<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 18, 1997
WORLDCOM, INC.
(Exact Name of Registrant as Specified in its Charter)
Georgia 0-11258 58-1521612
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification Number)
Incorporation)
515 East Amite Street
Jackson, Mississippi 39201-2702
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (601) 360-8600
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<PAGE> 2
ITEM 5. OTHER EVENTS.
On March 18, 1997, WorldCom, Inc. ("WorldCom" or the "Company") announced that
it proposes to issue $1.5 billion of senior notes in a partial drawdown of its
previously announced shelf registration statement. The shelf registration
statement became effective February 12, 1997 for the sale from time to time, of
debt securities having an aggregate value of up to $3.0 billion.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
The following exhibits are filed herewith in accordance with Item 601
of Regulation S-K:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
12.1 Statement regarding Computation of Ratio of Earnings
to Fixed Charges
25.1 Statement of Eligibility of Trustee on Form T-1
under the Trust Indenture Act of 1939, as amended,
of Mellon Bank, N.A.
99.1 Press Release dated March 18, 1997
</TABLE>
2
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 24, 1997
WORLDCOM, INC.
By: /s/ Scott D. Sullivan
-----------------------------------
Scott D. Sullivan
Chief Financial Officer
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
12.1 Statement regarding Computation of Ratio of Earnings to Fixed
Charges
25.1 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939, as amended, of Mellon Bank, N.A.
99.1 Press Release dated March 18, 1997
</TABLE>
<PAGE> 1
EXHIBIT 12.1
WORLDCOM, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
Historical Pro Forma
-------------------------------------------------------------------- ------------
1992 1993 1994 1995 1996 1996
-------------------------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Pretax income (loss) from continuing
operations $ 22,513 $ 209,920 $ (50,697) $ 437,729 $(2,059,416) $(2,732,617)
Fixed charges, net of capitalized
interest 36,608 47,316 59,689 267,057 241,397 359,719
----------- ----------- ----------- ----------- ----------- -----------
Earnings $ 59,121 $ 257,236 $ 8,992 $ 704,786 $(1,818,019) $(2,372,898)
=========== =========== =========== =========== =========== ===========
Fixed charges:
Interest cost $ 33,815 $ 38,657 $ 49,203 $ 254,099 $ 229,376 $ 353,085
Amortization of financing costs 1,464 1,792 2,086 2,811 1,742 --
Interest factor of rent expense 4,833 9,967 10,300 15,030 17,854 28,024
----------- ----------- ----------- ----------- ----------- -----------
Fixed charges $ 40,112 $ 50,416 $ 61,589 $ 271,940 $ 248,972 $ 381,109
=========== =========== =========== =========== =========== ===========
Deficiency of earnings to fixed charges $ - $ - $ (52,597) $ - $(2,066,991) $(2,754,007)
=========== =========== =========== =========== =========== ===========
Ratio of earnings to fixed charges 1.47:1 5.10:1 0.15:1 2.59:1 N/A N/A
=========== =========== =========== =========== =========== ===========
</TABLE>
See Notes to Computation of Earnings to Fixed Charges.
<PAGE> 2
NOTES TO COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(1) On December 31, 1996, WorldCom completed the MFS Merger. The MFS
Merger is being accounted for as a purchase; accordingly, the
operating results for MFS are not reflected in the historical amounts
above and will be included from the date of acquisition.
(2) Results for 1996 include a $2.14 billion charge for in-process
research and development related to the MFS Merger. The charge is
based upon a valuation analysis of the technologies of MFS' worldwide
information system, the Internet network expansion system of UUNET,
and certain other identified research and development projects
purchased in the Merger. The expense includes $1.6 billion associated
with UUNET and $0.54 billion related to MFS.
Additionally, 1996 results include other after-tax charges of $121
million for employee severance, employee compensation charges,
alignment charges, and costs to exit unfavorable telecommunications
contracts and $344 million after-tax write-down of operating assets
within its non-core businesses. On a pre-tax basis, these charges
totaled $600.1 million.
(3) In 1995, Metromedia converted its Series 1 Preferred Stock into Common
Stock, exercised warrants to acquire Common Stock and immediately sold
its position of 61,699,096 shares of Common Stock in a public
offering. In connection with the preferred stock conversion, WorldCom
made a non-recurring payment of $15.0 million to Metromedia,
representing a discount to the minimum nominal dividends that would
have been payable on the Series 1 Preferred Stock prior to the
September 15, 1996 optional call date of approximately $26.6 million
(which amount includes an annual dividend requirement of $24.5 million
plus accrued dividends to such call date).
(4) As a result of the IDB Merger and the ATC Merger, the Company
initiated plans to reorganize and restructure its management and
operational organization and facilities to eliminate duplicate
personnel, physical facilities and service capacity, to abandon
certain products and marketing activities, and to take further
advantage of the synergies available to the combined entities. Also,
during the fourth quarter of 1993, plans were approved to reduce IDB's
cost structure and to improve productivity. Accordingly, in 1994,
1993 and 1992, the Company charged to operations the estimated costs
of such reorganization and restructuring activities, including
employee severance, physical facility abandonment and duplicate
service capacity. These costs totaled $43.7 million in 1994, $5.9
million in 1993 and $79.8 million in 1992.
Also, during 1994 and 1992, the Company incurred direct merger costs
of $15.0 million and $7.3 million, respectively, related to the IDB
Merger (in 1994) and the ATC Merger (in 1992). These costs include
professional fees, proxy solicitation costs, travel and related
expenses and certain other direct costs attributable to these mergers.
(5) In connection with certain debt refinancing, the Company recognized in
1996, 1993 and 1992 extraordinary items of approximately $4.2 million,
$7.9 million and $5.8 million, respectively, net of income taxes,
consisting of unamortized debt discount, unamortized issuance cost and
prepayment fees. Additionally, in 1996 the Company recorded an
extraordinary item of $20.2 million, net of income taxes, related to
a write-off of deferred international costs.
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM T-1
-------------------------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS
TRUSTEE
-------------------------
Check if an application to determine eligibility of
a Trustee pursuant to Section 305(b)(2) [ ]
MELLON BANK, N.A.
(Name of Trustee)
25-0659306 U.S.
(I.R.S. Employer Identification No.) (Jurisdiction of incorporation)
One Mellon Bank Center
Pittsburgh, PA 15258-0001
(Address of Principal Executive Office)
PETER J. GERMANOWSKI
Vice President
MELLON BANK, N.A.
ONE MELLON BANK CENTER
PITTSBURGH, PENNSYLVANIA 15258-0001
(412) 234-4194
(Name, Address and Telephone Number of Agent for Service)
-------------------------
WORLDCOM, INC.
(Name of Obligor)
GEORGIA
(State or Other Jurisdiction of Incorporation or Organization)
58-1521612
(I.R.S. Employer Identification No.)
515 EAST AMITE STREET, JACKSON, MISSISSIPPI 39201-2702
(Address of Principal Executive Offices)
DEBT SECURITIES
(Title of Indenture Securities)
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE --
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of Cleveland Cleveland, Ohio
Federal Deposit Insurance Corporation Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE
TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
The obligor is not an affiliate of the trustee.
ITEMS 3-15 ARE NOT APPLICABLE SINCE THE OBLIGOR IS NOT IN DEFAULT ON SECURITIES
ISSUED UNDER INDENTURES UNDER WHICH THE APPLICANT IS TRUSTEE.
16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS
STATEMENT OF ELIGIBILITY.
Exhibit 1 - Copy of articles of association of the trustee as now
in effect, filed as Exhibit 1 to trustee's statement of
eligibility and qualification, Registration No. 33-46990,
and incorporated herein by reference.
Exhibit 2 - Copy of certificate of the authority of the trustee to
commence business, copy of certificate of consolidation
with the Union Trust Company of Pittsburgh and copy of
certificate approving merger of Mellon National Bank and
Trust Company into Mellon Bank, N.A. filed as Exhibit
T1A(b) to trustee's statement of eligibility and
qualification, Registration No. 33-13020, and incorporated
herein by reference.
Exhibit 3 - Copy of certificate as to authority of the trustee to
exercise corporate trust powers, filed as Exhibit T1A(c) to
trustee's statement of eligibility and qualification,
Registration No. 33-13020, and incorporated herein by
reference.
Exhibit 4 - Copy of existing by-laws of the trustee, filed as Exhibit
4 to trustee's statement of eligibility and qualification,
Registration No. 33-46990, and incorporated herein by
reference.
Exhibit 5 - Copy of each indenture referred to in Item 4, if the
obligor is in default. Not Applicable.
Exhibit 6 - Consent of the trustee required by Section 321(b) of the
Act, filed as Exhibit T1D to trustee's statement of
eligibility and qualification, Registration No. 33-13020,
and incorporated herein by reference.
Exhibit 7 - Copy of the latest report of condition of the trustee
transmitted electronically pursuant to law or the
requirements of its supervising or examining authority.
1
<PAGE> 3
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939, THE
TRUSTEE, MELLON BANK, N.A., A NATIONAL BANKING ASSOCIATION ORGANIZED AND
EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA, HAS DULY CAUSED THIS
STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, ALL IN THE CITY OF PITTSBURGH, AND COMMONWEALTH OF
PENNSYLVANIA, ON THE 18TH DAY OF MARCH 1997.
MELLON BANK, N.A.
TRUSTEE
By:
------------------------
Peter J. Germanowski
Vice President
2
<PAGE> 4
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939, THE
TRUSTEE, MELLON BANK, N.A., A NATIONAL BANKING ASSOCIATION ORGANIZED AND
EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA, HAS DULY CAUSED THIS
STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, ALL IN THE CITY OF PITTSBURGH, AND COMMONWEALTH OF
PENNSYLVANIA, ON THE 18TH DAY OF MARCH 1997.
MELLON BANK, N.A.
TRUSTEE
By: Peter J. Germanowski
--------------------------
Peter J. Germanowski
Vice President
2
<PAGE> 5
EXHIBIT 7
REPORT OF CONDITION
CONSOLIDATING DOMESTIC AND FOREIGN SUBSIDIARIES OF
MELLON BANK, N.A.
FOR DECEMBER 31, 1996
IN THE COMMONWEALTH OF PENNSYLVANIA, AT THE CLOSE OF BUSINESS ON
DECEMBER 31, 1996; TRANSMITTED ELECTRONICALLY IN RESPONSE TO CALL MADE BY
COMPTROLLER OF THE CURRENCY, UNDER TITLE 12, UNITED STATES CODE, SECTION 161.
CHARTER NO. 6301 NORTHEASTERN DISTRICT
STATEMENT OF RESOURCES AND LIABILITIES
(in thousands)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . . . . . . . . . . . . . $ 2,672,284
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . 789,575
Securities:
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . 2,210,496
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . 3,869,905
Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533,454
Securities purchased under agreements to resell . . . . . . . . . . . . . . 7,681
Loans and lease financing receivables:
Loans and leases, net of unearned income . . . . . . . . . . . $ 23,267,207
LESS: Allowance for loan and lease losses . . . . . . . . . . 315,660
Loans and leases, net of unearned income, allowance, and reserve . . . . . . 22,951,547
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . 345,978
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . 496,468
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,313
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . 247,120
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,559,411
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,602,061
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . 37,339,293
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,662,107
Noninterest-bearing . . . . . . . . . . . . . . . . . . . 7,405,910
Interest-bearing . . . . . . . . . . . . . . . . . . . . . 17,256,197
In foreign offices, Edge and Agreement subsidiaries, and IBFs . . . . . . . 3,655,311
Noninterest-bearing . . . . . . . . . . . . . . . . . . . 18,417
Interest-bearing . . . . . . . . . . . . . . . . . . . . . 3,636,894
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . 1,383,786
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . 297,830
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . 471,321
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306,209
Other borrowed money:
With remaining maturity of one year or less . . . . . . . . . . . . . . . . 779,101
With remaining maturity of more than one year . . . . . . . . . . . . . . . 467,673
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . 1,997
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . 247,120
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . 977,681
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 856,713
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . 34,106,849
EQUITY CAPITAL
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,285
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . 895,960
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . 2,182,376
Net unrealized holding gains (losses) on available-for-sale securities . . . . . (6,348)
Cumulative foreign currency translation adjustments . . . . . . . . . . . . . . . (6,829)
TOTAL EQUITY CAPITAL . . . . . . . . . . . . . . . . 3,232,444
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK,
AND EQUITY CAPITAL . . . . . . . . . . . . . . . . . . 37,339,293
</TABLE>
3
<PAGE> 6
I, Michael K. Hughey, Senior Vice President and Corporate Controller
of the above-named bank, do hereby declare that this Report of Condition is
true and correct to the best of my knowledge and belief.
Michael K. Hughey
February 4, 1997
We, the undersigned directors, attest to the correctness of this
Statement of Resources and Liabilities. We declare that it has been examined
by us, and to the best of our knowledge and belief has been prepared in
conformance with the instructions and is true and correct.
FRANK V. CAHOUET
W. KEITH SMITH
CHARLES A. CORRY
4
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contacts:
News Media: Josh Howell Investors: Gary Brandt
(402) 231-3405 (402) 231-3432
WORLDCOM ANNOUNCES INTENT TO ISSUE SENIOR NOTES
JACKSON, Miss. March 18, 1997 - WorldCom, Inc. (WorldCom) today announced that
it proposes to issue $1.5 billion of senior notes in a partial drawdown of its
previously announced shelf registration statement. The shelf registration
statement became effective February 12, 1997 for the sale, from time to time,
of debt securities having an aggregate value of up to $3.0 billion.
WorldCom intends to use the net proceeds from this offering under this
registration primarily for the repayment of bank debt, general corporate
purposes and to fund expansion.
A preliminary prospectus supplement related to this offering has not yet been
distributed. These securities may not be sold, nor may offers to buy be
accepted, prior to availability of a final prospectus supplement. This
communication shall not constitute an offer to sell or the solicitation of an
offer to buy, nor shall there be any sale of the securities in any state in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state.
WorldCom is a global business telecommunications company. Operating in more
than 50 countries, the company is a premier provider of facilities-based and
fully integrated local, long distance, international and Internet services.
WorldCom subsidiary, UUNET Technologies, Inc., is the world's largest provider
of Internet services. WorldCom's World Wide Web address is
http://www.wcom.com. The common and depositary shares of WorldCom trade on the
Nasdaq National Market (U.S.) under the symbol WCOM and WCOMP, respectively.
-30-
