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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 28, 1998
Registration Statement No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
Registration Statement
Under the
Securities Act Of 1933
--------------------------------------------
WorldCom, Inc.
(Exact name of registrant as specified in its charter)
Georgia 58-1521612
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
515 East Amite Street
Jackson, Mississippi 39201-2702
(Address of principal executive offices)
Registrant's telephone number including area code: (601) 360-8600
--------------------------------------------
Copies of all correspondence to:
P. Bruce Borghardt, Esq.
General Counsel - Corporate Development
WorldCom, Inc.
10777 Sunset Office Drive, Suite 330
St. Louis, Missouri 63127
(314) 909-4100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
R. Randall Wang, Esq.
Denis P. McCusker, Esq.
Bryan Cave LLP
One Metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
(314) 259-2000
Approximate date of commencement of proposed sale to the public: From time
to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _____
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _____
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
CALCULATION OF REGISTRATION FEE
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Title of each Proposed maximum Amount of
class of securities aggregate registration
to be registered offering price(2) fee
- --------------------------------------------------------------------------------
Debt Securities $5,000,000,000 $ 1,475,000
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(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(o).
(2) Or, if any Debt Securities are issued (i) with a principal amount
denominated in a foreign currency, such principal amount as shall result in an
aggregate initial offering price the equivalent of $5,000,000,000 at the time of
initial offering, or (ii) at an original issue discount, such greater principal
amount as shall result in an aggregate initial offering price of $5,000,000,000.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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SUBJECT TO COMPLETION, DATED JANUARY 28, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these 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.
PRELIMINARY PROSPECTUS [GRAPHIC OMITTED]
WorldCom, Inc.
Debt Securities
WorldCom, Inc. (the "Company" or "WorldCom") may offer from time to time,
in one or more series, debentures, notes, bonds, or other obligations ("Debt
Securities"), all having an aggregate initial public offering price not to
exceed U.S. $5,000,000,000 or the equivalent thereof in one or more foreign
currencies, foreign currency units, or composite currencies, including European
Currency Units. The Debt Securities may be offered separately or as units with
other securities, in separate series in amounts, at prices, and on terms to be
determined at or prior to the time of sale. The Debt Securities will be direct
unsecured obligations of the Company.
The specific terms of the Debt Securities with respect to which this
Prospectus is being delivered will be set forth in a supplement to this
Prospectus (a "Prospectus Supplement"), together with the terms of the offering
and sale of the Debt Securities and the initial offering price and the net
proceeds to the Company from the sale thereof. The Prospectus Supplement will
include, among other things: the specific designation; aggregate principal
amount; ranking; authorized denomination; maturity; rate or method of
calculation of interest and dates for payment thereof; any index or formula for
determining the amount of any principal, premium, or interest payment; any
exchange, redemption, prepayment, or sinking fund provisions; the currency or
currency unit in which principal, premium, or interest is payable; whether the
securities are issuable in registered form or in the form of global securities;
and the designation of the trustee acting under the applicable indenture. The
Prospectus Supplement will also contain information, where applicable, about
material United States federal income tax considerations relating to, and any
listings on a securities exchange of, the Debt Securities covered by such
Prospectus Supplement.
The Company may sell the Debt Securities directly to purchasers, through
agents designated from time to time, or through underwriters or dealers, on
terms determined by market conditions at the time of sale. If any agents,
underwriters, or dealers are involved in the sale of the Debt Securities, the
names of such agents, underwriters, or dealers and any applicable commissions or
discounts and the net proceeds to the Company from such sale will be set forth
in the applicable Prospectus Supplement.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
--------------
The date of this Prospectus is __________________, 1998.
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No dealer, salesperson, or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus or any accompanying Prospectus
Supplement and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or any underwriter,
agent, or dealer. Neither the delivery of this Prospectus or any Prospectus
Supplement nor any sale made thereunder shall, under any circumstance, create an
implication that there has been no change in the affairs of the Company since
the date hereof or thereof. This Prospectus and any related Prospectus
Supplement do not constitute an offer to sell or a solicitation of an offer to
buy any of the securities offered hereby in any jurisdiction to any person to
whom it is unlawful to make such offer or solicitation in such jurisdiction.
TABLE OF CONTENTS
Available Information.....................................2
Incorporation Of Certain Documents By Reference...........3
Cautionary Statement Regarding Forward-Looking Statements.3
The Company...............................................4
Recent Developments.......................................4
Use Of Proceeds...........................................7
Ratio Of Earnings To Fixed Charges........................7
Description Of Debt Securities............................8
Plan Of Distribution.....................................18
Global Clearance, Settlement And Tax
Documentation Procedures................................19
Certain United States Federal
Income Tax Documentation Requirements...................22
Experts..................................................24
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300,
New York, New York 10048. Copies of such materials can also be obtained at
prescribed rates from the Public Reference Section of the Commission, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains
an Internet Web site (http://www.sec.gov) that contains reports, proxy and
information statements, and other materials that are filed electronically
through the Commission's Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) system. In addition, material filed by the Company can be inspected at
the offices of the National Association of Securities Dealers, Inc. (the
"NASD"), at 1735 K Street, N.W., Washington, DC 20006.
This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Debt Securities offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. Any statements contained in this Prospectus
and accompanying Prospectus Supplement as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed or incorporated by
reference as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference and the exhibits and the schedules
thereto. For further information pertaining to the Company and the Debt
Securities offered hereby, reference is made to the Registration Statement and
such exhibits and schedules thereto, which may be inspected without charge at,
and copies thereof may be obtained at prescribed rates from, the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549.
"WorldCom" is a service mark of the Company.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (formerly
Resurgens Communications Group, Inc. ("Resurgens")) under File No. 0-11258
(formerly File No. 1-10415) pursuant to the Exchange Act are incorporated herein
by reference and shall be deemed to be a part hereof:
(1) WorldCom's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(2) WorldCom's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; and
(3) WorldCom's Current Reports on Form 8-K dated August 25, 1996 (filed
August 26, 1996 and as amended on Forms 8-K/A filed November 4, 1996, November
20, 1996 and December 19, 1997), December 31, 1996 (filed January 15, 1997),
March 18, 1997 (filed March 24, 1997), March 26, 1997 (filed April 2, 1997), May
22, 1997 (filed June 6, 1997), June 30, 1997 (filed July 7, 1997), August 5,
1997 (filed August 5, 1997), August 8, 1997 (filed August 11, 1997), August 22,
1997 (filed August 25, 1997), August 28, 1997 (filed September 10, 1997),
September 7, 1997 (filed September 17, 1997), October 1, 1997 (filed October 2,
1997), October 3, 1997 (filed October 3, 1997), October 9, 1997 (filed October
10, 1997), October 10, 1997 (filed October 14, 1997), October 14, 1997 (filed
October 14, 1997), October 15, 1997 (filed October 16, 1997), October 16, 1997
(filed October 17, 1997), October 23, 1997 (filed October 23, 1997), October 31,
1997 (filed November 3, 1997) and November 9, 1997 (filed November 12, 1997 and
as amended on Forms 8-K/A-1 and 8-K/A-2 filed January 28, 1998).
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this
Prospectus and prior to the termination of the offering of the Debt Securities
offered hereby shall be deemed to be incorporated by reference herein and to be
a part hereof from the date of filing of such documents. See "Available
Information." Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein or in any Prospectus Supplement
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
References in this Prospectus to the "Company" include reference to
WorldCom and/or its direct and indirect subsidiaries.
This Prospectus incorporates documents by reference which are not presented
herein and may not be delivered herewith, as indicated above. The Company will
provide without charge to each person to whom a copy of this Prospectus has been
delivered, on the written or oral request of such person, a copy of any or all
of the documents referred to below which are incorporated herein by reference
(other than exhibits to such documents unless they are specifically incorporated
by reference into such documents). Requests for such copies should be directed
to Stephanie Q. Scott, Director of Financial Reporting, WorldCom, Inc., 515 East
Amite Street, Jackson, Mississippi 39201-2702; telephone number (601) 360-8600.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The following statements are or may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"PSLRA"):
(i) Certain statements, including possible or assumed future results of
operations of WorldCom, MCI Communications Corporation ("MCI"), CompuServe
Corporation ("CompuServe"), Brooks Fiber Properties, Inc. ("BFP") and ANS
Communications, Inc. ("ANS"), contained in "Recent Developments," including any
forecasts, projections and descriptions of anticipated cost savings or other
synergies referred to therein, and certain statements incorporated by reference
from documents filed with the Commission by WorldCom, including any statements
contained herein or therein regarding the development of possible or assumed
future results of operations of WorldCom's and MCI's businesses, the markets for
WorldCom's and MCI's services and products, anticipated capital expenditures,
regulatory developments, competition or the effects of the merger (the
"MCI/WorldCom Merger") of MCI with and into a wholly owned subsidiary of
WorldCom, the merger (the "CompuServe Merger") of a wholly owned subsidiary of
WorldCom with and into CompuServe, the transactions (the "AOL Transaction")
contemplated by the Purchase and Sale Agreement (the "AOL Agreement") with
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America Online, Inc. ("AOL") or the merger (the "BFP Merger") of a wholly owned
acquisition subsidiary of WorldCom with and into BFP;
(ii) any statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "intends" or similar expressions; and
(iii) other statements contained or incorporated by reference herein
regarding matters that are not historical facts.
Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Potential purchasers of Debt Securities are
cautioned not to place undue reliance on such statements, which speak only as of
the date thereof.
The independent public accountants have not examined or compiled the
accompanying forward-looking statements or any forecasts or other projections
referred to herein and, accordingly, do not provide any assurance with respect
to such statements.
The cautionary statements contained or referred to in this section should
be considered in connection with any subsequent written or oral forward-looking
statements that may be issued by WorldCom or persons acting on its behalf.
WorldCom does not undertake any obligation to release publicly any revisions to
such forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
THE COMPANY
WorldCom, Inc. is one of the largest telecommunications companies in the
United States, serving local, long distance and Internet customers, domestically
and internationally. WorldCom provides telecommunications services to business,
government, telecommunications companies and consumer customers, through its
network of fiber optic cables, digital microwave, and fixed and transportable
satellite earth stations.
WorldCom is one of the first major facilities-based telecommunications
companies with the capability to provide businesses with high quality local,
long distance, Internet, data, and international communications services over
its global networks. With service to points throughout the nation and the world,
WorldCom provides telecommunications products and services including: switched
and dedicated long distance and local products, 800 services, calling cards,
domestic and international private lines, broadband data services, debit cards,
conference calling, advanced billing systems, enhanced fax and data connections,
high speed data communications, facilities management, local access to long
distance companies, local access to ATM-based backbone service, and
interconnection via Network Access Points to Internet Service Providers
("ISPs"). In addition, WorldCom's subsidiary, UUNET, is an international ISP.
WorldCom's principal executive offices are located at 515 East Amite
Street, Jackson, Mississippi 39201-2702, and its telephone number is (601)
360-8600.
RECENT DEVELOPMENTS
The MCI/WorldCom Merger
On October 1, 1997, WorldCom announced its intention to commence an
exchange offer to acquire all of the outstanding shares of MCI common stock, par
value $.10 per share ("MCI Common Stock"), for $41.50 of common stock of
WorldCom, par value $0.01 ("WorldCom Common Stock"), subject to adjustment in
certain circumstances as set forth in materials filed by WorldCom with the
Commission (the "MCI Offer"). On November 9, 1997, WorldCom entered into an
Agreement and Plan of Merger (the "MCI/WorldCom Merger Agreement") with MCI and
a wholly-owned acquisition subsidiary of WorldCom ("MCI Merger Sub"), providing
for the merger (the "MCI/WorldCom Merger") of MCI with and into MCI Merger Sub,
with MCI Merger Sub surviving as a wholly-owned subsidiary of WorldCom. As a
result of the MCI/WorldCom Merger, the separate corporate existence of MCI will
cease, and MCI Merger Sub (which will be renamed "MCI Communications
Corporation") will succeed to all the rights and be responsible for all the
obligations of MCI in accordance with the Delaware General Corporation Law.
Subject to the terms and conditions of the MCI/WorldCom Merger Agreement, each
share of MCI Common Stock outstanding immediately prior to the effective time of
the MCI/WorldCom Merger (the "MCI/WorldCom Effective Time") will be converted
into the right to receive that number of shares of WorldCom Common Stock equal
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to the MCI Exchange Ratio (as defined below), and each share of MCI Class A
Common Stock, par value $.10 per share ("MCI Class A Common Stock"),
outstanding immediately prior to the MCI/WorldCom Effective Time will be
converted into the right to receive $51.00 in cash, without interest
thereon. The "MCI Exchange Ratio" means the quotient (rounded to the nearest
1/10,000) determined by dividing $51.00 by the average of the high and low
sales prices of WorldCom Common Stock as reported on The Nasdaq National
Market on each of the 20 consecutive trading days ending with the third trading
day immediately preceding the MCI/WorldCom Effective Time; provided,
however, that the MCI Exchange Ratio will not be less than 1.2439 or greater
than 1.7586. Cash will be paid in lieu of the issuance of any fractional share
of WorldCom Common Stock in the MCI/WorldCom Merger.
Based on the number of shares MCI Common Stock outstanding as of January
20, 1998 and assumed MCI Exchange Ratios of 1.2439 and 1.7586, approximately
710,554,160 shares and 1,004,566,722 shares, respectively, of WorldCom Common
Stock would be issued in the MCI/WorldCom Merger. In addition, outstanding
rights and options to purchase shares of MCI Common Stock would be converted in
the MCI/ WorldCom Merger to rights and options to acquire an aggregate of
approximately 122,280,154 shares and 86,491,688 shares, respectively, of
WorldCom Common Stock, and the exercise price would be adjusted to reflect the
MCI Exchange Ratio, so that, on exercise, the holders would receive, in the
aggregate, the same number of shares of WorldCom Common Stock as they would have
received had they exercised prior to the MCI/WorldCom Merger, at the same
exercise price.
The MCI/WorldCom Merger is subject to the approvals of the MCI stockholders
and the WorldCom shareholders as well as approvals from the Federal
Communications Commission, the Department of Justice ("DOJ") and various state
government bodies. In addition, the MCI/WorldCom Merger is subject to review by
the Commission of the European Communities. WorldCom anticipates that the
MCI/WorldCom Merger will close in late spring or early summer of 1998.
Termination of the MCI/WorldCom Merger Agreement by MCI or WorldCom under
certain conditions, including the failure to receive the approval of MCI's
stockholders of the MCI/WorldCom Merger or the MCI/WorldCom Merger Agreement,
will require MCI to pay WorldCom $750 million as a termination fee and to
reimburse WorldCom the $450 million alternative transaction fee paid by WorldCom
to British Telecommunications plc ("BT"). Further, termination of the
MCI/WorldCom Merger Agreement by MCI or WorldCom under certain conditions,
including the failure to receive the approval of WorldCom's shareholders of the
issuance of shares pursuant to the MCI/WorldCom Agreement, will require WorldCom
to pay MCI $1.635 billion as a termination fee.
Pursuant to an agreement (the "BT Agreement") among MCI, WorldCom and BT,
the prior merger agreement between BT and MCI (the "BT/MCI Merger Agreement")
was terminated, and WorldCom agreed to pay BT an alternative transaction fee of
$450 million and expenses of $15 million payable to BT in accordance with the
BT/MCI Merger Agreement. These fees were paid on November 12, 1997. WorldCom
also agreed to pay to BT an additional payment of $250 million in the event that
WorldCom is required to make the $1.635 billion payment to MCI in accordance
with the MCI/WorldCom Merger Agreement. In addition, pursuant to the BT
Agreement, BT agreed to vote (or cause to be voted) its shares of MCI Class A
Common Stock in favor of the MCI/WorldCom Merger Agreement, the adoption by MCI
of the MCI/WorldCom Merger Agreement and the approval of the other transactions
contemplated by the MCI/WorldCom Merger Agreement.
The CompuServe Merger
On September 7, 1997, WorldCom entered into the Agreement and Plan of
Merger (the "CompuServe Merger Agreement") with H&R Block, Inc. ("H&R Block"),
H&R Block Group, Inc. ("Block Group"), CompuServe and a wholly-owned acquisition
subsidiary of the Company providing for the CompuServe Merger. In the CompuServe
Merger, each share of CompuServe common stock ("CompuServe Common Stock") will
be converted into a fraction of a share of WorldCom Common Stock equal to the
CompuServe exchange ratio (the "CompuServe Exchange Ratio"), which will be
determined as follows: (i) if the average trading price (generally based on the
average reported closing prices for a specified twenty day period prior to
closing) of a share of WorldCom Common Stock is greater than or equal to $29.54,
the CompuServe Exchange Ratio will be 0.40625; (ii) if such average trading
price is greater than or equal to $24.00 but less than $29.54, the CompuServe
Exchange Ratio will equal a fraction determined by dividing $12.00 by such
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average trading price; and (iii) if such average trading price is less than
$24.00, the CompuServe Exchange Ratio will be 0.5, provided that CompuServe has
the right to terminate the CompuServe Merger Agreement if such average trading
price is less than $24.00. Based on (i) the number of shares of CompuServe
Common Stock outstanding as of January 20, 1998 (assuming the conversion of
CompuServe stock options into WorldCom Common Stock) and (ii) assumed CompuServe
Exchange Ratios of 0.40625 and 0.5, 38,293,901 shares and 47,130,956 shares,
respectively, of WorldCom Common Stock will be issued in the CompuServe Merger.
Consummation of the CompuServe Merger is subject to certain conditions,
including the approval of the stockholders of CompuServe. The applicable waiting
period under the Hart-Scott-Rodino Act has expired. The CompuServe Merger
Agreement may be terminated if the effective time has not occurred on or before
March 1, 1998 and under certain other circumstances. Termination of the
CompuServe Merger Agreement by WorldCom or CompuServe under certain
circumstances, including failure to receive the approval of CompuServe's
stockholders, will require one party to make $15 million payment to the other
party as a termination fee. H&R Block and Block Group have agreed to vote all of
the CompuServe shares directly or indirectly owned by it (the "Block Shares,"
which, as of September 30, 1997, represented approximately 80.1% of the
outstanding CompuServe shares) in favor of the CompuServe Merger, which number
of shares is sufficient for such approval. In addition, H&R Block and Block
Group have irrevocably appointed WorldCom or its nominee as proxy to vote the
Block Shares at any stockholder meeting or otherwise as described in the
preceding sentence, and have granted WorldCom an option to purchase the Block
Shares under certain circumstances. The closing of the CompuServe Merger, which
will be accounted for as a purchase, is expected to occur on or about January
31, 1998, provided that the conditions to the CompuServe Merger are then
fulfilled or waived.
The AOL Transaction
On September 7, 1997, WorldCom also entered into the AOL Agreement, under
which WorldCom agreed to (a) transfer to AOL the online services businesses of
CompuServe and Spry, Inc., a CompuServe subsidiary ("Sprynet"), which WorldCom
will acquire as a result of the CompuServe Merger, and (b) acquire all
outstanding shares of ANS, a wholly-owned subsidiary of AOL which provides
Internet and other networking services to AOL and other customers. In addition
to the transfer of the online services businesses of CompuServe and Sprynet,
WorldCom will pay AOL $175 million in cash, subject to certain adjustments
specified in the AOL Agreement. The closing of the AOL Transaction is
conditioned on, and is expected to occur immediately after, the closing of the
CompuServe Merger. The closing of the AOL Transaction, which will be accounted
for as a purchase, is subject to certain other conditions. The applicable
waiting period under the Hart-Scott-Rodino Act with respect to the AOL
Transaction has expired.
The BFP Merger
WorldCom entered into an Amended and Restated Agreement and Plan of Merger
dated as of October 1, 1997 (the "BFP Merger Agreement") with BFP and a wholly
owned acquisition subsidiary of WorldCom, providing for the BFP Merger. In the
BFP Merger, each share of common stock, par value $.01, of BFP (the "BFP Common
Stock") will be converted into a fraction of a share of WorldCom Common Stock
equal to the BFP Exchange Ratio. The "BFP Exchange Ratio" will be determined as
follows: (i) if the average trading price (generally based on the average
reported closing prices for a specified twenty-day period prior to closing) of a
share of WorldCom Common Stock is greater than or equal to $35.15, the BFP
Exchange Ratio will equal 1.65; (ii) if such average trading price is greater
than or equal to $31.35 but less than $35.15, the BFP Exchange Ratio will equal
a fraction determined by dividing $58.00 by such average trading prices; and
(iii) if such average trading price is less than $31.35, the BFP Exchange Ratio
will equal 1.85. Based on (i) BFP Common Stock outstanding as of December 23,
1997 (including an estimated 73,000 shares that will be issuable immediately
prior to the effective time of the BFP Merger pursuant to an employee stock
purchase plan) and (ii) assumed BFP Exchange Ratios of 1.65 and 1.85,
approximately 64,729,280 shares and 72,575,253 shares, respectively, of WorldCom
Common Stock will be issued in the BFP Merger. In addition, outstanding warrants
and options to purchase shares of BFP Common Stock would be converted in the BFP
Merger to warrants and options to acquire an aggregate of approximately
4,634,777 shares and 5,196,569 shares, respectively, of WorldCom Common Stock,
and the exercise price would be adjusted to reflect the BFP Exchange Ratio, so
that, on exercise, the holders would receive, in the aggregate, the same number
of shares of WorldCom Common Stock as if they had exercised prior to the BFP
Merger, at the same aggregate exercise price. The BFP Merger has been structured
to qualify as a pooling of interests. Consummation of the BFP Merger is subject
to the fulfillment of a number of conditions, including the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino Act and
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the receipt of other required regulatory approvals (which condition has been
satisfied), and the absence of certain material adverse changes. Consummation of
the BFP Merger is also subject to the approval and adoption of the BFP Merger
Agreement by the stockholders of BFP. The BFP Merger Agreement may be terminated
if the effective time has not occurred on or before March 31, 1998 and under
certain other circumstances. Termination of the BFP Merger Agreement by WorldCom
or BFP under certain circumstances will require one party to make a $40 million
payment to the other party. Each of BFP's directors has agreed to vote his or
her beneficially owned shares of BFP Common Stock in favor of the BFP Merger
Agreement. The closing of the BFP Merger is expected to occur on or about
January 29, 1998, provided that the conditions to the BFP Merger are then
fulfilled or waived.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement,
WorldCom will use the net proceeds from the sale of the Debt Securities for
general corporate purposes, which may include the repayment of indebtedness,
acquisitions, additions to working capital, and capital expenditures.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
each of the five years ended December 31, 1996, and for the nine months ended
September 30, 1996 and 1997, which ratios are based on the historical
consolidated financial statements of WorldCom. The table also sets forth the pro
forma combined data for the year ended December 31, 1996, which data give effect
to the acquisition (the "MFS Merger") of MFS Communications Company, Inc.
("MFS")on December 31, 1996 as if the merger had occurred January 1, 1996. The
table does not include pro forma information reflecting the MCI/WorldCom Merger
or the other proposed transactions referred to herein, because such information
is not required to be presented herein. The pro forma combined data are
presented for comparative purposes only and are not intended to be indicative of
actual results had the transaction occurred as of the date indicated above nor
do they purport to indicate results that may be attained in the future.
<TABLE>
<CAPTION>
Historical
Nine Months Ended
Year Ended December 31, September 30,
--------------------------------------------------------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges ... 1.47:1 5.10:1 0.15:1 2.59:1 N/A 1.41:1 2.49:1
Deficiency of Earnings to Fixed
Charges (in thousands) ............. -- -- $52,597 -- $2,066,991 -- --
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Combined
-----------------------------
Year Ended
December 31, 1996
-----------------------------
<S> <C>
Ratio of Earnings to Fixed Charges ........................ N/A
Deficiency of Earnings to Fixed Charges (in thousands) .... $2,754,007
</TABLE>
Notes to Computation of Ratio of Earnings to Fixed Charges
(1) For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income (loss) from continuing operations, and fixed
charges consist of pretax interest (including capitalized interest) on all
indebtedness, amortization of debt discount and expense, that portion of
rental expense which the Company believes to be representative of interest,
and preferred stock dividend requirements of majority-owned subsidiaries
and 50-percent owned persons. For the historical years ended December 31,
1994 and 1996 and the pro forma combined year ended December 31, 1996,
earnings were inadequate to cover fixed charges by the amounts shown.
7
<PAGE> 9
(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 MFS Merger.
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 a $344
million after-tax write-down of operating assets within the Company's
non-core businesses. On a pre-tax basis, these charges totaled $600.1
million.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Indenture under which the Debt Securities are to be
issued. The particular terms of each issue of Debt Securities, as well as any
modifications or additions to such general terms that may apply in the case of
such Debt Securities, will be described in the Prospectus Supplement relating to
such Debt Securities. Accordingly, for a description of the terms of a
particular issue of Debt Securities, reference must be made to both the
Prospectus Supplement relating thereto and to the following description.
The Indenture
The Debt Securities will be issued under the Indenture, dated as of March
1, 1997, between the Company and The Chase Manhattan Bank, as successor to
Mellon Bank, N.A. as trustee, or under another indenture between the Company and
one or more other trustees to be selected by the Company (collectively, the
"Indenture" and the "Trustee").
The Indenture has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. Any amendments or modifications of the
Indenture will be filed by the Company with the Commission on a Current Report
on Form 8-K. Each Indenture will be available for inspection at the offices of
the Trustee. The following description of the Indenture and summaries of certain
provisions thereof do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all provisions of the Indenture and
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
including the definitions of certain terms in the Indenture and those terms made
a part of the Indenture by reference to the Trust Indenture Act as in effect on
the date of the Indenture. The Indenture is by its terms subject to and governed
by the Trust Indenture Act. Unless otherwise indicated, references under this
caption to sections are references to the Indenture. Whenever particular
sections or defined terms are referred to, it is intended that such sections or
defined terms shall be incorporated herein by reference. A copy of the Indenture
may be obtained from the Company.
The description of certain provisions of the Indenture described below
reflect the terms of the Indenture as they are proposed to be modified in
respect of the Debt Securities pursuant to the Board Resolutions, Officers'
Certificates and/or supplemental indentures to be delivered to the Trustee in
connection with the issuance of the several series of Debt Securities (the
"Authorizing Resolutions").
General Terms of Debt Securities
The Indenture provides that the Debt Securities issued thereunder may be
issued without limit as to aggregate principal amount, in one or more series, in
each case as established from time to time in or pursuant to authority granted
by a resolution of the Board of Directors of the Company or as established in
one or more supplemental indentures (Section 301 of the Indenture). The
Indenture also provides that there may be more than one Trustee thereunder, each
with respect to one or more series of Debt Securities (Section 101 of the
Indenture). Any Trustee may resign or be removed with respect to one or more
series of Debt Securities issued under the Indenture, and a successor Trustee
may be appointed to act with respect to such series (Section 608 of the
Indenture).
In the event that two or more persons are acting as Trustee with respect to
different series of Debt Securities issued under the Indenture, each such
Trustee shall be a Trustee of a trust under the Indenture separate and apart
from the trust administered by any other such Trustee (Section 609 of the
Indenture), and, except as otherwise indicated herein, any action described
herein to be taken by the Trustee may be taken by each such Trustee with respect
to, and only with respect to, the one or more series of Debt Securities for
which it is Trustee under the Indenture.
8
<PAGE> 10
Reference is made to the Prospectus Supplement relating to the series of
Debt Securities to be offered for the following terms thereof: (1) the title of
such Debt Securities; (2) any limit on the aggregate principal amount of such
Debt Securities; (3) the purchase price of such Debt Securities (expressed as a
percentage of the principal amount); (4) the date or dates, or the method for
determining such date or dates, on which the principal (and premium, if any) of
such Debt Securities will be payable; (5) the rate or rates (which may be fixed
or variable), or the method for determining such rate or rates, at which such
Debt Securities will bear interest, if any; (6) the date or dates from which any
such interest will accrue, the Interest Payment Dates on which any such interest
will be payable, the Regular Record Dates for the interest payable on any
registered Debt Security on such Interest Payment Dates, and the basis upon
which interest shall be calculated if other than that of a 360 day year of
twelve 30-day months; (7) the place or places where the principal of (and
premium, if any) and interest, if any, on such Debt Securities will be payable
and such Debt Securities may be surrendered for registration of transfer or
exchange; (8) the period or periods within which, the price or prices at which,
and the terms and conditions upon which such Debt Securities may be redeemed, as
a whole or in part, at the option of the Company, if the Company is to have such
an option; (9) the obligation, if any, of the Company to redeem or purchase such
Debt Securities pursuant to any sinking fund or analogous provision or at the
option of a Holder thereof and the period or periods within which, the price or
prices at which, and the terms and conditions upon which such Debt Securities
will be redeemed or purchased, as a whole or in part, pursuant to such
obligation; (10) if other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency or
currencies, and the terms and conditions relating thereto; (11) whether the
amount of payments of principal of (and premium, if any) or interest, if any, on
such Debt Securities may be determined with reference to an index, formula, or
other method (which index, formula, or method may, but need not be, based on a
currency, currencies, currency unit or units or composite currency or
currencies) and the manner in which such amounts shall be determined; (12) any
additions, modifications, or deletions in the terms of such Debt Securities with
respect to the Events of Default set forth in the Indenture; (13) any additions,
modifications, or deletions in the terms of such Debt Securities with respect to
the other covenants set forth in the Indenture; (14) whether such Debt
Securities will be issued in certificated or book-entry form; (15) whether such
Debt Securities will be in registered or bearer form and, if in registered form,
the denominations thereof if other than $1,000 or any integral multiple thereof
and, if in bearer form, the denominations thereof if other than $5,000 or any
integral multiple thereof; and (16) any other terms of such Debt Securities not
inconsistent with the provisions of the Indenture (Section 301 of the
Indenture).
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount from the
principal amount thereof. Special U.S. federal income tax, accounting, and other
considerations applicable thereto will be described in the applicable Prospectus
Supplement.
Unless otherwise provided with respect to a series of Debt Securities, the
Debt Securities (other than those issued in global form) will be issued in
registered form without coupons in denominations of $1,000 and integral
multiples thereof or in bearer form in a denomination of $5,000 (Section 302 of
the Indenture).
No stockholder, employee, officer, director or incorporator as such, past,
present or future, of the Company shall have any personal liability in respect
of the obligations of the Company under the Indenture or the Debt Securities by
reasons of his, her or its status as such stockholder, employee, officer,
director or incorporator.
Certificated Securities
Except as may be set forth in the applicable Prospectus Supplement, Debt
Securities will not be issued in certificated form. If, however, Debt Securities
are to be issued in certificated form, no service charge will be made for any
transfer or exchange of any Debt Securities, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith (Section 305 of the Indenture).
Book-Entry Debt Securities
The Debt Securities of a series may be issued, in whole or in part, in the
form of one or more global securities (each, a "Global Security") that will be
deposited with, or on behalf of, a depository identified in the Prospectus
Supplement. Global Securities may be issued in either registered or bearer form
and in either temporary or permanent form. Unless otherwise provided in the
Prospectus Supplement, Debt Securities that are represented by a Global Security
will be issued in denominations of $1,000 and any integral multiple thereof, and
will be issued in registered form only, without coupons. Payments of principal
of, premium, if any, and interest on Debt Securities represented by a Global
9
<PAGE> 11
Security will be made by the Company to the Trustee under the applicable
Indenture and forwarded by the Trustee to the depository.
The Company anticipates that any Global Securities will be deposited with,
or on behalf of, The Depository Trust Company, New York, New York ("DTC"), that
such Global Securities will be registered in the name of DTC's nominee, and that
the following provisions will apply to the depository arrangements with respect
to any such Global Securities. Additional or differing terms of the depository
arrangements will be described in the Prospectus Supplement relating to a
particular series of Debt Securities issued in the form of Global Securities.
So long as DTC or any successor depository (collectively, the "Depository")
or its nominee is the registered owner of a Global Security, the Depository, or
such nominee, as the case may be, will be considered the sole Holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Investors' interests in the Global Securities will be
represented through financial institutions acting on their behalf as direct and
indirect participants in the Depository. Such participants may include Morgan
Guaranty Trust Company of New York, Brussels, Belgium office or Cedel S.A.
Except as provided below, owners of beneficial interests in a Global Security
will not be entitled to have Debt Securities represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities in certificated form, and will not be considered the
owners or Holders thereof under the applicable Indenture. The laws of some
states require that certain purchasers of securities take physical delivery of
such securities in certificated form; accordingly, such laws may limit the
transferability of beneficial interests in a Global Security. Accordingly, each
person owning a beneficial interest in a Global Security must rely on DTC's
procedures and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any rights
of a Holder under the applicable Indenture. If the Company requests any action
of Holders or if an owner of a beneficial interest in a Global Security desires
to take any action that a Holder is entitled to take under the applicable
Indenture, DTC will authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants will otherwise act
upon the instructions of beneficial owners holding through them.
If DTC is at any time unwilling or unable to continue as depository or if
at any time DTC ceases to be a clearing agency registered under the Exchange
Act, if so required by applicable law or regulation, and, in either case, a
successor depository is not appointed by the Company within 90 days, the Company
will issue individual Debt Securities in certificated form in exchange for the
Global Securities. In addition, the Company may at any time, and in its sole
discretion, determine not to have any Debt Securities represented by one or more
Global Securities, and, in such event, will issue individual Debt Securities in
certificated form in exchange for the relevant Global Securities. In any such
instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery of individual Debt Securities in certificated form
of like tenor and rank, equal in principal amount to such beneficial interest
and to have such Debt Securities in certificated form registered in its name.
Unless otherwise provided in the Prospectus Supplement, Debt Securities so
issued in certificated form will be issued in denominations of $1,000 or any
integral multiple thereof, and will be issued in registered form only, without
coupons.
The following is based on information furnished by DTC:
DTC will act as securities depository for the Debt Securities. The
Debt Securities will be issued as fully registered securities
registered in the name of Cede & Co. (DTC's partnership nominee). One
fully registered Debt Security certificate is issued with respect to
each $200 million of principal amount of the Debt Securities of a
series, and an additional certificate is issued with respect to any
remaining principal amount of such series.
DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations, and certain
other organizations ("Direct Participants"). DTC is owned by a number
10
<PAGE> 12
of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to
others, such as securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on
file with the Commission.
Purchases of Debt Securities under the DTC system must be made by
or through Direct Participants, which will receive a credit for the
Debt Securities on DTC's records. The ownership interest of each actual
purchaser of each Debt Security ("Beneficial Owner") is in turn
recorded on the Direct and Indirect Participants' records. A Beneficial
Owner does not receive written confirmation from DTC of its purchase,
but such Beneficial Owner is expected to receive a written confirmation
providing details of the transaction, as well as periodic statements of
its holdings, from the Direct or Indirect Participant through which
such Beneficial Owner entered into the transaction. Transfers of
ownership interests in Debt Securities are accomplished by entries made
on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners do not receive certificates representing their
ownership interests in Debt Securities, except in the event that use of
the book-entry system for the Debt Securities is discontinued.
To facilitate subsequent transfers, the Debt Securities deposited
by Participants with DTC are registered in the name of DTC's
partnership nominee, Cede & Co. The deposit of the Debt Securities with
DTC and their registration in the name of Cede & Co. will effect no
change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Debt Securities; DTC records reflect only the
identity of the Direct Participants to whose accounts Debt Securities
are credited, which may or may not be the Beneficial Owners. The
Participants remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners are
governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of
the Debt Securities within an issue are being redeemed, DTC's practice
is to determine by lot the amount of interest of each Direct
Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. consents or votes with respect to the
Debt Securities. Under its usual procedures, DTC mails a proxy (an
"Omnibus Proxy") to the issuer as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the Debt
Securities are credited on the record date (identified on a list
attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Debt
Securities are made to DTC. DTC's practice is to credit Direct
Participants' accounts on the payable date in accordance with their
respective holdings as shown on DTC's records unless DTC has reason to
believe that it will not receive payment on the payable date. Payments
by Participants to Beneficial Owners are governed by standing
instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in
"street name," and are the responsibility of such Participant and not
of DTC, the Trustee, or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment
of principal, premium, if any, and interest to DTC is the
responsibility of the Company or the Trustee. Disbursement of such
payments to Direct Participants is the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities
depository with respect to the Debt Securities at any time by giving
reasonable notice to the Company or the Trustee. Under such
circumstances, in the event that a successor securities depository is
not appointed, Debt Security certificates are required to be printed
and delivered.
11
<PAGE> 13
The Company may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities
depository). In that event, Debt Security certificates will be printed
and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
Unless stated otherwise in the Prospectus Supplement, the underwriters or
agents with respect to a series of Debt Securities issued as Global Securities
will be Direct Participants in DTC.
None of the Company, any underwriter or agent, the Trustee, or any
applicable paying agent will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial interests
in a Global Security or for maintaining, supervising, or reviewing any records
relating to such beneficial interest.
Merger
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other
corporation, provided that (a) either (i) the Company shall be the continuing
corporation or (ii) the successor corporation (if other than the Company) formed
by or resulting from any such consolidation or merger or which shall have
received the transfer of such assets shall expressly assume payment of the
principal of (and premium, if any) and interest on all the Debt Securities and
the performance and observance of all the covenants and conditions of the
applicable Indenture and (b) the Company or such successor corporation shall not
immediately thereafter be in default under the applicable Indenture (Section 801
of the Indenture). In the case of such a transaction, the successor corporation
shall succeed to and be substituted for the Company, with the same effect as if
it had been named in the Indenture as the party of the first part (Section 802
of the Indenture).
Limitation on Liens
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, or suffer to be created or to exist, any Lien
(other than Permitted Liens) upon any of its Property or assets, whether now
owned or hereafter acquired, or any interest therein or any income or profits
therefrom, unless it has made or will make effective provision whereby the Debt
Securities will be secured by such Lien equally and ratably with (or prior to)
all other indebtedness of the Company or any Restricted Subsidiary secured by
such Lien for so long as any such other indebtedness of the Company or any
Restricted Subsidiary shall be so secured. Notwithstanding the foregoing, the
Company may, and may permit any Restricted Subsidiary to, issue, assume, or
guarantee indebtedness secured by Liens on Property that are not Permitted Liens
without equally and ratably securing the Debt Securities, provided that the sum
of all such indebtedness then being issued, assumed, or guaranteed together with
such indebtedness theretofore issued, assumed, or guaranteed that remains
outstanding (the "Additional Permitted Secured Indebtedness") does not exceed
10% of the total assets of the Company and its Subsidiaries prior to the time
such indebtedness was issued, assumed, or guaranteed, as reflected in the
Company's then most recent balance sheet prepared in accordance with GAAP
(Section 1004 of the Indenture, as modified by the Authorizing Resolutions). In
respect of several series of securities (the "1997 Senior Securities") issued by
the Company in April and August, 1997 in aggregate principal amount of
approximately $3.35 billion, maturing from 2004 through 2027 (subject to prior
redemption at the option of the Company), the Indenture provides, in lieu of the
exception set forth in the immediately preceding sentence, for Additional
Permitted Secured Indebtedness not exceeding 15% of Consolidated Net Tangible
Assets prior to the time such indebtedness was issued, assumed, or guaranteed.
As long as both the Debt Securities and the 1997 Senior Securities remain
outstanding, the Company will be required to comply with both of the limitations
on Liens referred to above.
Set forth below is a summary of certain of the defined terms used herein
and defined in Section 101 of the Indenture. Reference is made to the Indenture
for the full definitions of such terms, as well as any capitalized terms used
herein for which not definitions are provided.
"Capital Lease Obligations" means indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP and the amount of such indebtedness shall be
the capitalized amount of such obligations determined in accordance with GAAP.
For purposes of this covenant, a Capital Lease Obligation shall be deemed
secured by a Lien on the Property being leased.
12
<PAGE> 14
"Capital Stock" means, with respect to any person, any and all shares or
other equivalents (however designated) of corporate stock, partnership interest
or any other participation, right, warrant, option or other interest in the
nature of an equity interest in such person, but excluding any debt security
convertible or exchangeable into such equity interest.
"Consolidated Net Tangible Assets" means the consolidated total assets of
the Company and its Subsidiaries as reflected in the Company's most recent
balance sheet prepared in accordance with GAAP, less (i) current liabilities
(excluding current maturities of long-term debt and Capital Lease Obligations)
and (ii) goodwill, trademarks, patents and minority interests of others.
"GAAP" means United States generally accepted accounting principles as in
effect as of the date of determination, unless stated otherwise.
"Lien" means, with respect to any Property of any person, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement or zoning restriction (other than any easement
or zoning restriction not materially impairing usefulness or marketability),
encumbrance, preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever on or with respect to such Property
including any Capital Lease Obligation, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing or any Sale and Leaseback Transaction.
"Permitted Liens" means (i) Liens existing on the date of the Indenture;
(ii) Liens on Property existing at the time of acquisition thereof or to secure
the payment of all or any part of the purchase price thereof or to secure any
indebtedness incurred prior to, at the time of or within 270 days after the
acquisition of such Property for the purpose of financing all or any part of the
purchase price thereof; (iii) Liens securing indebtedness owing by a Restricted
Subsidiary to the Company or any wholly-owned Subsidiary of the Company; (iv)
Liens on Property of any entity, or on the stock, indebtedness or other
obligations of such entity, existing at the time (a) such entity becomes a
Restricted Subsidiary, (b) such entity is merged into or consolidated with the
Company or a Restricted Subsidiary or (c) the Company or a Restricted Subsidiary
acquires all or substantially all of the assets of such entity; provided that no
such Lien extends to any other Property; (v) Liens on Property to secure any
indebtedness incurred to provide funds for all or any part of the cost of
development of or improvements to such Property; (vi) Liens on the Property of
the Company or any of its Subsidiaries securing (a) nondelinquent performance of
bids or contracts (other than for borrowed money, obtaining of advances or
credit or the securing of debt), (b) contingent obligations on surety and appeal
bonds and (c) other nondelinquent obligations of a like nature, in each case,
incurred in the ordinary course of business; (vii) Liens securing Capital Lease
Obligations, provided that (a) any such Lien attaches to the Property within 270
days after the acquisition thereof and (b) such Lien attaches solely to the
Property so acquired; (viii) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit account or other funds, provided that such
deposit account is not a dedicated cash collateral account and is not subject to
restrictions against access by the Company in excess of those set forth by
regulations promulgated by the Federal Reserve Board and such deposit account is
not intended by the Company or any Subsidiary to provide collateral to the
depository institution; (ix) pledges or deposits under worker's compensation
laws, unemployment insurance laws or similar legislation; (x) statutory and tax
Liens for sums not yet due or delinquent or which are being contested or
appealed in good faith by appropriate proceedings; (xi) Liens arising solely by
operation of law and in the ordinary course of business, such as mechanics',
materialmen's, warehousemen's and carriers' Liens and Liens of landlords or of
mortgages of landlords, on fixtures and movable Property located on premises
leased in the ordinary course of business; (xii) Liens on personal Property,
other than shares of stock or indebtedness of any Restricted Subsidiary, to
secure loans maturing not more than one year from the date of the creation
thereof and on accounts receivable associated with a receivables financing
program of the Company or any of its Subsidiaries; and (xiii) any renewal,
extension or replacement (in whole or in part) for any Lien permitted pursuant
to exceptions (i) through (xii) above or of any indebtedness secured thereby,
provided that such extension, renewal or replacement Lien shall be limited to
all or any part of the same Property that secured the Lien extended, renewed or
replaced (plus improvements on such Property).
"Property" means, with respect to any person, any interest of such person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including, without limitation, Capital Stock in any other person
(but excluding Capital Stock or other securities issued by such first mentioned
person).
13
<PAGE> 15
"Receivables Subsidiary" means a special purpose wholly owned Subsidiary
created in connection with any transactions that may be entered into by the
Company or any of its Subsidiaries pursuant to which the Company or any of its
Subsidiaries may sell, convey, grant a security interest in or otherwise
transfer undivided percentage interests in its receivables.
"Restricted Subsidiary" means any Subsidiary of the Company if (i) such
Subsidiary has substantially all of its Property in the United States (other
than its territories and possessions) and (ii) at the end of the most recent
fiscal quarter of the Company, the aggregate amount, determined in accordance
with GAAP consistently applied, of securities of, loans and advances to, and
other investments in, such Subsidiary held by the Company and its other
Subsidiaries exceeded 10% of the Company's Consolidated Net Tangible Assets;
provided, however, that the term Restricted Subsidiary shall not include (a) any
Subsidiary acquired by the Company subsequent to the date of the Indenture
unless and until such time as such corporation is designated by the Company as a
"Restricted Subsidiary" or otherwise similarly treated under the Company's $5
billion five-year revolving credit facility or any other agreement of the
Company for indebtedness for borrowed money or (b) any Receivables Subsidiary.
(Section 101 of the Indenture as modified by the Authorizing Resolutions. In
respect of the 1997 Senior Securities, in lieu of the exception described in
clause (a) above, the Indenture excludes from the definition of Restricted
Subsidiary any of MFS Communications Company, Inc. or its Subsidiaries unless
and until such time as such corporation is designated by the Company as a
"Restricted Subsidiary" or otherwise similarly treated under the Company's $5
billion five-year revolving credit facility or any other agreement of the
Company for indebtedness for borrowed money. As long as both the Debt Securities
and the 1997 Senior Securities remain outstanding, the Company will be required
to comply with provisions relating to Restricted Subsidiaries as applicable for
purposes of both the Debt Securities and the 1997 Senior Securities.
"Sale and Leaseback Transaction" means, with respect to any person, any
direct or indirect arrangement pursuant to which Property is sold or transferred
by such person or a Restricted Subsidiary of such person and is thereafter
leased back from the purchaser or transferee thereof by such person or one of
its Restricted Subsidiaries.
"Subsidiary" means a corporation a majority of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or one or more
other Subsidiaries of the Company. For the purposes of this definition, "voting
stock" means stock having voting power for the election of directors, whether at
all times or only so long as no senior class of stock has such voting power by
reason of any contingency.
Events of Default, Notice and Waiver
The Indenture provides that the following events are Events of Default with
respect to any series of Debt Securities issued thereunder: (a) default for 30
days in the payment of any installment of interest on any Debt Security of such
series; (b) default in the payment of the principal of (or premium, if any, on)
any Debt Security of such series at its Maturity; (c) default in making a
sinking fund payment required for any Debt Security of such series; (d) default
in the performance of any other covenant of the Company in the Indenture (other
than a covenant included in the Indenture solely for the benefit of a series of
Debt Securities issued thereunder other than such series), continued for 90 days
after written notice as provided in the Indenture (which notice period is 60
days in respect of the 1997 Senior Securities); (e) certain events of
bankruptcy, insolvency, or reorganization, or court appointment of a receiver,
liquidator, or trustee of the Company or all or substantially all of its
property; and (f) any other Event of Default provided with respect to a
particular series of Debt Securities (Section 501 of the Indenture, as modified
by the Authorizing Resolutions). In respect of the 1997 Senior Securities, the
Indenture also includes within the meaning of Events of Default certain events
of default resulting in the acceleration of the maturity of indebtedness
aggregating in excess of $50,000,000 under any mortgages, indentures(including
the Indenture), or instruments under which the Company may have issued, or by
which there may have been secured or evidenced, any other indebtedness(including
debt securities of any other series issued under the Indenture) of the Company,
but only if such indebtedness is not discharged or such acceleration is not
rescinded or annulled. Accordingly, if such events were to occur, the principal
amount of the 1997 Senior Securities may be declared to be due and payable at a
time when the Debt Securities would not be so declared to be due and payable,
and such acceleration in respect of the 1997 Senior Securities may adversely
affect the ability of the Company to make required payments in respect of the
Debt Securities.
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Within 90 days after the occurrence of any default with respect to any
series of Debt Securities, the Trustee shall transmit notice of such default
(unless cured or waived) known to the Trustee to the Holders of such Debt
Securities; provided, that the Trustee may withhold notice to the Holders of any
series of Debt Securities of any default with respect to such series (except a
default in the payment of the principal of (or premium, if any) or interest on
any Debt Security of such series or in the payment of any sinking fund
installment in respect of any Debt Security of such series) if the Responsible
Officers of the Trustee consider such withholding to be in the interest of such
Holders (Section 601 of the Indenture).
If an Event of Default under the Indenture with respect to Debt Securities
of any series issued thereunder at the time Outstanding occurs and is
continuing, then in every such case the Trustee or the Holders of not less than
25% in principal amount of the Outstanding Debt Securities of that series may
declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms thereof) of all of the Debt Securities of that series
to be due and payable immediately by written notice thereof to the Company (and
to the Trustee if given by the Holders) (Section 502 of the Indenture). However,
at any time after such a declaration of acceleration with respect to Debt
Securities of such series (or of all Debt Securities then Outstanding under the
Indenture, as the case may be) has been made, but before a judgment or decree
for payment of the money due has been obtained by the Trustee prior to the
Stated Maturity thereof, the Holders of a majority in principal amount of
Outstanding Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) may, subject to certain
conditions, rescind and annul such acceleration if all Events of Default, other
than the non-payment of accelerated principal (or specified portion thereof),
with respect to Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) have been cured or waived
as provided in the Indenture (Section 502 of the Indenture). The Indenture also
provides that the Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series issued thereunder (or of all Debt
Securities then Outstanding under the Indenture, as the case may be) may waive
certain past defaults with respect to such series and its consequences (Section
513 of the Indenture). Reference is made to the Prospectus Supplement relating
to any series of Debt Securities issued under the Indenture which are Original
Issue Discount Securities for the particular provisions relating to acceleration
of a portion of the principal amount of such Original Issue Discount Securities
upon the occurrence of an Event of Default and the continuation thereof. Within
120 days after the close of each fiscal year, the Company must file with the
Trustee a statement, signed by specified officers, stating whether or not such
officers have knowledge of any default under the Indenture and, if so,
specifying each such default and the nature and status thereof (Section 1006 of
the Indenture).
Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
(Section 602 of the Indenture). Subject to such provisions for indemnification
and certain limitations contained in the Indenture, the Holders of not less than
a majority in principal amount of the Outstanding Debt Securities of any series
issued thereunder (or of all Debt Securities then Outstanding under the
Indenture, as the case may be) shall have the right to direct the time, method,
and place of conducting any proceeding for any remedy available to the Trustee,
or of exercising any trust or power conferred upon the Trustee (Section 512 of
the Indenture).
Modification of the Indenture
The Indenture contains provisions permitting the Company and the Trustee to
enter into one or more indentures supplemental to the Indenture without the
consent of the holders of any Debt Securities for certain purposes, including
the following: (a) to evidence the succession of another entity to the Company
and the assumption by such entity of the covenants of the Company contained in
the Indenture, (b) to add to the covenants of the Company for the benefit of the
holders of any series of the Debt Securities (and if such covenants are to be
for the benefit of less than all series of Debt Securities, stating that such
covenants are expressly being included solely for the benefit of such series) or
to surrender any right or power conferred upon the Company in the Indenture; (c)
to add any additional Events of Default for the benefit of the Holders of any
series of the Debt Securities (and if such Events of Default are to be for the
benefit of less than all series of Debt Securities, stating that such Events of
Default are expressly being included solely for the benefit of such series);
provided, however, that in respect of any such additional Events of Default such
supplemental indenture may provide for a particular period of grace after
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default or may provide for an immediate enforcement upon such default or may
limit the remedies available to the Trustee upon such default or may limit the
right of the Holders of a majority in aggregate principal amount of that or
those series of Debt Securities to which such additional Events of Default apply
to waive such default; (d) to add to or change any of the provisions of the
Indenture to permit or facilitate the issuance of any series of the Debt
Securities in uncertificated or bearer form; (e) to change or eliminate any
provisions of the Indenture, provided that any such change or elimination shall
become effective only when there are no Outstanding Debt Securities of any
series created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; (f) to provide security for the Debt
Securities; (g) to establish the form or terms of any series of Debt Securities
and any related coupons in accordance with the terms and conditions of the
Indenture; (h) to evidence and provide for the acceptance and appointment of a
successor Trustee with respect to any series of Debt Securities and to add to or
change any of the provisions of the Indenture to provide for or facilitate the
administration of the trusts under the Indenture by more than one Trustee; (i)
to cure any ambiguity, to correct or supplement any provision of the Indenture
which may be defective or inconsistent with any other provision, or to make any
other provisions with respect to matters or questions arising under the
Indenture which shall not be inconsistent with the provisions of the Indenture
and which additional provisions shall not adversely affect the interests of the
Holders of any series of the Debt Securities; or (j) to supplement any of the
provisions of the Indenture to such extent as shall be necessary to permit or
facilitate the defeasance and discharge of any series of the Debt Securities in
accordance with terms and conditions of the Indenture provided that any such
action shall not adversely affect the interests of the holders of any series of
the Debt Securities in any material respect (Section 901 of the Indenture).
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
principal amount of all the Outstanding Debt Securities under the Indenture
affected by the terms of any such supplemental indenture, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of modifying in any manner
the rights of Holders of any series of Debt Securities, except that, without the
consent of the Holders of each such Debt Security affected thereby, no such
supplemental indenture shall (a) change the Stated Maturity of the principal of
(or premium, if any, on) or any installment of principal of or interest on any
such Debt Security; (b) reduce the principal amount of, or the rate or amount of
interest on, or any premium payable on redemption of, any such Debt Security, or
reduce the amount of principal of an Original Issue Discount Security that would
be due and payable upon declaration of acceleration of the Maturity thereof or
would be provable in bankruptcy, or adversely affect any right of repayment of
the Holder of any such Debt Security; (c) change any obligation of the Company
to pay additional amounts pursuant to Section 1007 of the Indenture (except as
otherwise contemplated by the Indenture); (d) adversely affect any right of
repayment at the option of the Holder such Debt Security; (e) change the place
of payment where, or the currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Security or any premium or
interest thereon is payable; (f) impair the right to institute suit for the
enforcement of any payment on or after the stated maturity thereof (or in the
case of redemption or repayment at the option of the Holder of such Debt
Security, on or after the Redemption Date or the Repayment Date, as the case may
be) with respect to any such Debt Security; (g) reduce the percentage in
principal amount of the Outstanding Debt Securities of any series, the consent
of whose Holders is required for any such supplemental indenture, or the consent
of whose Holders is required for any waiver with respect to such series or
compliance with certain provisions of the Indenture or certain defaults
thereunder and their consequences; (h) reduce the quorum or voting requirements
as contained in the Indenture with respect to such Debt Securities; or (i)
modify any of the provisions of the Indenture relating to supplemental
indentures or waiver of past defaults with respect to such Debt Securities
except to increase any such percentage or to provide that certain other
provisions of the Indenture cannot be modified or waived with respect to such
Debt Securities without the consent of the Holders of each such Debt Security
(Section 902 of the Indenture).
A supplemental indenture which changes or eliminates any covenant or other
provision of the Indenture which has expressly been included solely for the
benefit of one or more series of the Debt Securities, or which modifies the
rights of Holders of Debt Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under the
Indenture of the Holders of Debt Securities of any other series, but shall
require the consent, in accordance with the provisions of the Indenture, of the
Holders of at least a majority of the Outstanding Debt Securities of such one or
more particular series. It is not necessary for the Holders of the Debt
Securities to approve the particular form of any proposed supplemental
indenture, but it is sufficient if such Holders approve the substance thereof
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(Section 902 of the Indenture). Every supplemental indenture executed pursuant
to the Indenture will conform to the requirements of the Trust Indenture Act as
then in effect (Section 905 of the Indenture).
Satisfaction and Discharge of the Indenture, Covenant Defeasance
The Company may, at its option, elect to have either or both of (a) the
defeasance provision of the Indenture or (b) the covenant defeasance provision
of the Indenture apply to a series of Debt Securities upon compliance with the
applicable conditions set forth in the Indenture. (Section 1401 of the
Indenture) The Company shall be deemed to have been discharged from its
obligations with respect to a series of Debt Securities on the date the
conditions set forth below are satisfied (hereinafter, "defeasance"), except for
the following obligations which shall survive until otherwise terminated or
discharged pursuant to the Indenture: (i) the rights of holders of such Debt
Securities to receive, solely from the trust fund described in Section 1404 of
the Indenture, payments in respect of the principal of (and premium, if any) and
interest, if any, on such Debt Securities when such payments are due, (ii) the
Company's obligations with respect to such Debt Securities under Sections 305,
306, 1002 and 1003 of the Indenture and with respect to the payment of
additional amounts, if any, as contemplated by Section 1007 of the Indenture,
(iii) the rights, powers, trusts, duties and immunities of the Trustee under the
Indenture and (iv) the obligations contained in the article of the Indenture
relating to defeasance and covenant defeasance. The Company shall be released
from its obligations under any covenant with respect to such Debt Securities on
and after the date the conditions set forth below are satisfied (hereinafter,
"covenant defeasance") (Sections 1402 and 1403 of the Indenture).
The following are the conditions that must be satisfied prior to defeasance
or covenant defeasance: (a) the Company shall irrevocably have deposited or
caused to be deposited with the Trustee as trust funds in trust for the purpose
of making the following payments, money and/or Government Obligations
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, (i) the principal of (and
premium, if any) and interest, if any, on the Debt Securities to be defeased on
the Stated Maturity of such principal or installment of principal or interest
and (ii) any mandatory sinking fund payments or analogous payments applicable to
such Debt Securities; (b) such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a default under, the Indenture
or any other material agreement or instrument to which the Company is a party or
by which it is bound; (c) no Event of Default or event which with notice or
lapse of time or both would become an Event of Default with respect to such Debt
Securities shall have occurred and be continuing on the date of such deposit, or
if applicable, at any time during the period ending on the 91st day after the
date of such deposit; (d) the Company shall have delivered to the Trustee an
opinion of counsel to the effect that the holders of such Debt Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such defeasance or covenant defeasance, as applicable, and will be subject to
Federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance or covenant defeasance, as
applicable, had not occurred; (e) the Company shall have delivered to the
Trustee an officers' certificate and an opinion of counsel, each stating that
all conditions precedent to the defeasance or the covenant defeasance (as the
case may be) have been complied with and an opinion of counsel to the effect
that either (i) as a result of a deposit pursuant to subsection (a) above,
registration is not required under the Investment Company Act of 1940, as
amended, by the Company, with respect to the trust funds representing such
deposit or by the Trustee for such trust funds or (ii) all necessary
registrations under said Act have been effected; and (f) such defeasance or
covenant defeasance shall be effected in compliance with any additional or
substitute terms, conditions or limitations which may be imposed on the Company
in connection therewith pursuant to Section 301 of the Indenture (Section 1404
of the Indenture).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
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account of the Holder of a depository receipt; provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the Holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101 of the Indenture).
The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance option.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than the Events of Default
described in clauses (d) and (f) under "Events of Default, Notice and Waiver",
the amount of money in which such Debt Securities are payable, and Government
Obligations on deposit with the relevant Trustee, will be sufficient to pay
amounts due on such Debt Securities at the time of their Stated Maturity but may
not be sufficient to pay amounts due on such Debt Securities at the time of the
acceleration resulting from such Event of Default. However, the Company would
remain liable to make payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series and any related coupons.
Regarding the Trustee
The Chase Manhattan Bank, Trustee under the Indenture, is a participant in
the Company's revolving credit and term loan agreements. In addition, the
trustee may from time to time enter into other lending transactions with the
Company in the ordinary course of business.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in or outside the United States to
or through underwriters, through or to dealers, directly to one or more
purchasers, or through agents. The Prospectus Supplement with respect to the
Debt Securities offered hereby will set forth the terms of the offering of the
Debt Securities, including the name or names of any underwriters, dealers, or
agents, the purchase price of the Debt Securities and the proceeds to the
Company from such sale, any delayed delivery arrangements, any underwriting
discounts and other items constituting underwriters' compensation, the initial
public offering price, any discounts or concessions allowed or re-allowed or
paid to dealers, and any securities exchanges on which the Debt Securities may
be listed.
If underwriters are used in the sale, the Debt Securities will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at negotiated prices or at varying
prices determined at the time of sale. The Debt Securities may be offered to the
public either through underwriting syndicates represented by one or more
managing underwriters or directly by one or more firms acting as underwriters or
agents. The underwriter or underwriters with respect to a particular
underwritten offering of Debt Securities will be named in the Prospectus
Supplement relating to such offering, and if an underwriting syndicate is used,
the managing underwriter or underwriters will be set forth on the cover of such
Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement
relating thereto, the obligations of the underwriters or agents to purchase the
Debt Securities will be subject to conditions precedent and the underwriters
will be obligated to purchase all the Debt Securities if any are purchased. The
initial public offering price and any discounts or concessions allowed or
re-allowed or paid to dealers may be changed from time to time.
If dealers are used in the sale of Debt Securities with respect to which
this Prospectus is delivered, the Company will sell such Debt Securities to the
dealers as principals. The dealers may then resell such Debt Securities to the
public at varying prices to be determined by such dealers at the time of resale.
The names of the dealers and the terms of the transaction will be set forth in
the Prospectus Supplement relating thereto.
Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time at fixed prices, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at varying prices determined at the time of
sale. Any agent involved in the offer or sale of the Debt Securities with
respect to which this Prospectus is delivered will be named, and any commissions
payable by the Company to such agent will be set forth, in the Prospectus
Supplement relating thereto. Unless otherwise indicated in the Prospectus
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Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
In connection with the sale of the Debt Securities, underwriters or agents
may receive compensation from the Company or from purchasers of Debt Securities
for whom they may act as agents in the form of discounts, concessions, or
commissions. Underwriters, agents, and dealers participating in the distribution
of the Debt Securities may be deemed to be underwriters, and any discounts or
commissions received by them from the Company and any profit on the resale of
the Debt Securities by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters, or dealers to solicit offers from certain types of
institutions to purchase Debt Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents, dealers, and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments that such agents, dealers, or underwriters may be
required to make with respect thereto. Agents, dealers, and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
The Debt Securities may or may not be listed on a national securities
exchange. No assurances can be given that there will be a market for the Debt
Securities.
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
When so provided in the Prospectus Supplement, investors in the Global
Securities representing any of the Debt Securities issued hereunder may hold a
beneficial interest in such Global Securities through DTC, CEDEL, or Euroclear
(as defined below) or through participants. The Global Securities may be traded
as home market instruments in both the European and U.S. domestic markets.
Initial settlement and all secondary trades will settle as set forth in the
applicable Prospectus Supplement.
Cedel S.A. ("CEDEL") is incorporated under the laws of Luxembourg as a
professional depository. CEDEL holds securities for its participating
organizations and facilitates the clearance and settlement of securities
transactions between CEDEL participants through electronic book-entry changes in
accounts of CEDEL participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its participants,
among other things, services for safekeeping, administration, clearance, and
settlement of internationally traded securities and securities lending and
borrowing. CEDEL interfaces with domestic markets in several countries. As a
professional depository, CEDEL is subject to regulation by the Luxembourg
Monetary Institute. CEDEL participants are recognized financial institutions
around the world, including underwriters, securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations and may
include the underwriters named in any Prospectus Supplement. Indirect access to
CEDEL is also available to others, such as banks, brokers, dealers, and trust
companies that clear through or maintain a custodial relationship with a CEDEL
participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System and to clear and settle transactions
between Euroclear participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 32 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing, and interfaces with domestic markets in
several countries generally similar to the arrangements for cross-market
transfers with DTC. The Euroclear System is operated by Morgan Guaranty Trust
Company of New York, Brussels, Belgium office (the "Euroclear Operator" or
"Euroclear"), under contract with Euroclear Clearance System S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
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Cooperative. The Cooperative establishes policy for the Euroclear System on
behalf of Euroclear participants. Euroclear participants include banks
(including central banks), securities brokers and dealers, and other
professional financial intermediaries and may include the underwriters. Indirect
access to the Euroclear System is also available to other firms that clear
through or maintain a custodial relationship with a Euroclear participant,
either directly or indirectly.
The Euroclear Operator is the Belgian branch of Morgan Guaranty Trust
Company of New York ("Morgan") which is a member bank of the Federal Reserve
System. As such, it is regulated and examined by the Federal Reserve Board and
the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawals of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear participants, and has no record
of or relationship with persons holding through Euroclear participants.
Principal, premium, if any, and interest payments with respect to Debt
Securities held through CEDEL or Euroclear will be credited to the cash accounts
of CEDEL participants or Euroclear participants in accordance with the relevant
system's rules and procedures, to the extent received by its depository. Such
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations as described below. The CEDEL or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a holder under the relevant Indenture on behalf of a CEDEL
participant or Euroclear participant only in accordance with its relevant rules
and procedures and subject to its depository's ability to effect such actions on
its behalf through the Depository.
Initial Settlement
All Global Securities will be registered in the name of Cede & Co. as
nominee of DTC. Investors' interests in the Global Securities will be
represented through financial institutions acting on their behalf as direct and
indirect participants in the Depository. As a result, CEDEL and Euroclear will
hold positions on behalf of their participants through their respective
depositories, Citibank and Morgan, which in turn will hold such positions in
accounts as participants of DTC.
Global Securities held through DTC will follow the settlement practices
described above. Investor securities custody accounts will be credited with
their holdings against payment on the settlement date. Global Securities held
through CEDEL or Euroclear accounts will follow the settlement procedures
applicable to conventional eurobonds, except that there will be no temporary
global security and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payment.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
participants will be settled using the procedures described above.
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL participants and/or Euroclear participants will be settled
using the procedures applicable to conventional eurobonds.
Trading between DTC Seller and CEDEL or Euroclear Purchaser. When
beneficial interests in the Global Securities are to be transferred from the
account of a DTC participant to the account of a CEDEL participant or a
Euroclear participant, the purchaser will send instructions to CEDEL or
Euroclear through a participant at least one business day prior to settlement.
CEDEL or Euroclear will instruct Citibank or Morgan, respectively, as the case
may be, to receive a beneficial interest in the Global Securities against
payment. Unless otherwise set forth in the Prospectus Supplement, payment will
include interest accrued on the beneficial interest in the Global Securities so
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transferred from and including the last coupon payment date to and excluding the
settlement date, on the basis on which interest is calculated on the Debt
Securities. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
Payment will then be made by Citibank or Morgan to the DTC participant's account
against delivery of the beneficial interest in the Global Securities. After
settlement has been completed, the beneficial interest in the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the CEDEL or Euroclear participant's
account. The securities credit will appear the next day (European time) and the
cash debit will be back-valued to, and the interest on the beneficial interest
in Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (that is, the trade fails), the CEDEL or
Euroclear cash debit will be valued instead as of the actual settlement date.
CEDEL participants and Euroclear participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within CEDEL or Euroclear. Under this approach,
they may take on credit exposure to CEDEL or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit to
them, participants can elect not to preposition funds and allow that credit line
to be drawn upon to finance settlement. Under this procedure, CEDEL participants
or Euroclear participants purchasing beneficial interest in Global Securities
would incur overdraft charges for one day, assuming they cleared the overdraft
when the beneficial interests in the Global Securities were credited to their
accounts. However, interest on the beneficial interests in the Global Securities
would accrue from the value date. Therefore, in many cases the investment income
on the Global Securities earned during that one-day period may substantially
reduce or offset the amount of such overdraft charges, although this result will
depend on each participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending a beneficial interest
in Global Securities to Citibank or Morgan for the benefit of CEDEL participants
or Euroclear participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC participant a cross-market transaction
will settle no differently than a trade between two DTC participants.
Trading between CEDEL or Euroclear Seller and DTC Purchaser. Due to time
zone differences in their favor, CEDEL and Euroclear participants may employ
their customary procedures to transactions in which the beneficial interest in
the Global Securities is to be transferred by the respective clearing system,
through Citibank or Morgan, to a DTC participant. The seller will send
instructions to CEDEL or Euroclear through a participant at least one business
day prior to settlement. In these cases, CEDEL or Euroclear will instruct
Citibank or Morgan, as appropriate, to deliver the beneficial interest in the
Global Securities to the DTC participant's account against payment. Payment will
include interest accrued on the beneficial interests in the Global Securities
from and including the last coupon payment date to and excluding the settlement
date on the basis on which interest is calculated on the Global Securities. For
transactions settling on the 31st of the month, payment will include interest
accrued to and excluding the first day of the following month. The payment will
then be reflected in the account of the CEDEL or Euroclear participant the
following day, and receipt of the cash proceeds in the CEDEL or Euroclear
participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the CEDEL or
Euroclear participant have a line of credit with its respective clearing system
and elect to be in debit in anticipation of receipt of the sale proceeds in its
account, the back-valuation will extinguish any overdraft charges incurred over
that one-day period. If settlement is not completed on the intended value date
(that is, the trade fails), receipt of the cash proceeds in the CEDEL or
Euroclear participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use CEDEL or Euroclear and that purchase
beneficial interests in Global Securities from DTC participants for credit to
CEDEL participants or Euroclear participants should note that these trades would
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:
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<PAGE> 23
(1) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the day trade is reflected in their CEDEL or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(2) borrowing beneficial interests in the Global Securities in the
United States from a DTC participant no later than one day prior to
settlement, which would give beneficial interests in the Global Securities
sufficient time to be reflected in the appropriate CEDEL or Euroclear
account in order to settle the sale side of the trade; or
(3) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC participant is at
least one day prior to the value date for the sale to the CEDEL participant
or Euroclear participant.
Although the DTC, CEDEL, and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of beneficial interests in Global
Securities among participants of the DTC, CEDEL, and Euroclear, they are under
no obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time.
CERTAIN UNITED STATES FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities, directly or
indirectly, through CEDEL or Euroclear (or through DTC if the Holder has an
address outside the United States) will be subject to the 30% United States
withholding tax that generally applies to payments of interest (including
original issue discount) on registered debt issued by United States persons,
unless (i) each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the United States
entity required to withhold tax complies with applicable certification
requirements, and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:
Exemption for non-U.S. persons (Form W-8). Non-U.S. persons that are
beneficial owners (other than a beneficial owner that owns actually or
constructively 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote or a controlled foreign
corporation that is related to the Company through stock ownership) can
obtain a complete exemption from the withholding tax by filing a properly
completed Form W-8 (Certificate of Foreign Status).
Exemption for non-U.S. persons with effectively connected income (Form
4224). A non-U.S. person, including a non-U.S. corporation or bank with a
United States branch, that is a beneficial owner and for which the interest
income is effectively connected with its conduct of a trade or business in
the United States, can obtain an exemption from the withholding tax by
filing a properly completed Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
Exemption or reduced rate for non-U.S. persons resident in treaty
countries (Form 1001). Non-U.S. persons that are beneficial owners that are
entitled to the benefits of an income tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing a properly completed Form 1001 (Ownership, Exemption or Reduced Rate
Certificate). If the treaty provides only for a reduced rate, withholding
tax will be imposed at that rate unless the filer alternatively files Form
W-8. Form 1001 may be filed by the beneficial owner or the beneficial
owner's agent.
Exemption for U.S. Persons (Form W-9). United States persons can obtain
a complete exemption from the withholding tax by filing a properly
completed Form W-9 (Request for Taxpayer Identification Number and
Certification).
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<PAGE> 24
United States Federal Income Tax Reporting Procedure
The beneficial owner of the Global Security or, in the case of a Form 1001
or a Form 4224 filer, his agent, files by submitting the appropriate form to the
entity through whom it directly holds the Global Security. For example, if the
beneficial owner is listed directly on the books of Euroclear or CEDEL as the
Holder of the Debt Security, the Internal Revenue Service ("IRS") Form must be
provided to Euroclear or CEDEL, as the case may be. Each person through which a
Debt Security is held must submit, on behalf of the beneficial owner, the IRS
Form (or in certain cases a copy thereof) under applicable procedures to the
person through which it holds the Debt Security, until the IRS Form is received
by the U.S. person who would otherwise be required to withhold U.S. federal
income tax from interest on the Debt Security. For example, in the case of Debt
Securities held through Euroclear or CEDEL, the IRS Form (or a copy thereof)
must be received by the U.S. depository of such clearing agency. Applicable
procedures include, if a beneficial owner of the Debt Security provides an IRS
Form W-8 to a securities clearing organization, bank or other financial
institution (a "financial institution") that holds the Debt Security in the
ordinary course of its trade or business on the owner's behalf, that such
financial institution certify to the person otherwise required to withhold U.S.
federal income tax from such interest, under penalties of perjury, that such
statement has been received from the beneficial owner by it or by a financial
institution between it and the beneficial owner and that it furnish the payor
with a copy thereof.
As used in this section on tax documentation requirements and the following
section ("Additional United States Federal Tax Considerations for Non-U.S.
Persons"), the term "U.S. person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any State thereof, (iii) an estate the income of which is
subject to United States federal income taxation regardless of its source, or
(iv) a trust if (A) a U.S. court is able to exercise primary supervision over
the trust's administration and (B) one or more U.S. persons have the authority
to control all the trust's substantial decisions. The terms "United States" and
"U.S." means the United States of America (including the States and the District
of Columbia).
Additional United States Federal Tax Considerations for Non-U.S. Persons
Any capital gain realized on the sale, exchange, redemption, or other
disposition of Debt Securities by a non-U.S. person will not be subject to
United States federal income or withholding taxes unless, in the case of an
individual, such Holder is present in the United States for 183 days or more in
the taxable year of the sale, exchange, redemption, or other disposition or
receipt and certain other conditions are met, or the gain is effectively
connected with a United States trade or business of the non-U.S. person.
Payments made on Debt Securities and proceeds from the sale of Debt
Securities received by a non-U.S. person will not be subject to a backup
withholding tax of 31% or to information reporting requirements unless, in
general, the Holder fails to comply with certain reporting procedures or
otherwise fails to establish an exemption from such tax or reporting
requirements under applicable provisions of the Internal Revenue Code (see
"Certain U.S. Federal Income Tax Documentation Requirements").
Treasury Regulations issued on October 14, 1997, which will be applicable
to payments made after 1998 (with certain transition rules), provide for the
unification and simplification of certain current certification procedures.
Under these regulations, a Form W-8 will replace Forms 1001 and 4224 and become
the only form necessary to obtain a withholding exemption or reduction for
non-U.S. Holders. Further, pursuant to these new regulations, special rules
permit the shifting of primary responsibility for withholding to certain
financial intermediaries acting on behalf of beneficial owners. Although a
beneficial owner will still be required to submit a Form W-8 to such an
intermediary, such intermediary generally will not be required to forward a Form
W-8 received from such beneficial owner to the withholding agent. Both U.S.
Holders and non-U.S. Holders are urged to consult their own tax advisors with
respect to these new regulations.
Debt Securities will not be subject to United States federal estate tax as
a result of the death of a Holder who is not a citizen or resident of the United
States at the time of death, unless such Holder at the time of death actually or
constructively owns 10 percent or more of the combined voting power of all
classes of stock of the Company or, at the time of such Holder's death, payments
of interest on such Debt Securities are effectively connected with the conduct
by such Holder of a trade or business in the United States.
This summary does not deal with all aspects of U.S. income tax and
withholding or the application of any U.S. income or estate tax treaty that may
be relevant to foreign beneficial owners of the Global Securities, including
23
<PAGE> 25
special categories of foreign investors who may not be eligible for exemptions
from U.S. withholding tax. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of
beneficial interests in the Global Securities. Any additional requirements, if
applicable, will be set forth in the Prospectus Supplement.
EXPERTS
The consolidated financial statements and schedule of WorldCom as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included in WorldCom's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, and are incorporated herein by reference, in reliance upon
the authority of such firm as experts in accounting and auditing in giving said
reports.
The consolidated financial statements and schedule of MFS as of December
31, 1996, and for the period then ended (see Note 1 to the MFS Consolidated
Financial Statements), and for the year ended December 31, 1996, included in
WorldCom's Current Report on Form 8-K/A dated August 25, 1996 (filed December
19, 1997) and incorporated by reference into this registration statement, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated herein by
reference, in reliance upon the authority of such firm as experts in accounting
and auditing in giving said reports.
The consolidated financial statements of MFS as of December 31, 1995 and
1994, and for each of the three and two years in the period ended December 31,
1995, included in WorldCom's Current Report on Form 8-K/A dated August 25, 1996
(filed November 4, 1996 and December 19, 1997), and incorporated by reference
into this registration statement, have been incorporated in reliance on the
reports of Coopers & Lybrand L.L.P., independent accountants, given upon the
authority of that firm as experts in accounting and auditing.
The consolidated financial statements of UUNET as of December 31, 1995 and
1994, and for each of the three years in the period ended December 31, 1995,
included in WorldCom's Current Report on Form 8-K/A dated August 25, 1996 (filed
November 4, 1996) and incorporated by reference into this registration
statement, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements of MCI for the year ended December
31, 1996 incorporated in this Prospectus by reference to WorldCom's Current
Report on Form 8-K/A-2 dated November 9, 1997 (filed January 28, 1998), have
been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
24
<PAGE> 26
II-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the expenses (other than underwriting
discounts and commissions), which other than the SEC registration fee are
estimates, payable by the Company in connection with the sale and distribution
of the securities registered hereby:
SEC registration fee.................. $ 1,475,000
Printing expenses..................... $ 45,000
Blue Sky fees and expenses............ $ 25,000
Trustee's fees and expenses........... $ 30,000
Accountants' fees and expenses........ $ 15,000
Legal fees and expenses............... $ 100,000
Miscellaneous......................... $ 10,000
-----------
Total......................... $ 1,700,000
===========
Item 15. Indemnification of Directors and Officers
Section 14-2-202(b)(4) of the Georgia Business Corporation Code (the
"Georgia Code") provides that a corporation's articles of incorporation may
include a provision that eliminates or limits the personal liability of
directors for monetary damages to the corporation or its shareholders for any
action taken, or any failure to take any action, as a director, provided,
however, that the Section does not permit a corporation to eliminate or limit
the liability of a director for appropriating, in violation of his or her
duties, any business opportunity of the corporation, for acts or omissions
including intentional misconduct or a knowing violation of law, receiving from
any transaction an improper personal benefit, or voting for or assenting to an
unlawful distribution (whether as a dividend, stock repurchase or redemption, or
otherwise) as provided in Section 14-2-832 of the Georgia Code. Section
14-2-202(b)(4) also does not eliminate or limit the rights of WorldCom or any
shareholder to seek an injunction or other nonmonetary relief in the event of a
breach of a director's duty to the corporation and its shareholders.
Additionally, Section 14-2-202(b)(4) applies only to claims against a director
arising out of his or her role as a director, and does not relieve a director
from liability arising from his or her role as an officer or in any other
capacity.
The provisions of Article Ten of WorldCom's Second Amended and Restated
Articles of Incorporation are similar in all substantive respects to those
contained in Section 14-2-202(b)(4) of the Georgia Code as outlined above.
Article Ten further provides that the liability of directors of WorldCom shall
be limited to the fullest extent permitted by amendments to Georgia law.
Sections 14-2-850 to 14-2-859, inclusive, of the Georgia Code govern the
indemnification of directors, officers, employees, and agents. Section 14-2-851
of the Georgia Code permits indemnification of a director of WorldCom for
liability incurred by him or her in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including, subject to certain limitations, civil actions brought
as derivative actions by or in the right of WorldCom) in which he or she is made
a party by reason of being a director of WorldCom and of directors who, at the
request of WorldCom, act as directors, officers, partners, trustees, employees
or agents of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise. The Section permits
indemnification if the director acted in good faith and reasonably believed (a)
in the case of conduct in his or her official capacity, that such conduct was in
the best interests of the corporation, (b) in all other cases other than a
criminal proceeding, that such conduct was at least not opposed to the best
interests of the corporation, and (c) in the case of a criminal proceeding, that
he or she had no reasonable cause to believe his or her conduct was unlawful. If
the required standard of conduct is met, indemnification may include judgments,
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<PAGE> 27
settlements, penalties, fines or reasonable expenses (including attorneys' fees)
incurred with respect to a proceeding.
A Georgia corporation may not indemnify a director under Section 14-2-851
(i) in connection with a proceeding by or in the right of the corporation,
except for reasonable expenses incurred by such director in connection with the
proceeding provided it is determined that such director met the relevant
standard of conduct set forth above, or (ii) in connection with any proceeding
with respect to conduct for which such director was adjudged liable on the basis
that he or she received an improper personal benefit.
Prior to indemnifying a director under Section 14-2-851 of the Georgia
Code, a determination must be made that the director has met the relevant
standard of conduct. Such determination must be made by: (i) a majority vote of
a quorum consisting of directors not at that time parties to the suit; (ii) a
duly designated committee of directors; (iii) duly selected special legal
counsel; or (iv) a vote of the shareholders, excluding shares owned by or voted
under the control of directors who are at the time parties to the suit.
A Georgia corporation may, before final disposition of a proceeding,
advance funds to pay for or reimburse the reasonable expenses incurred by a
director who is a party to a proceeding because he or she is a director,
provided that such director delivers to the corporation a written affirmation of
his or her good faith belief that he or she met the relevant standard of conduct
described in Section 14-2-851 of the Georgia Code, or that the proceeding
involves conduct for which such director's liability has been properly
eliminated by action of the corporation, and a written undertaking by the
director to repay any funds advanced if it is ultimately determined that such
director was not entitled to such indemnification. Section 14-2-852 of the
Georgia Code provides that directors who are successful with respect to any
claim brought against them, which claim is brought because they are or were
directors of WorldCom, are entitled to mandatory indemnification against
reasonable expenses incurred in connection therewith.
The Georgia Code also allows a Georgia corporation to indemnify directors
made a party to a proceeding without regard to the above-referenced limitations,
if authorized by the articles of incorporation or a bylaw, contract, or
resolution duly adopted by a vote of the shareholders of the corporation by a
majority of votes entitled to be cast, excluding shares owned or voted under the
control of the director or directors who are not disinterested, and to advance
funds to pay for or reimburse reasonable expenses incurred in the defense
thereof, subject to restrictions similar to the restrictions described in the
preceding paragraph; provided, however, that the corporation may not indemnify a
director adjudged liable (1) for any appropriation, in violation of his or her
duties, of any business opportunity of WorldCom, (2) for acts or omissions which
involve intentional misconduct or a knowing violation of law, (3) for unlawful
distributions under Section 14-2-832 of the Georgia Code, or (4) for any
transaction in which the director obtained an improper personal benefit.
Section 14-2-857 of the Georgia Code provides that an officer of WorldCom
(but not an employee or agent generally) who is not a director has the mandatory
right of indemnification granted to directors under Section 14-2-852, as
described above. In addition, WorldCom may, as provided by WorldCom's Second
Amended and Restated Articles of Incorporation, WorldCom's Bylaws, general or
specific actions by its board of directors or contract, indemnify and advance
expenses to an officer, employee or agent who is not a director to the extent
that such indemnification is consistent with public policy.
The indemnification provisions of Article X of WorldCom's Bylaws and
Article Eleven of WorldCom's Second Amended and Restated Articles of
Incorporation are consistent with the foregoing provisions of the Georgia Code.
However, WorldCom's Second Amended and Restated Articles of Incorporation
prohibit indemnification of a director who did not believe in good faith that
his or her actions were in, or not contrary to, WorldCom's best interests.
WorldCom's Bylaws extend the indemnification available to officers under the
Georgia Code to employees and agents.
Reference is made to the form of Underwriting Agreement filed as Exhibit
1.1 with respect to indemnification of the Company, its directors and certain
officers by the Underwriters or by an agent, as the case may be.
II-2
<PAGE> 28
Item 16. Exhibits
See Exhibit Index.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii)To reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(6) The undersigned registrant hereby undertakes that:
II-3
<PAGE> 29
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(7)The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-4
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jackson, State of Mississippi, on January 27, 1998.
WORLDCOM, INC.
By: /s/ SCOTT D. SULLIVAN
--------------------------------
Scott D. Sullivan
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Bernard J. Ebbers, John W. Sidgmore, Scott D. Sullivan and Charles T.
Cannada, and each of them (with full power to each of them to act alone), his or
her true and lawful attorneys in fact and agents for him or her and on his or
her behalf and in his or her name, place and stead, in any and all capacities to
sign any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with exhibits and any and all
other documents filed with respect thereto, with the Securities and Exchange
Commission (or any other governmental or regulatory authority), granting unto
said attorneys, and each of them, full power and authority to do and to perform
each and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes as
he or she might or could do if personally present, hereby ratifying and
confirming all that said attorneys in fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Name Title Date
------- ------- ---------
/s/ CARL J. AYCOCK Director January 27, 1998
--------------------------
Carl J. Aycock
/s/ MAX E. BOBBITT Director January 27, 1998
--------------------------
Max E. Bobbitt
Chairman, President and Chief
Executive Officer (Principal
Executive Officer) January 27, 1998
/s/ BERNARD J. EBBERS
--------------------------
Bernard J. Ebbers
/s/ FRANCESCO GALESI Director January 27, 1998
--------------------------
Francesco Galesi
II-5
<PAGE> 31
/s/ RICHARD R. JAROS Director January 27, 1998
--------------------------
Richard R. Jaros
/S/ STILES A. KELLETT, JR Director January 27, 1998
--------------------------
Stiles A. Kellett, Jr.
/s/ DAVID C. MCCOURT Director January 27, 1998
--------------------------
David C. McCourt
/s/ JOHN A. PORTER Director January 27, 1998
--------------------------
John A. Porter
Vice Chairman of the Board,
Chief Operations Officer and
/s/ JOHN W. SIDGMORE Director January 27, 1998
--------------------------
John W. Sidgmore
Chief Financial Officer and
Director (Principal Financial
Officer and Principal
/s/ SCOTT D. SULLIVAN Accounting Officer) January 27, 1998
--------------------------
Scott D. Sullivan
/s/ LAWRENCE C. TUCKER Director January 27, 1998
--------------------------
Lawrence C. Tucker
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<PAGE> 32
EXHIBIT INDEX
Exhibit No. Description
1.1 Form of Underwriting Agreement Standard Provisions for Debt Securities,
with form of Terms Agreement (incorporated by reference to Exhibit No.
1.1 to the Registrant's Registration Statement on Form S-3 No.
333-20911, filed January 31, 1997).
2.1 Purchase and Sale Agreement by and among America Online, Inc., ANS
Communications, Inc. and WorldCom, Inc. ("WorldCom") dated as of
September 7, 1997 (incorporated herein by reference to Exhibit 2.4
to WorldCom's Current Report on Form 8-K dated September 7, 1997
(filed September 17, 1997)(File 0-11258))*
2.2 Amended and Restated Agreement and Plan of Merger by and among
WorldCom, BV Acquisition, Inc. and Brooks Fiber Properties, Inc.
("BFP"), dated as of October 1, 1997 (incorporated herein by
reference to Exhibit 2.1 to BFP's Current Report on Form 8-K dated
October 1, 1997 (filed October 6, 1997)(File 0-28036))*
2.3 Agreement and Plan of Merger by and among WorldCom, TC Investments
Corp. and MCI Communications Corporation dated as of November 9, 1997
(incorporated herein by reference to Exhibit 2.1 to WorldCom's Current
Report on Form 8-K dated November 9, 1997 (filed November 12, 1997)
(File 0-11258))*
2.4 Agreement by and among British Telecommunications plc, MCI
Communications Corporation and WorldCom dated as of November 9, 1997
(incorporated herein by reference to Exhibit 99.1 to WorldCom's Current
Report on Form 8-K dated November 9, 1997 (filed November 12, 1997)
(File 0-11258))*
2.5 Agreement and Plan of Merger by and among WorldCom, H&R Block, Inc.,
H&R Block Group, Inc., CompuServe Corporation and Walnut Acquisition
Company L.L.C., dated as of September 7, 1997 (incorporated herein by
reference to Exhibit 2.1 to WorldCom's Current Report on Form 8-K dated
September 7, 1997 (filed September 17, 1997) (File 0-11258))*
2.6 Stockholders Agreement by and among H&R Block, Inc., H&R Block Group,
Inc., and WorldCom dated as of September 7, 1997 (incorporated herein
by reference to Exhibit 2.2 to WorldCom's Current Report on Form 8-K
dated September 7, 1997 (filed September 17, 1997) (File 0-11258))*
2.7 Standstill Agreement by and among H&R Block, Inc., H&R Block Group,
Inc. and WorldCom, dated as of September 7, 1997 (incorporated herein
by reference to Exhibit 2.3 to WorldCom's Current Report on Form 8-K
dated September 7, 1997 (filed September 17, 1997) (File 0-11258))*
4.1 Indenture dated March 1, 1997 by and between WorldCom, Inc. and Mellon
Bank, N.A., as trustee (under which The Chase Manhattan Bank now acts
as successor trustee) (incorporated herein by reference to Exhibit 4.6
to WorldCom's Form 10-Q for the period ended March 31, 1997 (File No.
0-11258))
5.1 Validity Opinion of WorldCom Counsel
12.1 Statement re Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Coopers & Lybrand LLP
23.3 Consent of Arthur Andersen LLP
II-7
<PAGE> 33
23.4 Consent of Arthur Andersen LLP
23.5 Consent of Price Waterhouse LLP
23.6 Consent of WorldCom Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (included in Signature Page)
25.1 Statement of Eligibility of Trustee on Form T-1 with respect to the
Indenture
- -----------
* The Registrant hereby agrees to furnish supplementally to the Commission a
copy of any omitted schedules to such Agreement upon the Commission's request.
II-8
<PAGE> 1
EXHIBIT 5.1
January 27, 1998
Board of Directors of WorldCom, Inc.
515 East Amite Street
Jackson, Mississippi 39201
Ladies and Gentlemen:
I am General Counsel of WorldCom, Inc., a Georgia corporation (the
"Company"), and have reviewed a Registration Statement on Form S-3, including
the related Prospectus (the "Registration Statement"), which the Company
proposes to file with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"), relating to
$5,000,000,000 in aggregate initial offering price of senior unsecured
debentures, notes, and other forms of indebtedness issuable in series under an
Indenture substantially in the form which appears as Exhibit 4.1 to the
Registration Statement (the "Debt Securities"). Terms not defined herein shall
have the meaning thereof contained in the Prospectus referred to above.
In connection herewith, I or members of my staff have examined and relied
without investigation as to matters of fact upon the Registration Statement, the
Second Amended and Restated Articles of Incorporation and Bylaws of the Company,
certificates of public officials, certificates and statements of officers of the
Company, and such other corporate records, documents, certificates and
instruments as I have deemed necessary or appropriate to enable me to render the
opinions expressed herein. I have assumed the genuineness of all signatures on
all documents examined by me, the authenticity of all documents submitted to me
as originals, and the conformity to authentic originals of all documents
submitted to me as certified or photostatic copies. I have also assumed the due
authorization, execution and delivery of all documents.
Subject to the effectiveness of the Registration Statement under the Act, I
am of the opinion that:
1. The Company is a corporation validly existing under the laws of the
State of Georgia; and
2. Each series of the Debt Securities, when duly established by or
pursuant to a resolution of the Board of Directors of the Company or in a
supplemental Indenture, in each case so as not to violate any applicable law or
any agreement or instrument to which the Company is a party or by which it is
bound, and duly executed, authenticated and issued as provided in the
Indenture and delivered against payment, will constitute valid and
legally-binding obligations of the Company except to the extent limited
by applicable bankruptcy, insolvency, reorganization, receivership,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to or affecting the rights and remedies of creditors
generally, and by general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance, injunctive
relief or other equitable remedies, regardless of whether enforceability is
considered in a proceeding in equity or at law.
This opinion is not rendered with respect to any laws other than the laws
of the State of Georgia.
You have informed me that you intend to issue the Debt Securities from time
to time on a delayed or continuous basis, and this opinion is limited to the
laws, including the rules and regulations, as in effect on the date hereof. I
understand that prior to issuing any Debt Securities you will afford me an
opportunity to review the operative documents pursuant to which such Debt
Securities are to be issued (including the applicable Prospectus Supplement) and
will file such supplement or amendment to this opinion (if any) as I may
reasonably consider necessary or appropriate by reason of the terms of such Debt
Securities.
I hereby consent to the filing of this opinion as Exhibit 5.1 to the
aforesaid Registration Statement. I also consent to your filing copies of this
opinion as an exhibit to the Registration Statement with agencies of such states
<PAGE> 2
as you deem necessary in the course of complying with the laws of such states
regarding the offering and sale of the Debt Securities. In giving this consent,
I do not admit that I am in the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Commission.
Very truly yours
/s/ WILLIAM E. ANDERSON
-----------------------------
William E. Anderson
General Counsel
<PAGE> 1
Exhibit 12.1
WorldCom, Inc. Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(in Thousands of Dollars)
<TABLE>
<CAPTION>
For the Nine
Year Ended December 31, Months Ended
--------------------------------------------------------- -------------- ------------------------
Historical Pro Forma September 30,
--------------------------------------------------------- -------------- ---------------------
1992 1993 994 1995 1996 1996 1996 1997
---- ---- --- ---- ---- ---- ---- ----
<S> <C> <C> <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) $ 82,409 $501,492
Fixed charges, net of
capitalized interest 36,608 47,316 59,689 267,057 241,397 359,719 182,937 268,893
----------- ----------- --------- ---------- -------------- --------------- -------------- ----------
Earnings $59,121 $257,236 $8,992 $704,786 $(1,818,019) $(2,372,898) 265,346 770,385
=========== =========== ========= ========== ============== =============== ============== ==========
Fixed charges:
Interest Cost $33,815 $38,657 $49,203 $254,099 $229,376 $353,085 173,644 275,981
Amortization of
financing costs 1,464 1,792 2,086 2,811 1,742 -- 1,327 2,513
Interest factor of
rent expense 4,833 9,967 10,300 15,030 17,854 28,024 13,664 31,431
=========== =========== ========= ========== ============== =============== ============== ==========
Fixed charges $40,112 $50,416 $61,589 $271,940 $248,972 $381,109 188,635 309,925
=========== =========== ========= ========== ============== =============== ============== ==========
Deficiency of earnings
to fixed charges $ -- $ -- $(52,597) $ -- $2,066,991 $(2,754,007) $ -- $ --
=========== =========== ========= ========== ============== =============== ============== ==========
Ratio of earnings to
fixed charges 1.47 5.10 0.15 2.59 N/A N/A 1.41 2.49
- -------------------------- ----------- -------------------- --------------- ---------- ---- ----------- -- ----------- ------
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3, to be filed on or around
January 26, 1998, of our report dated February 26, 1997, included in WorldCom,
Inc.'s Form 10-K for the year ended December 31, 1996 and to all references to
our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Jackson, Mississippi,
January 26, 1998
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-3 (File No. 333- ) of WorldCom, Inc. of our reports dated February 14,
1996, on our audits of the consolidated financial statements of MFS
Communications Company, Inc. as of December 31, 1995 and 1994 and for each of
the three and two years in the period ended December 31, 1995 which reports are
included in WorldCom Inc.'s current Report on Form 8-K/A dated August 25, 1996
(as amended on November 4, 1996 and December 19, 1997). We also consent to the
reference to our Firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Omaha, Nebraska
January 26, 1998
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3, to be filed on or around
January 26, 1998, of our reports dated February 20, 1997, on the Consolidated
Financial Statements of MFS Communications Company, Inc. included in WorldCom,
Inc.'s Current Report on Form 8-K dated August 25, 1996, as amended by Form
8-K/A filed on December 19, 1997, and to all references to our Firm included in
this registration statement.
ARTHUR ANDERSEN LLP
Omaha, Nebraska,
January 26, 1998
<PAGE> 1
Exhibit 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3, to be filed on or around
January 26, 1998, of our report dated January 31, 1996, on the Consolidated
Financial Statements of UUNET Technologies, Inc. included in WorldCom, Inc.'s
Current Report on Form 8-K dated August 25, 1996, as amended by Form 8-K/A filed
on November 4, 1996, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Washington, D.C.,
January 26, 1998
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of WorldCom, Inc.
of our report dated January 27, 1997 relating to the consolidated financial
statements of MCI Communications Corporation for the year ended December 31,
1996, which report appears in WorldCom, Inc.'s Current Report on Form 8K/A-2
dated November 9, 1997 (as amended on January 28, 1998). We also consent to the
reference to us under the heading "Experts" in such Prospectus.
Price Waterhouse LLP
January 28, 1998
Washington, D.C.
<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) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
- --------------------------------------------------------------------------------
WorldCom, Inc.
- --------------------------------------------------------------------------------
(Exact name of obligor as specified in its charter)
Georgia 58-1521612
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
515 East Amite Street
Jackson, Mississippi 39201-2702
(Address of principal executive offices) (Zip Code)
Debt Securities
(Title of the indenture securities)
<PAGE> 2
GENERAL
Item 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.
New York State Banking Department, State House, Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New
York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable. SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 20th day of January, 1998.
THE CHASE MANHATTAN BANK
By /s/ T. J. Foley
T. J. Foley
Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of
business September 30, 1997,
in accordance with a call
made by the Federal Reserve
Bank of this District
pursuant to the provisions of
the Federal Reserve Act.
Dollar Amounts
ASSETS in Millions
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ..............................................$ 11,760
Interest-bearing balances ...................................... 4,343
Securities: ........................................................
Held to maturity securities......................................... 2,704
Available for sale securities....................................... 37,885
Federal funds sold and securities purchased under
agreements to resell .......................................... 27,358
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,370
Less: Allowance for loan and lease losses 2,760
Less: Allocated transfer risk reserve ......... 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................................... 124,597
Trading Assets .................................................... 64,630
Premises and fixed assets (including capitalized
leases)....................................................... 2,925
Other real estate owned ........................................... 286
Investments in unconsolidated subsidiaries and
associated companies.......................................... 232
Customers' liability to this bank on acceptances
outstanding .................................................. 2,212
Intangible assets ................................................. 1,480
Other assets ...................................................... 11,117
TOTAL ASSETS ...................................................... $291,529
=========
- 4 -
<PAGE> 5
LIABILITIES
Deposits
In domestic offices ....................................... $86,574
Noninterest-bearing ............................... $31,818
Interest-bearing .................................. 54,756
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ................................................. 69,887
Noninterest-bearing ............................... $ 3,777
Interest-bearing .................................. 66,110
Federal funds purchased and securities sold under agree-
ments to repurchase ............................................ 45,307
Demand notes issued to the U.S. Treasury ....................... 161
Trading liabilities ............................................ 47,406
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ................ 4,578
With a remaining maturity of more than one year
through three years ....................................... 261
With a remaining maturity of more than three years............ 131
Bank's liability on acceptances executed and outstanding ...... 2,212
Subordinated notes and debentures ............................. 5,715
Other liabilities .............................................. 12,355
TOTAL LIABILITIES .............................................. 274,587
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock ................................................... 1,211
Surplus (exclude all surplus related to preferred stock)....... 10,294
Undivided profits and capital reserves ......................... 5,414
Net unrealized holding gains (losses)
on available-for-sale securities ............................... 7
Cumulative foreign currency translation adjustments ............ 16
TOTAL EQUITY CAPITAL ........................................... 16,942
TOTAL LIABILITIES AND EQUITY CAPITAL ................................ $291,529
==========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and 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
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
