued by insurance companies and contracts with other
financial institutions 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 5.6% to 8.08% at December 31, 1997.
<TABLE>
<CAPTION>
The following guaranteed investment contracts were held individually by
the Master Trust as of December 31:
Contract Value
--------------
Contract
1997 1996 Rate
---- ---- ----
<S> <C> <C> <C>
A I G Life Insurance $ 5,323,731 $ 0 6.53%
A I G Life Insurance 3,155,722 0 7.00%
Aetna Life Insurance 21,652,482 20,306,182 6.63%
Allstate Life Insurance 6,856,228 6,474,248 5.90%
Allstate Life Insurance 2,000,314 4,000,628 5.90%
Canada Life Assurance Company 5,256,848 0 7.30%
Continental Assurance Company 3,133,924 0 6.78%
John Hancock Mutual Life Insurance 15,409,255 14,261,226 8.05%
Life of Virginia 5,053,558 0 6.28%
New York Life Insurance 3,174,974 8,847,294 6.82%
New York Life Insurance 3,156,159 5,803,475 8.08%
Pacific Mutual Life Insurance 4,981,496 4,642,586 7.30%
Pacific Mutual Life Insurance 4,333,876 1,287,816 7.36%
Peoples Security Insurance Company 3,500,453 7,000,905 5.72%
Peoples Security Insurance Company 3,367,299 5,220,011 5.86%
Peoples Security Insurance Company 4,013,633 0 6.32%
Principal Mutual Life Insurance 3,409,732 3,409,732 6.60%
Principal Mutual Life Insurance 4,081,625 0 6.78%
Protective Life Insurance 3,049,036 0 6.57%
Prudential Life Insurance 3,225,446 6,028,870 7.00%
Security Life of Denver 4,124,942 0 6.74%
TransAmerica Life Insurance 1,713,081 3,423,163 5.60%
TransAmerica Life Insurance 2,714,130 4,071,194 7.25%
The Stable Asset Fund also includes assets held in the Mellon Bank
Temporary Investment Fund (TIF) which are used to satisfy any liquidity
needs. The TIF also serves as a temporary account to hold funds from
maturing interests.
</TABLE>
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 the MCI 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 who are 100% vested are permitted to diversify their
Matching Contributions balance as of the prior year end once per Plan Year.
During 1997 and 1996, 39,950 and 39,393 shares of MCI Communications Corporation
Common Stock at a fair market value on the diversification date of $1,533,250
and $1,097,807, respectively, were transferred from the Employer Matching
Contributions accounts to the Elective Contributions accounts pursuant to these
provisions. Participants may change the allocation of their future contributions
among the funds with unlimited frequency. Participants' allocations are affected
by the last change placed prior to payroll processing.
Certain participants have the right to diversify a portion of their account in
the ESOP, Part I of the Non-Exempt Plan, and transfer that portion of their
account to the 401(k). Participants in the ESOP, who have attained at least 55
years of age and have been a participant in the ESOP for at least 10 years, are
eligible to diversify under these provisions. During 1997 and 1996, 934 and
5,319 shares of MCI Communications Corporation Common Stock at a fair market
value on the diversification date of $35,755 and $178,370, respectively, were
transferred from the ESOP to the 401(k) pursuant to these provisions.
Participant Loans
- -----------------
The Plan allows participants to borrow up to one-half of the vested account
balance (or $50,000, whichever is less). The minimum loan amount is $1,000 and
the minimum term of a loan is one year. The maximum term of a loan is five years
for a general purpose loan and fifteen years for a primary residence loan. Only
one loan of each type, general purpose and primary residence, may be outstanding
at any time. 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'
Page 11
<PAGE>
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, at any time
prior to maturity, by a cashier's or certified check. During Plan years ended
December 31, 1997 and 1996, $3,663,900 and $3,598,955 in loans were disbursed
and principal repayments of $1,953,680 and $1,783,718, 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 59.5 and can
demonstrate an economic hardship (as defined in the Plan). A participant who has
attained age 59.5 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
account are forfeited and used to offset future Company matching contributions.
Participants who terminate employment and elect to keep their funds in the Plan
are charged a $20 annual account maintenance fee. The Plan provides for
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 $1,825,168 and
$990,812, respectively, which included 41,549 and 28,996 forfeited shares of MCI
Communications Corporation Common Stock, at year-end fair market values of
$1,778,827 and $947,792, 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
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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, a Mellon Bank mutual fund and collective
trust account, and loans to participants 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 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 the Company's 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 of the
distributed shares is recorded as a net gain or loss on disposition of assets.
Purchase and sales of securities are recorded on the trade date.
The Plan's interest in registered investment companies and employer securities
are stated at fair value, measured by the quoted current market price. Units in
collective trusts are valued at the net asset value as reported by such trusts
at the 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 account maintenance 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." 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
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<PAGE>
held by the Plan at December 31, 1997, and 1996 were fully-benefit responsive,
and therefore are valued at contract value.
Participant loans are valued at cost which approximates fair value.
Benefit payments are recorded when paid.
Administrative expenses of the Plan are paid by the Company.
NOTE 3 - MASTER TRUST
The Company established 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.
The Master Trust consists of a pool of individual investments in which the Plan,
the Exempt Plan, the Darome Teleconferencing, Inc. 401(k) Plan (effective
November 20, 1996) the Systemhouse Inc. 401(k) Savings Plan (effective January
1, 1997) and the MCI Wireless, Inc. Employee Savings Plan (effective April 9,
1997) have shared participation through Master Trust Units. Net assets and net
investment gains and losses are allocated to each participating plan based on
units of participation held by the respective plans. Each unit represents a
specific interest in the Master Trust. The Plan's specific interest in the
Master Trust of $141,384,776 and $105,131,594 represents approximately 11% and
13% of the net assets of the Master Trust as of December 31, 1997 and 1996,
respectively.
<TABLE>
<CAPTION>
Page 14
<PAGE>
The fund information below presents the percentage interest of each plan in the Master Trust using specific identification:
Percentage Interest
Master Trust -------------------
Plan Name Investment Account 12/31/97 12/31/96
- --------------------- ---------------------------------- -------- --------
<S> <C> <C>
MCI Communications EuroPacific Growth Fund 89.07% 88.39%
Corporation Dreyfus Basic 500 Stock Index Fund 87.94% 88.44%
401(k) Plan Putnam Voyager Fund 84.79% 90.92%
For Exempt Putnam Balanced Fund 72.91% 86.21%
Employees Stable Asset Fund 80.32% 86.40%
EIN: 52-0886267 Putnam New Opportunities Fund 75.97% 88.34%
Plan No.: 001 MCI Common Stock Fund 86.83% 85.88%
Participant Loans 78.58% 80.73%
MCI Communications EuroPacific Growth Fund 09.54% 11.33%
Corporation Dreyfus Basic 500 Stock Index Fund 10.34% 11.41%
401(k) Plan Putnam Voyager Fund 07.86% 09.08%
For Non-Exempt Putnam Balanced Fund 09.74% 13.25%
Employees Stable Asset Fund 11.94% 13.35%
EIN: 52-0886267 Putnam New Opportunities Fund 08.77% 11.60%
Plan No.: 003 MCI Common Stock Fund 13.17% 14.12%
Participant Loans 17.60% 19.18%
Darome EuroPacific Growth Fund 00.22% 00.28%
Teleconferencing, Dreyfus Basic 500 Stock Index Fund 00.14% 00.15%
Inc. 401(k) Plan Putnam Voyager Fund 00.02% 00.00%
EIN: 13-2745892 Putnam Balanced Fund 00.18% 00.53%
Plan No.: 020 Stable Asset Fund 00.18% 00.25%
Putnam New Opportunities Fund 00.07% 00.06%
MCI Common Stock Fund 00.00% 00.00%
Participant Loans 00.12% 00.09%
Systemhouse Inc. EuroPacific Growth Fund 01.12%
401(k) Savings Plan Dreyfus Basic 500 Stock Index Fund 00.93%
EIN: 13-2745892 Putnam Voyager Fund 06.62%
Plan No.: 030 Putnam Balanced Fund 16.15%
Stable Asset Fund 07.20%
Putnam New Opportunities Fund 15.16%
MCI Common Stock Fund 00.00%
Participant Loans 03.02%
MCI Wireless, Inc. EuroPacific Growth Fund 00.05%
Employee Savings Dreyfus Basic 500 Stock Index Fund 00.65%
Plan Putnam Voyager Fund 00.71%
EIN: 13-2745892 Putnam Balanced Fund 01.02%
Plan No.: 040 Stable Asset Fund 00.36%
Putnam New Opportunities Fund 00.03%
MCI Common Stock Fund 00.00%
Participant Loans 00.68%
The following presents the net trust assets available for benefits and changes
in net trust assets available for benefits for the Master Trust in which the
Plan, the Exempt Plan, the Darome Teleconferencing, Inc. 401(k) Plan, the
Systemhouse Inc. 401(k) Savings Plan, and the MCI Wireless, Inc. Employee
Savings Plan participate.
</TABLE>
Page 15
<PAGE>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EuroPacific Dreyfus Putnam Stable
Growth Basic 500 Voyager Asset
Fund Stock Index Fund Fund
ASSETS ------------- ------------- ------------- -------------
------
<S> <C> <C> <C> <C>
Employer contributions receivable $ 0 $ 0 $ 0 $ 0
Non-interest bearing cash 165 0 7,162 391
Other receivables 12,055 107,970 33,402 27,276
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 0 17,727 0 10,811,659
Registered investment companies 40,233,423 128,956,690 * 185,135,550 * 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 116,687,944 *
------------- ------------- ------------- -------------
Total trust assets 40,245,643 129,082,387 185,176,114 127,527,270
------------- ------------- ------------- -------------
LIABILITIES
-----------
Operating payables 12,046 107,277 32,760 568,342
------------- ------------- ------------- -------------
Net trust assets available for benefits $ 40,233,597 $128,975,110 $185,143,354 $126,958,928
============= ============= ============= =============
Participating Plan Interests
- ----------------------------
MCI 401(k) Plan for Exempt Employees $ 35,838,466 $113,405,308 $156,994,098 $101,982,553
MCI 401(k) Plan for Non-Exempt Employees 3,836,649 13,339,904 14,546,377 15,154,822
Darome Teleconferencing, Inc. 401(k) Plan 90,314 180,597 32,835 223,208
Systemhouse Inc. 401(k) Savings Plan 449,377 1,204,697 12,250,898 9,136,249
MCI Wireless Inc. Employees Savings Plan 18,791 844,604 1,319,146 462,096
------------- ------------- ------------- -------------
Total $ 40,233,597 $128,975,110 $185,143,354 $126,958,928
============= ============= ============= =============
* Investment represents 5% or more of the Trust's net assets.
</TABLE>
Page 16
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
Putnam Putnam MCI
New Balanced Common Participant
ASSETS Opportunities Retirement Stock Loans Total
------ ------------- ------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Employer contributions receivable $ 0 $ 0 $ 1,857 $ 0 $ 1,857
Non-interest bearing cash 48,356 5,153 1 0 61,228
Other receivables 193,132 1,312 182,707 0 557,854
Investments, at fair value:
Common stock 0 0 565,998,991 * 0 565,998,991
Common/collective trusts 0 0 13,545 0 10,842,931
Registered investment companies 93,649,233 * 62,254,492 * 0 0 510,229,388
Participant loans 0 0 0 32,237,962 32,237,962
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 116,687,944
------------- ------------- ------------- ------------ ---------------
Total trust assets 93,890,721 62,260,957 566,197,101 32,237,962 1,236,618,155
------------- ------------- ------------- ------------ ---------------
LIABILITIES
-----------
Operating payables 192,427 825 1,379 0 915,056
------------- ------------- ------------- ------------ ---------------
Net trust assets available for benefits $ 93,698,294 $ 62,260,132 $566,195,722 $32,237,962 $1,235,703,099
============= ============= ============= ============ ===============
Participating Plan Interests
- ----------------------------
MCI 401(k) Plan for Exempt Employees $ 71,182,035 $ 45,391,628 $491,650,063 $25,330,235 $1,041,774,386
MCI 401(k) Plan for Non-Exempt Employees 8,221,262 6,065,509 74,545,659 5,674,594 141,384,776
Darome Teleconferencing, Inc. 401(k) Plan 66,075 112,924 0 38,902 744,855
Systemhouse Inc. 401(k) Savings Plan 14,204,310 10,056,167 0 974,027 48,275,725
MCI Wireless Inc. Employees Savings Plan 24,612 633,904 0 220,204 3,523,357
------------- ------------- ------------- ------------ ---------------
Total $ 93,698,294 $ 62,260,132 $566,195,722 $32,237,962 $1,235,703,099
============= ============= ============= ============ ===============
* Investment represents 5% or more of the Trust's net assets.
</TABLE>
Page 17
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
EuroPacific Dreyfus Putnam Stable
Growth Basic 500 Voyager Asset
Fund Stock Index Fund Fund
ASSETS ------------- ------------- ------------ ------------
------
Contributions receivable:
<S> <C> <C> <C> <C>
Participant $ 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 trust 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 trust 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
============= ============= ============= =============
* Investment represents 5% or more of the Trust's net assets.
</TABLE>
Page 18
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
ASSETS ------------- ------------- ------------- ------------- -------------
------
Contributions receivable:
<S> <C> <C> <C> <C> <C>
Participant $ 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 trust 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 trust 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
============= ============= ============= ============= =============
* Investment represents 5% or more of the Trust's net assets.
</TABLE>
Page 19
<PAGE>
<TABLE>
<CAPTION>
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, 1997
EuroPacific Dreyfus Putnam Stable Putnam
Growth Basic 500 Voyager Asset New
ADDITIONS Fund Stock Index Fund Fund Opportunities
- --------- ------------- ------------- ------------- ------------- -------------
Contributions:
<S> <C> <C> <C> <C> <C>
Participants $ 9,942,547 $ 15,064,398 $ 21,978,415 $ 10,388,735 $ 17,446,544
Non-cash employer 0 0 0 0 0
Rollovers 973,904 1,558,008 1,679,565 1,707,440 1,982,320
Transfers from ESOP 18,800 51,461 17,738 42,465 9,582
------------- ------------- ------------- ------------- -------------
Total contributions 10,935,251 16,673,867 23,675,718 12,138,640 19,438,446
------------- ------------- ------------- ------------- -------------
Earnings on investments:
Interest on participant loans 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 7,457,506 0
Dividends on common stock 0 0 0 0 0
Net realized gain on sale of common stock 0 0 0 0 0
Unrealized appreciation of common stock 0 0 0 0 0
Net realized/unrealized gain from registered
investment companies 2,116,030 27,006,914 35,525,129 0 14,666,957
------------- ------------- ------------- ------------- -------------
Total earnings on investments 2,116,030 27,006,914 35,525,129 7,457,506 14,666,957
------------- ------------- ------------- ------------- -------------
Total additions 13,051,281 43,680,781 59,200,847 19,596,146 34,105,403
DEDUCTIONS
- -----------
Participant benefit payments 1,863,592 4,773,396 8,686,220 9,809,285 5,269,496
Account maintenance fees 7,419 15,209 24,899 21,925 13,762
------------- ------------- ------------- ------------- -------------
Net increase (decrease) 11,180,270 38,892,176 50,489,728 9,764,936 28,822,145
Transfers from (to):
Other master trust investment accounts 2,791,973 11,033,346 (11,850,551) (1,999,058) (2,569,972)
Net loans (87,194) (675,645) (1,035,065) (828,565) (249,147)
Western Union International Collectively
Bargained Plan 0 33,220 88,017 112,372 6,361
Systemhouse Inc. 401(k) Savings Plan 0 0 10,958,088 10,325,999 13,329,918
MCI Wireless, Inc. Employees Savings Plan 0 674,981 1,036,215 555,849 0
Other non-related plans 691,088 1,374,791 1,795,254 3,757,610 1,859,772
Net trust assets available for benefits, at
beginning of year 25,657,460 77,642,241 133,661,668 105,269,785 52,499,217
------------- ------------- ------------- ------------- -------------
Net assets available for benefits, at
end of year $ 40,233,597 $128,975,110 $185,143,354 $126,958,928 $ 93,698,294
============= ============= ============= ============= =============
</TABLE>
Page 20
<PAGE>
<TABLE>
<CAPTION>
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, 1997
Putnam MCI
Balanced Common Participant
Retirement Stock Loans Total
ADDITIONS ------------- -------------- ------------- ---------------
- ---------
Contributions:
<S> <C> <C> <C> <C>
Participants $ 9,118,460 $ 35,595,332 $ 0 $ 119,534,431
Non-cash employer 0 54,541,014 0 54,541,014
Rollovers 1,213,115 5,529,325 0 14,643,677
Transfers from ESOP 16,524 416,859 0 573,429
------------- -------------- ------------- ---------------
Total contributions 10,348,099 96,082,530 0 189,292,551
------------- -------------- ------------- ---------------
Earnings on investments:
Interest on participant loans 0 0 2,446,123 2,446,123
Interest on guaranteed investment contracts 0 0 0 7,457,506
Dividends on common stock 0 657,327 0 657,327
Net realized gain on sale of common stock 0 2,315,418 0 2,315,418
Unrealized appreciation of common stock 0 125,184,767 0 125,184,767
Net realized/unrealized gain from registered
investment companies 7,946,598 0 0 87,261,628
------------- -------------- ------------- ---------------
Total earnings on investments 7,946,598 128,157,512 2,446,123 225,322,769
------------- -------------- ------------- ---------------
Total additions 18,294,697 224,240,042 2,446,123 414,615,320
DEDUCTIONS
Participant benefit payments 3,621,475 22,637,430 2,862,352 59,523,246
Account maintenance fees 9,427 62,108 0 154,749
------------- ------------- ------------- ---------------
Net increase (decrease) 14,663,795 201,540,504 (416,229) 354,937,325
Transfers from (to):
Other master trust investment accounts 6,462,184 (3,867,922) 0 0
Net loans (253,263) (1,759,192) 4,888,071 0
Western Union International Collectively
Bargained Plan 0 105,416 15,072 360,458
Systemhouse Inc. 401(k) Savings Plan 10,426,100 0 950,004 45,990,109
MCI Wireless, Inc. Employees Savings Plan 563,629 0 172,261 3,002,935
Other non-related plans 1,064,043 702,708 417,838 11,663,104
Net trust assets available for benefits, at
beginning of year 29,333,644 369,474,208 26,210,945 819,749,168
------------- ------------- ------------- ---------------
Net trust assets available for benefits, at
end of year $ 62,260,132 $566,195,722 $ 32,237,962 $1,235,703,099
============= ============= ============= ===============
</TABLE>
Page 21
<PAGE>
<TABLE>
<CAPTION>
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
EuroPacific Dreyfus Putnam Stable Putnam
Growth Basic 500 Voyager Asset New
Fund Stock Index Fund Fund Opportunities
ADDITIONS ------------- ------------- ------------- ------------- -------------
- ---------
Contributions:
<S> <C> <C> <C> <C> <C>
Participants $ 7,252,491 $ 11,138,992 $ 21,643,332 $ 10,657,509 $ 14,051,271
Non-cash employer 0 0 0 0 0
Rollovers 738,656 722,245 1,607,984 906,949 1,969,435
Transfers from ESOP 84,030 86,897 334,056 92,767 343,735
------------- ------------- ------------- ------------- -------------
Total contributions 8,075,177 11,948,134 23,585,372 11,657,225 16,364,441
------------- ------------- ------------- ------------- -------------
Earnings on investments:
Interest on participant loans 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 7,188,820 0
Dividends on common stock 0 0 0 0 0
Net realized gain on sale of common stock 0 0 0 0 0
Unrealized appreciation of common stock 0 0 0 0 0
Net realized/unrealized gain from registered
investment companies 3,598,035 14,154,926 14,497,797 0 3,295,115
------------- ------------- ------------- ------------- -------------
Total earnings on investments 3,598,035 14,154,926 14,497,797 7,188,820 3,295,115
------------- ------------- ------------- ------------- -------------
Total additions 11,673,212 26,103,060 38,083,169 18,846,045 19,659,556
DEDUCTIONS
Participant benefit payments 984,231 3,597,461 6,993,973 8,873,275 2,135,703
Account maintenance fees 6,163 14,225 27,072 27,308 11,396
------------- ------------- ------------- ------------- -------------
Net increase 10,682,818 22,491,374 31,062,124 9,945,462 17,512,457
Transfers from (to):
Other master trust investment accounts 137,996 (2,725,774) (3,558,778) (9,805,983) 6,817,424
Net loans (96,843) (788,574) (1,439,817) (1,215,837) (313,333)
Western Union International Collectively
Bargained Plan 215 38,526 41,125 42,069 88
Darome Teleconferencing, Inc. 401(k) Plan 67,035 107,960 0 259,972 31,009
Net trust assets available for benefits, at
beginning of year 14,866,239 58,518,729 107,557,014 106,044,102 28,451,572
------------- ------------- ------------- ------------- -------------
Net trust assets available for benefits, at
end of year $ 25,657,460 $ 77,642,241 $133,661,668 $105,269,785 $ 52,499,217
=========== =========== =========== ========== ===========
</TABLE>
Page 22
<PAGE>
<TABLE>
<CAPTION>
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
Putnam MCI
Balanced Common Participant
Retirement Stock Loans Total
ADDITIONS ------------- ------------- ------------- -------------
Contributions:
<S> <C> <C> <C> <C>
Participants $ 7,166,398 $ 16,670,642 $ 0 $ 88,580,635
Non-cash employer 0 42,788,843 0 42,788,843
Rollovers 648,448 977,692 0 7,607,409
Transfers from ESOP 123,300 53,920 0 1,118,705
------------- ------------- ------------- -------------
Total contributions 7,974,146 60,491,097 0 140,095,592
------------- ------------- ------------- -------------
Earnings on investments:
Interest on participant loans 0 0 1,978,777 1,978,777
Interest on guaranteed investment contracts 0 0 0 7,188,820
Dividends on common stock 0 525,391 0 525,391
Net realized gain on sale of common stock 0 1,003,548 0 1,003,548
Unrealized appreciation of common stock 0 69,875,942 0 69,875,942
Net realized/unrealized gain from registered
investment companies 3,239,957 0 0 38,785,830
------------- ------------- ------------- -------------
Total earnings on investments 3,239,957 71,404,881 1,978,777 119,358,308
------------- ------------- ------------- -------------
Total additions 11,214,103 131,895,978 1,978,777 259,453,900
DEDUCTIONS
Participant benefit payments 1,520,211 16,137,642 1,801,966 42,044,462
Account maintenance fees 7,390 47,232 0 140,786
------------- ------------- ------------- -------------
Net increase 9,686,502 115,711,104 176,811 217,268,652
Transfers from (to):
Other master trust investment accounts 575,236 8,559,879 0 0
Net loans (182,289) (1,514,441) 5,551,134 0
Western Union International Collectively
Bargained Plan 29 84,839 10,786 217,677
Darome Teleconferencing, Inc. 401(k) Plan 149,708 0 24,881 640,565
Net trust assets available for benefits, at
beginning of year 19,104,458 246,632,827 20,447,333 601,622,274
------------- ------------- ------------- -------------
Net trust assets available for benefits, at
end of year $ 29,333,644 $369,474,208 $ 26,210,945 $819,749,168
============= ============= ============= =============
</TABLE>
Page 23
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
SCHEDULE OF MASTER TRUST PARTICIPATION
Current Value of Interest Year Ended December 31, 1997
----------------------------- ----------------------------------------------------------------
Participant
December 31, December 31, Benefit Net
Investment Account Interest: 1997 1996 Contributions Payments Net Loans Net Transfers Appreciation
-------------- -------------- -------------- ---------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
EuroPacific Growth Fund $ 3,836,649 $ 2,907,841 $ 1,200,931 $ 220,622 $ (40,144) $ (264,806) $ 253,449
Dreyfus Basic 500 Stock Index Fund 1,339,904 8,857,738 2,046,417 538,458 (134,923) 314,179 2,794,951
Putnam Voyager Fund 14,546,377 12,133,429 2,900,573 843,854 (219,029) (2,127,861) 2,703,119
Putnam Balanced Retirement Fund 6,065,509 3,887,960 1,600,666 354,266 (56,339) 229,595 757,893
Stable Asset Fund 15,154,822 14,054,922 2,119,981 1,347,321 (204,654) (305,577) 837,471
Putnam New Opportunities Fund 8,221,262 6,090,028 2,458,130 500,315 (70,638) (1,052,210) 1,296,267
MCI Common Stock Fund 74,545,659 52,171,562 13,965,336 4,291,221 (589,856) (4,085,003 17,374,841
Participant Loans
(interest rates range 7%-11%) 5,674,594 5,028,144 0 604,095 1,315,583 (459,645) 394,637
-------------- -------------- -------------- --------------- ------------- ------------- -------------
Total $ 141,384,776 $ 105,131,594 $ 26,292,034 $ 8,700,152 $ 0 $ (7,751,328) $ 26,412,628
============== ============== ============== =============== ============= ============= =============
</TABLE>
Page 24
<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 as of and for the years ended December 31, 1997 and 1996
are presented on the following pages.
Page 25
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
EuroPacific Dreyfus Putnam Stable
Growth Basic 500 Voyager Asset
Fund Stock Index Fund Fund
------------ ------------ -------------- -------------
ASSETS
------
<S> <C> <C> <C> <C>
Employer contribution receivable $ 0 $ 0 $ 0 $ 0
Other receivables 0 16,211 1,001 3,256
------------ ------------ -------------- -------------
Total receivables 0 16,211 1,001 3,256
Non-interest bearing cash 16 0 563 47
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 0 4,707 0 1,294,190
Registered investment companies 3,836,637 13,321,859 * 14,544,827 * 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 13,862,314 *
------------- ------------- -------------- -------------
Total assets 3,836,653 13,342,777 14,546,391 15,159,807
------------- ------------- -------------- -------------
LIABILITIES
-----------
Operating payables 4 2,873 14 4,985
------------- ------------- -------------- -------------
Net assets available for benefits $ 3,836,649 $ 13,339 904 $ 14,546,377 $ 15,154,822
============= ============= ============== =============
* Investment represents 5% or more of the Plan's net assets.
</TABLE>
Page 26
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
------------- ------------- ------------- ------------ ----------------
ASSETS
------
<S> <C> <C> <C> <C> <C>
Employer contribution receivable $ 0 $ 0 $ 18 $ 0 $ 18
Other receivables 12,876 0 32 0 33,376
------------- ------------- ------------- ------------ ----------------
Total receivables 12,876 0 50 0 33,394
Non-interest bearing cash 4,243 502 0 0 5,371
Investments, at fair value:
Common stock 0 0 74,543,884 * 0 74,543,884
Common/collective trusts 0 0 1,783 0 1,300,680
Registered investment companies 8,204,314 * 6,065,085 0 0 45,972,722
Participant loans 0 0 0 5,674,594 5,674,594
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 13,862,314
------------- ------------- ------------- ------------ ----------------
Total assets 8,221,433 6,065,587 74,545,717 5,674,594 141,392,959
------------- ------------- ------------- ------------ ----------------
LIABILITIES
-----------
Operating payables 171 78 58 0 8,183
------------- ------------- ------------- ------------- ---------------
Net assets available for benefits $ 8,221,262 $ 6,065,509 $ 74,545,659 $ 5,674,594 $ 141,384,776
============= ============= ============= ============= ===============
* Investment represents 5% or more of the Plan's net assets.
</TABLE>
Page 27
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
EuroPacific Dreyfus Putnam Stable
Growth Basic 500 Voyager Asset
Fund Stock Index Fund Fund
------------- ------------- ------------- -------------
ASSETS
------
Contributions receivable:
<S> <C> <C> <C> <C>
Participant $ 89 $ 52 $ 117 $ 117
Employer 0 0 0 0
Other receivables 1,375 1,923 6,553 961,312
------------ ------------ -------------- -------------
Total receivables 1,464 1,975 6,670 961,429
Non-interest bearing cash 0 0 1 83,936
Investments, at fair value:
Common stock 0 0 0 0
Common/collective trusts 26 3,103 427 285,211
Registered investment companies 2,910,068 8,854,641 * 12,133,001 * 0
Participant loans 0 0 0 0
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 12,757,728 *
------------- ------------- ------------- ------------
Total assets 2,911,558 8,859,719 12,140,099 14,088,304
------------- ------------- ------------- ------------
LIABILITIES
-----------
Operating payables 3,717 1,981 6,670 33,382
------------- ------------- ------------- ------------
Net assets available for benefits $ 2,907,841 $ 8,857,738 $ 12,133,429 $ 14,054,922
============= ============= ============= =============
* Investment represents 5% or more of the Plan's net assets.
</TABLE>
Page 28
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
Putnam Putnam MCI
New Balanced Common Participant
Opportunities Retirement Stock Loans Total
------------- ------------- -------------- ------------ -------------
ASSETS
------
Contributions receivable:
<S> <C> <C> <C> <C> <C>
Participant $ 199 $ 114 $ 147 $ 0 $ 836
Employer 0 0 508 0 508
Other receivables 639 52 25,658 0 997,512
------------ ------------- -------------- ------------ -------------
Total receivables 838 166 26,313 0 998,856
Non-interest bearing cash 0 0 0 0 83,937
Investments, at fair value:
Common stock 0 0 52,144,009 * 0 52,144,009
Common/collective trusts 5,064 601 1,249 0 295,681
Registered investment companies 6,084,956 * 3,887,359 0 0 33,870,025
Participant loans 0 0 0 5,028,114 5,028,114
Investments, at contract value:
Value of guaranteed investment contracts 0 0 0 0 12,757,728
------------ ------------- -------------- ------------ -------------
Total assets 6,090,858 3,888,126 52,171,571 5,028,114 105,178,349
------------ ------------- -------------- ------------ -------------
LIABILITIES
-----------
Operating payables 830 166 9 0 46,755
------------ ------------- -------------- ------------ -------------
Net assets available for benefits $ 6,090,028 $ 3,887,960 $ 52,171,562 $ 5,028,114 $105,131,594
============ ============= ============== ============ =============
* Investment represents 5% or more of the Plan's net assets.
</TABLE>
Page 29
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
EuroPacific Dreyfus Putnam Stable Putnam
Growth Basic 500 Voyager Asset New
Fund Stock Index Fund Fund Opportunities
ADDITIONS ------------- ------------- ------------- ------------ --------------
Contributions:
<S> <C> <C> <C> <C> <C>
Participants $ 1,140,523 $ 1,856,322 $ 2,763,793 $ 2,025,825 $ 2,357,639
Non-cash employer 0 0 0 0 0
Rollovers 60,331 190,095 136,780 94,156 100,491
Transfers from ESOP 77 0 0 0 0
------------- ------------- ------------- ------------- -------------
Total contributions 1,200,931 2,046,417 2,900,573 2,119,981 2,458,130
------------- ------------- ------------- ------------- -------------
Earnings on investments:
Interest on participant loans 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 837,471 0
Dividends on common stock 0 0 0 0 0
Net realized gain on sale of common stock 0 0 0 0 0
Unrealized appreciation of common stock 0 0 0 0 0
Net realized/unrealized gain from registered
investment companies 253,449 2,794,951 2,703,119 0 1,296,267
------------- ------------- ------------- ------------- -------------
Total earnings on investments 253,449 2,794,951 2,703,119 837,471 1,296,267
------------- ------------- ------------- ------------- -------------
Total additions 1,454,380 4,841,368 5,603,692 2,957,452 3,754,397
DEDUCTIONS
Participant benefit payments 218,583 534,720 837,695 1,340,585 496,749
Account maintenance fees 2,039 3,738 6,159 6,736 3,566
------------- ------------- ------------- ------------- -------------
Net increase (decrease) 1,233,758 4,302,910 4,759,838 1,610,131 3,254,082
Transfers from (to):
Other master trust investment accounts (98,140) 838,774 (1,236,269) (361,278) (701,404)
Net loans (40,144) (134,923) (219,029) (204,654) (70,638)
Western Union International Collectively
Bargained Plan 0 22,453 79,364 90,819 6,361
MCI 401(k) Plan for Exempt Employees (295,566) (818,520) (1,287,961) (913,530) (600,134)
Other non-related plans 128,900 271,472 317,005 878,412 242,967
Net assets available for benefits,
beginning of year 2,907,841 8,857,738 12,133,429 14,054,922 6,090,028
------------- ------------- ------------- ------------- -------------
Net assets available for benefits,
end of year $ 3,836,649 $ 13,339,904 $ 14,546,377 $ 15,154,822 $ 8,221,262
============= ============= ============= ============= =============
</TABLE>
Page 30
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
Putnam MCI
Balanced Common Participant
Retirement Stock Loans Total
ADDITIONS ------------- ------------- ------------- ---------------
Contributions:
<S> <C> <C> <C> <C>
Participants $ 1,462,415 $ 5,416,957 $ 0 $ 17,023,474
Non-cash employer 0 8,218,103 0 8,218,103
Rollovers 138,251 294,598 0 1,014,702
Transfers from ESOP 0 35,678 0 35,755
------------- ------------- ------------- ---------------
Total contributions 1,600,666 13,965,336 0 26,292,034
------------- ------------- ------------- ---------------
Earnings on investments:
Interest on participant loans 0 0 394,637 394,637
Interest on guaranteed investment contracts 0 0 0 837,471
Dividends on common stock 0 87,670 0 87,670
Net realized gain on sale of common stock 0 435,539 0 435,539
Unrealized appreciation of common stock 0 16,851,632 0 16,851,632
Net realized/unrealized gain from registered
investment companies 757,893 0 0 7,805,679
------------- ------------- ------------- ---------------
Total earnings on investments 757,893 17,374,841 394,637 26,412,628
------------- ------------- ------------- ---------------
Total additions 2,358,559 31,340,177 394,637 52,704,662
DEDUCTIONS
Participant benefit payments 351,343 4,274,890 604,095 8,658,660
Account maintenance fees 2,923 16,331 0 41,492
------------- ------------- ------------- ---------------
Net increase (decrease) 2,004,293 27,048,956 (209,458) 44,004,510
Transfers from (to):
Other master trust investment accounts 384,431 1,173,886 0 0
Net loans (56,339) (589,856) 1,315,583 0
Western Union International Collectively
Bargained Plan 0 73,479 2,652 275,128
MCI Plan for Exempt Employees (424,782) (5,598,912) (580,927) (10,520,332)
Other non-related plans 269,946 266,544 118,630 2,493,876
Net assets available for benefits,
beginning of year 3,887,960 52,171,562 5,028,114 105,131,594
------------- ------------- ------------- ---------------
Net assets available for benefits,
end of year $ 6,065,509 $ 74,545,659 $ 5,674,594 $ 141,384,776
============= ============= ============= ===============
</TABLE>
Page 31
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
EuroPacific Dreyfus Putnam Stable Putnam
Growth Basic 500 Voyager Asset New
Fund Stock Index Fund Fund Opportunities
ADDITIONS ------------- ------------- ------------- ------------- -------------
Contributions:
<S> <C> <C> <C> <C> <C>
Participants $ 1,094,938 $ 1,600,956 $ 3,089,772 $ 2,275,487 $ 2,316,168
Non-cash employer 0 0 0 0 0
Rollovers 36,129 38,143 116,417 77,412 77,277
Transfers from ESOP 2,422 4,135 24,742 48,928 52,476
------------- ------------- ------------- ------------- -------------
Total contributions 1,133,489 1,643,234 3,230,931 2,401,827 2,445,921
------------- ------------- ------------ -------------- -------------
Earnings on investments:
Interest on participant loans 0 0 0 0 0
Interest on guaranteed investment contracts 0 0 0 930,446 0
Dividends on common stock 0 0 0 0 0
Net realized gain on sale of common stock 0 0 0 0 0
Unrealized appreciation of common stock 0 0 0 0 0
Net realized/unrealized gain from registered
investment companies 401,267 1,589,587 1,266,501 0 297,906
------------- ------------- ------------- ------------- -------------
Total earnings on investments 401,267 1,589,587 1,266,501 930,446 297,906
------------- ------------- ------------- ------------- -------------
Total additions 1,534,756 3,232,821 4,497,432 3,332,273 2,743,827
DEDUCTIONS
Participant benefit payments 159,943 465,916 950,717 1,565,643 334,525
Account maintenance fees 1 857 3,829 7,387 9,370 3,254
------------- ------------- ------------- ------------- -------------
Net increase 1,372,956 2,763,076 3,539,328 1,757,260 2,406,048
Transfers from (to):
Other master trust investment accounts (62,133) (235,482) (193,351) (586,094) 848,539
Net loans (49,274) (155,189) (358,363) (379,240) (77,620)
Western Union International Collectively
Bargained Plan 51 2,390 2,200 615 88
MCI 401(k) Plan for Exempt Employees (234,530) (287,384) 753,759 3,210,216 (390,821)
Net assets available for benefits,
beginning of year 1,880,771 6,770,327 8,389,856 10,052,165 3,303,794
------------- ------------- ------------- ------------- -------------
Net assets available for benefits,
end of year $ 2,907,841 $ 8,857,738 $ 12,133,429 $ 14,054,922 $ 6,090,028
============= ============= ============= ============= =============
</TABLE>
Page 32
<PAGE>
<TABLE>
<CAPTION>
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
(EIN: 52-0886267
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
Putnam MCI
Balanced Common Participant
Retirement Stock Loans Total
ADDITIONS ------------- ------------- ------------- -------------
Contributions:
<S> <C> <C> <C> <C>
Participants $ 1,310,492 $ 3,236,416 $ 0 $ 14,924,229
Non-cash employer 0 7,469,320 0 7,469,320
Rollovers 129,112 49,608 0 524,098
Transfers from ESOP 17,800 27,867 0 178,370
------------- ------------- ------------- -------------
Total contributions 1,457,404 10,783,211 0 23,096,017
------------- ------------- ------------- -------------
Earnings on investments:
Interest on participant loans 0 0 349,003 349,003
Interest on guaranteed investment contracts 0 0 0 930,446
Dividends on common stock 0 79,756 0 79,756
Net realized gain on sale of common stock 0 195,393 0 195,393
Unrealized appreciation of common stock 0 9,887,614 0 9,887,614
Net realized/unrealized gain from registered
investment companies 422,250 0 0 3,977,511
------------- ------------- ------------- -------------
Total earnings on investments 422,250 10,162,763 349,003 15,419,723
------------- ------------- ------------- -------------
Total additions 1,879,654 20,945,974 349,003 38,515,740
DEDUCTIONS
Participant benefit payments 285,381 3,427,564 349,281 7,538,970
Account maintenance fees 2,429 14,187 0 42,313
------------- ------------- ------------- -------------
Net increase 1,591,844 17,504,223 (278) 30,934,457
Transfers from (to):
Other master trust investment accounts 48,422 180,099 0 0
Net loans (47,079) (399,469) 1,466,234 0
Western Union International Collectively
Bargained Plan 29 2,371 0 7,744
MCI Plan for Exempt Employees (9,645) 6,269,105 1,083,900 10,394,600
Net assets available for benefits,
beginning of year 2,304,389 28,615,233 2,478,258 63,794,793
------------- ------------- ------------- -------------
Net assets available for benefits,
end of year $ 3,887,960 $ 52,171,562 $ 5,028,114 $105,131,594
============= ============= ============= =============
</TABLE>
Page 33
<PAGE>
NOTE 5 - PARTICIPANTS' ACCOUNTS
As of December 31, 1997 and 1996, the Plan held 1,880,105 and 1,595,520 shares
of MCI Communications Corporation Common Stock at fair market values of
$80,491,984 and $52,153,560, respectively. Of these shares, 218,773 and 275,777
were contributed by the Company during the Plan years ended December 31, 1997
and 1996, respectively, as the Company's matching contributions. As of December
31, 1997 and 1996, the Plan's benefit claims payable were $18,888,257 and
$11,755,110, respectively, which include 209,281 and 156,894 shares of MCI
Communications Corporation Common Stock at fair market values of $8,959,851 and
$5,128,464, 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, 1997 and 1996, certain participants
transferred between the Plan and the Exempt Plan. During the Plan year ended
December 31, 1997, assets valued at $10,520,332 were transferred from the Plan,
including 165,942 shares of MCI Communications Corporation Common Stock at a
fair value of $5,598,912. During the year ended December 31, 1996, assets valued
at $10,394,600 were transferred to the Plan, including 235,152 shares of MCI
Communications Corporation Common Stock at a fair value of $6,269,105.
During the years ended December 31, 1997 and 1996, certain participants
transferred between the Plan and the Western Union International 401(k) Plan for
Collectively Bargained Employees. During the year ended December 31, 1997 and
1996, assets valued at $275,128 and $7,744, respectively including 1,878 and 86
shares of MCI Communications Corporation Common Stock at a fair value of $73,479
and $2,371, respectively, were transferred to the Plan.
Effective June 23, 1997, assets valued at $575,736 were transferred to the Plan
from the Apple Computer, Inc. Savings and Investment Plan (the "Apple Plan").
These assets represent the account balances of participants of the Apple Plan
who were accepted into the Plan and became employees of MCI Systemhouse
Page 34
<PAGE>
("MCIS"), a subsidiary of MCI Telecommunications Corporation which is a
wholly-owned subsidiary of the Company, pursuant to a contractual outsourcing
agreement between MCIS and Apple Computer, Inc.
Effective December 8, 1997, assets valued at $1,918,140 were transferred to the
Plan from the California State Automobile Association IIB Autosave Plan (the
"CSAA Plan"). These assets represent the account balances of participants of the
CSAA Plan who were accepted into the Plan and became employees of MCIS pursuant
to a contractual outsourcing agreement between MCIS and the California State
Automobile Association.
NOTE 7 - FEDERAL INCOME TAX STATUS
As described in Note 1, the Plan is Part II of the MCI Communications
Corporation ESOP and 401(k) for Non-Exempt Employees. The Plan, as amended
through January 24, 1995, has been determined by letter dated January 31, 1996,
by the IRS to be qualified under Section 401 of the Internal Revenue Code. The
Plan administrator believes the Plan is currently 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 8 - 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
Page 35
<PAGE>
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; (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.
NOTE 9 - SUBSEQUENT EVENTS
Effective January 1, 1998, eligible employees under the Plan may elect to defer
up to 20% of eligible compensation on a pre-tax basis to be contributed to the
Plan by the Company on behalf of such employees. Additionally, the Plan will
provide for the automatic distribution in a lump sum of terminated participant
accounts with a vested balance of $5,000 or less.
Page 36
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
CURRENT
NUMBER VALUE AT
DESCRIPTION/ISSUER OF SHARES COST 12/31/97
- ------------------ --------- ------------ ------------
LOANS TO PARTICIPANTS
<S> <C> <C> <C>
Participant loan accounts (rates range 6% - 11%) $ 0 $ 32,237,962
(maturities range 1998-2012) ------------
INTEREST IN COLLECTIVE INVESTMENT
FUNDS OF TRUSTEE
* Mellon Bank Temporary
Investment Fund 10,842,931 10,842,931
------------
INTEREST IN REGISTERED INVESTMENT
COMPANIES
EuroPacific Growth Fund 1,546,250 39,071,848 40,233,423
* Dreyfus Basic 500 Stock Index Fund 6,269,163 87,196,064 128,956,690
* Putnam Voyager Fund 9,718,402 137,068,715 185,135,550
* Putnam New Opportunities Fund 1,924,959 75,559,675 93,649,233
* Putnam Balanced Retirement Fund 5,716,666 59,525,072 62,254,492
------------
Total investment in registered
investment companies 510,229,388
------------
GUARANTEED INVESTMENT CONTRACTS **
Stable Asset Fund
AIG Life Insurance (6.53% Matures 3/31/02) 5,323,731 5,323,731
AIG Life Insurance (7.00% Matures 6/3/02) 3,155,722 3,155,722
Aetna Life Insurance (6.63% Matures 6/30/00) 21,652,482 21,652,482
Allstate Life Insurance (5.90% Matures 7/1/98) 6,856,228 6,856,228
Allstate Life Insurance (5.90% Matures 6/30/01) 2,000,314 2,000,314
Canada Life Assurance Company (7.30% Matures 7/1/02) 5,256,848 5,256,848
Continental Assurance Company (6.78% Matures 4/2/01) 3,133,924 3,133,924
John Hancock Mutual Life Insurance (8.05% Matures 6/30/99) 15,409,255 15,409,255
Life of Virginia (6.28% Matures 8/15/01) 5,053,558 5,053,558
New York Life Insurance (6.82% Matures 3/31/98) 3,174,974 3,174,974
New York Life Insurance (8.08% Matures 12/31/99) 3,156,159 3,156,159
Pacific Mutual Life Insurance (7.30% Matures 12/31/01) 4,981,496 4,981,496
Pacific Mutual Life Insurance (7.36% Matures 12/31/01) 4,333,876 4,333,876
Peoples Security Insurance Company (5.72% Matures 6/30/94) 3,500,453 3,500,453
Peoples Security Insurance Company (5.86% Matures 3/31/98) 3,367,299 3,367,299
Peoples Security Insurance Company (6.32% Matures 2/17/03) 4,013,633 4,013,633
Principal Mutual Life Insurance (6.60% Matures 4/02/07) 3,409,732 3,409,732
Principal Mutual Life Insurance (6.78% Matures 12/16/07) 4,081,625 4,081,625
Protective Life Insurance (6.57% Matures 10/2/00) 3,049,036 3,049,036
Prudential Life Insurance (7.00% Matures 9/30/98) 3,225,446 3,225,446
Security Life of Denver (6.74% Matures 9/16/02) 4,124,942 4,124,942
TransAmerica Life Insurance (5.60% Matures 6/30/95) 1,713,081 1,713,081
TransAmerica Life Insurance (7.25% Matures 12/31/98) 2,714,130 2,714,130
------------
Total guaranteed investment contracts 116,687,944
------------
COMMON STOCK
* MCI Communications Corporation 13,220,260 322,843,184 565,998,991
------------
TOTAL INVESTMENTS $1,236,097,216
==============
* Denotes a party-in-interest
** Current value is considered to be contract value.
</TABLE>
Page 37
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
MCI COMMUNICATIONS CORPORATION
DEFINED CONTRIBUTION MASTER TRUST
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Transactions or series of transactions exceeding 5% of the beginning fair values
of master trust assets for the plan year January 1, 1997 to December 31, 1997
are considered reportable transactions. Fair value at January 1, 1997 is
$820,069,314. Five percent (5%) of fair value is $41,003,465.
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>
* Putnam New $ 42,964,423 $ 42,964,423 $ 42,964,423 $ 0
Opportunities Fund (118 purchases)
* Putnam New $ 14,437,422 $ 12,282,409 $ 14,437,422 $2,152,013
Opportunities Fund (137 sales)
* Putnam Voyager Fund $ 56,449,333 $ 56,449,333 $ 56,449,333 $ 0
(104 purchases)
* Putnam Voyager Fund $ 29,583,046 $ 21,935,279 $ 29,583,046 $7,647,767
(153 sales)
* MCI Common Stock Fund $ 60,572,087 $ 60,572,087 $ 60,572,087 $ 0
(153 deliveries)
* MCI Common Stock Fund $150,691,965 $150,691,965 $150,691,965 $ 0
(365 receipts)
Stable Asset Fund $ 12,500,000 $ 12,500,000 $ 12,500,000 $ 0
(5 purchases)
Stable Asset Fund $ 10,620,272 $ 10,620,272 $ 10,620,272 $ 0
(5 sales)
* Mellon Bank Temporary $121,657,362 $121,657,362 $121,657,362 $ 0
Investment Fund (567 purchases)
* Mellon Bank Temporary $112,968,133 $112,968,133 $112,968,133 $ 0
Investment Fund (447 sales)
* Denotes a party-in-interest
</TABLE>
Page 38
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
sponsor of the MCI Communications Corporation ESOP and 401(k) Plan for
Non-Exempt Employees has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT
EMPLOYEES - PART II OF THE MCI
COMMUNICATIONS CORPORATION ESOP
AND 401(k) PLAN FOR NON-EXEMPT
EMPLOYEES
Date: June 26, 1998 By:David M. Case
------------------------------
David M. Case
Vice President
MCI Telecommunications Corporation
Page 39
<PAGE>
Exhibit 23
---------
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT EMPLOYEES
EIN: 52-0886267
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement of Form S-8 (No. 333-12847) of
MCI Communications Corporation of our report dated June 8, 1998, appearing on
page 3 of this Form 11-K.
PRICE WATERHOUSE LLP
Washington, D.C.
June 26, 1998
Page 40
<PAGE>
Exhibit 99
DOL Filing Confirmation ---------
I certify that the Plan Administrator of the MCI Communications Corporation
401(k) Plan for Non-Exempt Employees has received a Statement of Assets and
Liabilities and also that the statement has been filed directly with the United
States Department of Labor by Mellon Bank, N.A. (EIN # 25-0659206) for the
following investment arrangements:
EIN #
--------------
Mellon Bank Temporary Investment Fund 25-6078903-980
MCI COMMUNICATIONS CORPORATION
401(k) PLAN FOR NON-EXEMPT
EMPLOYEES - PART II OF THE MCI
COMMUNICATIONS CORPORATION ESOP
AND 401(k) PLAN FOR NON-EXEMPT
EMPLOYEES
Date: June 26, 1998 By:David M. Case
------------------------------
David M. Case
Vice President
MCI Telecommunications Corporation
Page 41
