<PAGE>
Filed Pursuant to Rule 424(b)5
Registration Number 333-34578
PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 12, 2000)
$60,000,000
[WorldCom logo]
WorldCom, Inc.
$60,000,000 Floating Rate Notes due 2002
-----------------
The floating rate notes will mature on June 11, 2002. Interest on the
floating rate notes is payable quarterly on the 11th day of March, June,
September and December, beginning September 11, 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the related prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
For a discussion of risks associated with our pending merger with
Sprint, see "Sprint Merger--Risk Factors Relating to the Sprint Merger"
beginning on page S-6.
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<TABLE>
<CAPTION>
Public Offering Underwriting Proceeds to
PRICE DISCOUNT WORLDCOM
----- -------- --------
<S> <C> <C> <C>
Per Note 100.00% .150% 99.850%
Total $60,000,000 $90,000 $59,910,000
</TABLE>
Interest on the notes will accrue from June 12, 2000 to the date of
delivery.
------------------
The underwriter is offering the notes subject to various conditions. The
underwriter expects to deliver the notes to purchasers in book-entry form only
through the facilities of The Depository Trust Company on or about June 12,
2000.
-----------------
Salomon Smith Barney
May 31, 2000
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE AS OF ANY DATE
OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS SUPPLEMENT.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PROSPECTUS
<S> <C>
Cautionary Statement Regarding About This Prospectus......................3
Forward Looking Statements................S-3 Where You Can Find More Information........3
WorldCom...................................S-4 Cautionary Statement Regarding
Sprint Merger..............................S-4 Forward-Looking Statements................4
Use of Proceeds............................S-7 WorldCom...................................6
Ratio of Earnings to Fixed Charges.........S-7 Recent Developments........................6
Description of Notes.......................S-8 Use of Proceeds............................7
Underwriting...............................S-12 Ratio of Earnings to Fixed Charges.........7
Where You Can Find More Information........S-13 Description of Debt Securities.............8
Legal Matters..............................S-14 Plan of Distribution.......................17
Book Entry Debt Securities.................18
Certain United States Federal Income Tax
Documentation Requirements................20
Lawyers....................................21
Experts....................................21
</TABLE>
References to "WorldCom" in this prospectus supplement and in the
accompanying prospectus, and to "we," "us" and "our" in both this prospectus
supplement and the accompanying prospectus are references to WorldCom, Inc.
S-2
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The following statements are or may be forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995:
any statements contained or incorporated herein regarding possible or
assumed future results of operations of WorldCom's business, anticipated cost
savings or other synergies, the markets for WorldCom's services and products,
anticipated capital expenditures, the outcome of Euro conversion efforts,
regulatory developments or competition;
any statements preceded by, followed by or that include the words
"intends," "estimates," "believes," "expects," "anticipates," "should," "could,"
or similar expressions; and
other statements contained or incorporated by reference in this
prospectus supplement or the accompanying prospectus regarding matters that are
not historical facts.
These statements are subject to risks and uncertainties. You should
understand that certain important factors, in addition to the factors discussed
in the documents we incorporate by reference in this prospectus supplement or
the accompanying prospectus, could affect our future results and could cause
those results to differ materially from those expressed in our forward-looking
statements. You should not place undue reliance on any of our forward-looking
statements, which speak only as of the date of those statements. The important
factors that could cause actual results to differ materially from those in the
forward-looking statements include, without limitation:
- whether the Sprint merger is completed and the ability to
integrate the operations of WorldCom and Sprint, including their
respective products and services;
- the effects of vigorous competition in the markets in which we
operate;
- the impact of technological change on our business, new entrants
and alternative technologies, and dependence on availability of
transmission facilities;
- risks of international business;
- regulatory risks, including the impact of the Telecommunications
Act of 1996;
- contingent liabilities;
- the impact of competitive services and pricing;
- risks associated with the Euro conversion efforts;
- risks associated with debt service requirements and interest rate
fluctuations;
- our degree of financial leverage, and
- other risks referenced from time to time in our filings with the
Securities and Exchange Commission.
Our independent public accountants have not examined or compiled the
forward-looking statements referred to above or any forecasts or other
projections incorporated by reference in this prospectus supplement or the
accompanying prospectus and, accordingly, they 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 us or persons acting on our
behalf. We do not undertake any obligation to release publicly any revisions to
such forward-looking statements to reflect events or circumstances after the
date of this prospectus supplement or the accompanying prospectus or to reflect
the occurrence of unanticipated events.
S-3
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WORLDCOM
Organized in 1983, WorldCom, Inc., a Georgia corporation, provides a
broad range of communications, outsourcing and managed network services to both
U.S. and non-U.S. based corporations. We are a global communications company
utilizing a facilities-based, on-net strategy throughout the world. The on-net
approach allows our customers to send data streams or voice traffic across town,
across the U.S., or to any of our facilities-based networks in Europe or Asia,
without ever leaving the confines of our network. The on-net approach provides
our customers with superior reliability and low operating costs. Prior to
September 15, 1998, we were named WorldCom, Inc. From September 15, 1998 through
April 30, 2000, we were named MCI WORLDCOM, Inc. Effective May 1, 2000, we
changed our name back to WorldCom, Inc.
We leverage our facilities-based networks to focus on data and the
Internet. We provide the building blocks or foundation for the new e-conomy.
Whether it is an emerging e-business or a larger, more established company who
is embracing an e-business approach, we provide the communications
infrastructure to help make them successful. From private networking--frame
relay and asynchronous transfer mode--to high capacity Internet and related
services, to hosting for complex, high volume mega-sites, to turn-key network
management and outsourcing, we provide the broadest range of Internet and
traditional, private networking services available from any provider.
We serve as a holding company for our subsidiaries' operations, which
means that we are the ultimate parent for a group of companies, including
subsidiaries and other organizations, operating in over 65 countries around the
world. Our core business is communications services, which includes voice, data,
Internet and international services. During each of the last three years, more
than 90% of our operating revenues were derived from communications services.
Voice and data includes voice, data and other types of domestic communications
services. Internet includes Internet services. International operations provide
voice, data, Internet and other similar types of communications services to
customers primarily in Europe, the Asia Pacific region and Brazil.
Our principal executive offices are located at 500 Clinton Center
Drive, Clinton, Mississippi 39056, and our telephone number is (601) 460-5600.
SPRINT MERGER
On October 5, 1999, we announced that we had entered into an Agreement
and Plan of Merger dated as of October 4, 1999, which was amended and restated
on March 8, 2000, between WorldCom and Sprint Corporation. Under the terms of
the Sprint merger agreement, Sprint will merge with and into WorldCom.
Sprint is a diversified telecommunications company, providing long
distance, local and wireless communications services. Sprint's business is
organized in two groups: the Sprint PCS group and Sprint FON group. Sprint built
and operates the United States' first nationwide all-digital, fiber-optic
network and is a leader in advanced data communications services. In 1999 Sprint
had $20 billion in annual revenues and served more than 20 million business and
residential customers. Additional information regarding Sprint and the Sprint
merger agreement is contained in our Current Report on Form 8-K-1 dated April
11, 2000 (filed April 11, 2000), which is incorporated by reference into this
prospectus supplement.
Under the merger agreement with Sprint, each outstanding share of
Sprint FON common stock will be exchanged for $76.00 of WorldCom common stock,
subject to a collar. In addition, each share of Sprint PCS common stock will be
exchanged for one share of a new WorldCom PCS tracking stock and 0.116025 shares
of WorldCom common stock. The terms of the WorldCom PCS tracking stock will be
virtually identical to the terms of Sprint PCS common stock and will be designed
to track the
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performance of the PCS business of the surviving company in the Sprint
merger. Holders of Sprint class A stock will receive an amount of WorldCom
common stock and WorldCom PCS tracking stock as if such class A stock had
been converted into Sprint FON common stock and Sprint PCS common stock
immediately before the Sprint merger. Holders of the other classes or series
of Sprint capital stock will receive one share of a class or series of our
capital stock with virtually identical terms, which will be established in
connection with the Sprint merger, for each share of Sprint capital stock
that they own. Sprint has announced that it will redeem for cash each
outstanding share of the Sprint first and second series preferred stock on
May 25, 2000. The Sprint merger will be accounted for as a purchase and will
be tax-free to Sprint stockholders.
The actual number of shares of WorldCom common stock to be exchanged
for each share of Sprint FON common stock will be determined based on the
average trading prices of WorldCom common stock prior to the closing, but will
not be less than 1.4100 shares (if the average trading price of WorldCom common
stock equals or exceeds $53.9007) or more than 1.8342 shares (if the average
trading price of WorldCom common stock equals or is less than $41.4350).
Consummation of the Sprint merger is subject to various conditions set
forth in the merger agreement with Sprint, including the adoption of the merger
agreement by stockholders of Sprint, the approval of the Sprint merger by
shareholders of WorldCom, the approval of the issuance of WorldCom capital stock
in the Sprint merger by shareholders of WorldCom, certain U.S. and foreign
regulatory approvals and other customary conditions. On April 28, 2000, special
meetings of the shareholders of WorldCom and Sprint were held and the merger
proposals were adopted and approved. It is anticipated that the Sprint merger
will close in the second half of 2000. Additionally, if the Sprint merger is
consummated, the integration and consolidation of Sprint would require
substantial management and financial resources and involve a number of
significant risks, including potential difficulties in assimilating technologies
and services of Sprint and in achieving anticipated synergies and cost
reductions.
Sprint's business is organized in two groups: the Sprint FON group and
the Sprint PCS group.
SPRINT FON
LONG DISTANCE. The long distance division is the nation's third-largest
long distance phone company. It operates a nationwide, all-digital long distance
communications network that uses fiber-optic and electronic technology. The
division primarily provides domestic and international voice, video and data
communications services.
LOCAL DIVISION. The local division consists of regulated local phone
companies serving more than 8 million access lines in 18 states. It provides
local phone services, access for phone customers and other carriers to its local
network, sales of telecommunications equipment, and long distance services
within certain regional calling areas.
PRODUCT DISTRIBUTION AND DIRECTORY PUBLISHING BUSINESSES. The product
distribution business provides wholesale distribution services of
telecommunications products. The directory publishing business publishes and
markets white and yellow page phone directories.
SPRINT ION(SM). Sprint is developing and deploying new integrated
communications services, referred to as Sprint ION. Sprint ION extends Sprint's
existing network capabilities to the customer and enables Sprint to provide the
network infrastructure to meet customers' demands for advanced services
including integrated voice, data, Internet and video. It is also expected to be
the foundation for Sprint to provide advanced services in the competitive local
service market.
OTHER VENTURES. The "other ventures" segment includes the cable TV
service operations of the broadband fixed wireless companies acquired in 1999.
S-5
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This segment also includes the FON Group's investments in: EarthLink,
Inc., an Internet service provider; Call-Net, a long distance provider in Canada
operating under the Sprint brand name; and certain other telecommunications
investments and ventures.
SPRINT PCS
The PCS Group includes Sprint's domestic wireless PCS operations. It
operates the only 100% digital PCS wireless network in the United States with
licenses to provide service nationwide using a single frequency and a single
technology. At year-end 1999, the PCS Group, together with affiliates, operated
PCS systems in over 360 metropolitan markets, including the 50 largest U.S.
metropolitan areas. The PCS Group has licenses to serve more than 270 million
people in all 50 states, Puerto Rico and the U.S. Virgin Islands. The PCS
Group's service, including affiliates, now reaches nearly 190 million people.
The PCS Group provides nationwide service through:
operating its own digital network in major U.S. metropolitan areas,
affiliating with other companies, mainly in and around smaller U.S.
metropolitan areas,
roaming on other providers' analog cellular networks using dual
band/dual-mode handsets, and
roaming on other providers' digital PCS networks that use code
division multiple access.
RISK FACTORS RELATING TO THE SPRINT MERGER
PROSPECTIVE PURCHASERS OF THE NOTES SHOULD CAREFULLY CONSIDER ALL OF
THE INFORMATION CONTAINED AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, INCLUDING THE FOLLOWING FACTORS,
IN EVALUATING WORLDCOM AND ITS BUSINESS. IN PARTICULAR, PROSPECTIVE INVESTORS
SHOULD NOTE THAT THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS AND THE DOCUMENTS
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS CONTAIN OR INCORPORATE BY REFERENCE FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT AND THAT
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
STATEMENTS. SEE "CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS"
ON PAGE S-3. THE FACTORS LISTED BELOW REPRESENT CERTAIN IMPORTANT FACTORS
WORLDCOM BELIEVES COULD CAUSE SUCH RESULTS TO DIFFER. THESE FACTORS ARE NOT
INTENDED TO REPRESENT A COMPLETE LIST OF THE GENERAL OR SPECIFIC RISKS THAT
MAY AFFECT WORLDCOM. YOU SHOULD RECOGNIZE THAT OTHER RISKS MAY BE
SIGNIFICANT, PRESENTLY OR IN THE FUTURE, AND THE RISKS SET FORTH BELOW MAY
AFFECT WORLDCOM TO A GREATER EXTENT THAN INDICATED.
- The failure to successfully integrate WorldCom and Sprint by managing
the significant challenges of the integration may result in WorldCom
not achieving the anticipated potential benefits of the merger.
WorldCom and Sprint will face significant challenges in consolidating
functions, integrating their organizations, procedures, operations and
product lines in a timely and efficient manner, and retaining key
WorldCom and Sprint personnel. The integration of WorldCom and Sprint
will be complex and time-consuming. The consolidation of operations
will require substantial attention from management. The diversion of
management attention and any difficulties encountered in the
transition and integration process could have a material adverse
effect on the revenues, level of expenses and operating results of
WorldCom.
- The merger is subject to the receipt of consents and approvals from
various government entities, which may jeopardize or delay completion
of the merger or reduce the anticipated benefits of the merger.
Completion of the merger is conditioned upon filings with, and the
receipt of required consents, orders, approvals or clearances from
various governmental agencies, both
S-6
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foreign and domestic, including the Federal Trade Commission, the
Antitrust Division, European antitrust authorities, the Federal
Communications Commission and state public utility or service
commissions. These consents, orders, approvals and clearances may
impose conditions on or require divestitures relating to the
divisions, operations or assets of WorldCom or Sprint. Such
conditions or divestitures may jeopardize or delay completion of
the merger or may reduce the anticipated benefits of the merger.
The merger agreement provides that neither WorldCom nor Sprint is
required to agree to any such condition or divestiture that
individually or in the aggregate would reasonably be expected to
materially impair WorldCom's or Sprint's ability to achieve the
overall benefits expected to be realized from the completion of the
merger.
Additional risks relating to the pending Sprint merger agreement are
contained in our Current Report on Form 8-K-1 dated April 11, 2000 (filed April
11, 2000), which is incorporated by reference into this prospectus supplement.
USE OF PROCEEDS
The net proceeds of the offering are estimated to be $59,910,000. WorldCom
intends to use the net proceeds of the offering for general corporate purposes.
Pending any specific application, we may initially invest funds in short-term
marketable securities or apply them to reduce short-term indebtedness under
our commercial paper program, which was issued for general corporate
purposes. Following repayment of such commercial paper, we expect to incur
additional indebtedness under our commercial paper program or otherwise in
the ordinary course of business, in connection with the Sprint merger or
otherwise. As of June 1, 2000, our commercial paper had a weighted average
interest rate of approximately 6.39% and a weighted average maturity of
approximately 53 days.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to our fixed
charges for each of the five years ended December 31, 1999, and for the thee
months ended March 31, 1999 and 2000. We base these ratios on our historical
consolidated financial statements.
For current information on the ratio or earnings to fixed charges, see
the documents referred to under "Where You Can Find More Information" on page
S-13.
<TABLE>
<CAPTION>
Historical
-----------------------------------------------------------------------------
Three Months Ended
Year Ended December 31, March 31,
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 1996 1997 1998 1999 1999 2000
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges 2.28:1 -- 1.84:1 -- 5.75:1 3.96:1 7.01:1
Deficiency of Earnings to Fixed Charges
(in millions) -- $(2,288) -- $(1,834) -- -- --
</TABLE>
Note 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 pretax income (loss) from continuing operations,
excluding minority interests in losses of consolidated subsidiaries, and fixed
charges consist of pretax interest (including capitalized interest) on all
indebtedness, amortization of debt discount and expense, and that portion of
rental expense which we believe to be representative of interest. For the
historical year ended December 31, 1996 and 1998, earnings were inadequate to
cover fixed charges by the amounts shown.
S-7
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DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes offered
hereby supplements the description of the general terms and provisions of the
debt securities set forth under "Description of Debt Securities" in the
accompanying prospectus. This description replaces the description of the notes
in the accompanying prospectus, to the extent of any inconsistency. Terms used
in this prospectus supplement that are otherwise not defined will have the
meanings given to them in the accompanying prospectus.
The floating rate notes due 2002 are a series of debt securities
described in the accompanying prospectus, which will be senior debt securities,
will initially be limited to $60 million aggregate principal amount and will
mature on June 11, 2002. The accompanying prospectus contains a detailed summary
of additional provisions of the floating rate notes and of the indenture dated
as of May 15, 2000 between WorldCom and Chase Manhattan Trust Company, National
Association, as trustee, under which the floating rate notes will be issued.
The floating rate notes will bear interest at a floating rate of
interest from June 12, 2000, payable quarterly in arrears on the 11th day of
March, June, September and December of each year, commencing September 11, 2000,
to the persons in whose names the floating rate notes are registered at the
close of business on the preceding 28th day of February, May, August or
November, each a record date, as the case may be. Principal of and interest on
the floating rate notes will be payable, and the floating rate notes may be
presented for repayment, at the office or agency of WorldCom maintained for such
purposes in New York, New York.
The floating rate notes will not be subject to any sinking fund.
RATE OF INTEREST
The rate of interest payable from time to time in respect of the
floating rate notes, which we refer to as the "Rate of Interest," will be a
floating rate subject to adjustment on a quarterly basis and determined by
reference to LIBOR for three-month U.S. dollar deposits, determined as described
below, plus a spread of 0.16% per annum. All percentages resulting from any
calculation on the floating rate notes will be rounded to the nearest one
hundred-thousandth of a percentage point, with five one millionths of a
percentage point rounded upwards. For example, 9.876545% (or .09876545) would be
rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting
from such calculation on the floating rate notes will be rounded to the nearest
cent, with one-half cent being rounded upward.
(1) At approximately 11:00 a.m. (London time) on the second day on
which commercial banks are open for business, including dealings in
deposits in U.S. dollars in London (or, for purposes of paragraph (3)(B)
below, New York), prior to the commencement of the Interest Period (defined
below) for which such rate will apply (each such day an "Interest
Determination Date"), Chase Manhattan Trust Company, National Association,
as the calculation agent or its successors in this capacity, which we refer
to as the "Calculation Agent," will calculate the rate of interest, which
we refer to as "Rate of Interest", for such Interest Period as, subject to
the provisions described below, the rate per annum equal to 0.16% above the
rate appearing on the Dow Jones Telerate Page 3750 (or such other page as
may replace that page on the Dow Jones Telerate Service) for three-month
U.S. dollar deposits in the London inter-bank market on such Interest
Determination Date. "Interest Period" means the period beginning on, and
including, June 12, 2000, and ending on, but excluding, the first interest
payment date for the floating rate notes and each successive period
beginning on, and including, an interest payment date for
the floating rate notes and ending on, but excluding, the next
succeeding interest payment date for the floating rate notes.
(2) If on any Interest Determination Date an appropriate rate cannot
be determined from the Dow Jones Telerate Service, the Rate of Interest for
the next Interest Period shall, subject to the provisions described below,
be the rate per annum that the Calculation Agent certifies to be 0.16% per
annum above
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the arithmetic mean of the offered quotations, as communicated to and
at the request of the Calculation Agent by not less than two major
banks in London selected by the Calculation Agent, which we refer to as the
"Reference Banks," which term shall include any successors nominated by the
Calculation Agent, to leading banks in London by the principal London
offices of the Reference Banks for three-month U.S. dollar deposits in the
London inter-bank market as at 11:00 a.m. (London time) on such Interest
Determination Date.
(3) If on any Interest Determination Date fewer than two of such
offered rates are available, the Rate of Interest for the next Interest
Period shall be whichever is the higher of:
(A) The Rate of Interest in effect for the last preceding
Interest Period to which (1) or (2) above shall have applied; and
(B) The Reserve Interest Rate. The "Reserve Interest Rate" refers
to the rate per annum which the Calculation Agent determines to be 0.16% per
annum above either:
The arithmetic mean of the U.S. dollar offered rates which at least two New
York City banks selected by the Calculation Agent are or were quoting, on
the relevant Interest Determination Date, for three-month deposits to the
Reference Banks or those of them (being at least two in number) to which
such quotations are or were, in the opinion of the Calculation Agent, being
so made, or
In the event that the Calculation Agent can determine no such arithmetic
mean, the arithmetic mean of the U.S. dollar offered rates which at least
two New York City banks selected by the Calculation Agent are or were
quoting on such Interest Determination Date to leading European banks for a
period of three months;
PROVIDED, HOWEVER, that if the banks selected as aforesaid by the
Calculation Agent are not quoting as mentioned above, the Rate of Interest
shall be the Rate of Interest specified in (A) above.
DETERMINATION OF RATE OF INTEREST AND CALCULATION OF INTEREST AMOUNT
The Calculation Agent shall, as soon as practicable after 11:00 a.m.
(London time) on each Interest Determination Date, determine the Rate of
Interest and calculate the amount of interest payable in respect of the
following Interest Period, which we refer to as the "Interest Amount". The
Interest Amount shall be calculated by applying the Rate of Interest to the
principal amount of each floating rate note outstanding at the commencement of
the Interest Period, multiplying each such amount by the actual number of days
in the Interest Period concerned (which actual number of days shall include the
first day but exclude the last day of such Interest Period) divided by 360 and
rounding the resultant figure upwards to the nearest cent. The determination of
the Rate of Interest and the Interest Amount by the Calculation Agent shall, in
the absence of willful default, bad faith or manifest error, be final and
binding on all parties. In no event will the rate of interest on the floating
rate notes be higher than the maximum rate permitted by New York law, as the
same may be modified by United States law of general application.
CALCULATION AGENT
WorldCom shall provide that, so long as any of the floating rate notes
remain outstanding, there shall at all times be a Calculation Agent for the
purpose of such notes. In the event of the Calculation Agent being unable or
unwilling to continue to act as the Calculation Agent or in the case of the
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Calculation Agent failing duly to establish the Rate of Interest for any
Interest Period, WorldCom shall appoint another leading bank engaged in the
London inter-bank market to act as such in its place. The Calculation Agent may
not resign its duties without a successor having been appointed as aforesaid.
CERTIFICATES TO BE FINAL
All certificates, communications, opinions, determinations,
calculations, quotations and decisions given, expressed, made or obtained for
the purposes of the provisions relating to the payment and calculation of
interest on the floating rate notes, whether by the Reference Banks, or any of
them, or the Calculation Agent, shall, in the absence of willful default, bad
faith or manifest error, be binding on WorldCom, the Calculation Agent and all
of the noteholders and no liability shall, in the absence of willful default,
bad faith or manifest error, attach to the Calculation Agent in connection with
the exercise or non-exercise by it of its powers, duties and discretions.
GENERAL
If any interest payment date falls on a day that is not a business day,
the interest payment will be postponed to the next day that is a business day,
and no interest on such payment will accrue for the period from and after such
interest payment date. If the maturity date of the notes falls on a day that is
not a business day, the payment of interest and principal may be made on the
next succeeding business day, and no interest on such payment will accrue for
the period from and after the maturity date. As used in this prospectus
supplement, "business day" means any day, other than a Saturday or Sunday, that
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close in the City of New York or
in the place of presentation.
The notes will be in fully registered form, without coupons, in
denominations of $1,000 or any multiple thereof.
The notes, the indenture and the underwriting agreement are governed
by, and will be construed in accordance with, the laws of the State of New York,
United States of America, applicable to agreements made and to be performed
wholly within such jurisdiction.
In some circumstances, we may elect to discharge our obligations on
the notes through defeasance or covenant defeasance. See "Description of Debt
Securities--Defeasance; Satisfaction and Discharge" on page 15 in the
accompanying prospectus for more information about how we may do this.
We may, without the consent of the holders of notes, issue additional
notes having the same ranking and the same interest rate, maturity and other
terms as the applicable notes. Any additional notes having such similar terms,
together with the applicable notes, will constitute a single series of notes
under the indenture. No additional notes may be issued if an event of default
has occurred with respect to the applicable series of notes.
RANKING
The notes will be senior unsecured obligations of ours and will rank
PARI PASSU, or equally and ratably, with all other senior unsecured and
unsubordinated indebtedness of ours from time to time outstanding.
The notes will be effectively subordinated to any secured indebtedness
of ours to the extent of the value of the assets securing such indebtedness. The
indenture permits us and our Restricted Subsidiaries to incur or permit to be
outstanding secured indebtedness in an aggregate amount not exceeding 10% of our
total assets, including those of our subsidiaries, in addition to Permitted
Liens, all as described under "Description of Debt Securities--Certain
Restrictions--Limitation on Liens" beginning on page 11 in the accompanying
prospectus. Our assets consist principally of the stock of and advances to our
subsidiaries. Almost all of the operating assets of WorldCom and our
consolidated subsidiaries are owned by such subsidiaries, and we rely primarily
on interest and dividends from our subsidiaries to
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meet our obligations for payment of principal and interest on our outstanding
debt obligations and corporate expenses. The notes will be structurally
subordinated to all obligations, including trade payables, of our
subsidiaries, to the extent of the assets of such subsidiaries available to
satisfy such obligations.
Upon consummation of the Sprint merger, Sprint would be merged into
WorldCom, and the notes would be structurally subordinated to all obligations of
Sprint's subsidiaries. See unaudited pro forma condensed combined financial
statements of WorldCom, the unaudited financial statements of Sprint for the
quarter ended March 31, 2000 and the related Management's Discussion and
Analysis of Financial Condition and Results of Operations appearing in
WorldCom's Current Report on Form 8-K dated May 16, 2000 (filed on May 16,
2000), and the financial statements of Sprint for the year ended December 31,
2000 and the related Management's Discussion and Analysis of Financial Condition
and Results of Operations appearing in WorldCom's Current Report on Form 8-K-2
dated April 11, 2000 (filed on April 11, 2000), which are incorporated by
reference herein.
BOOK-ENTRY, DELIVERY AND FORM
The notes will be issued in the form of one or more fully registered
global notes, which we refer to as the "Global Notes," which will be deposited
with, or on behalf of, The Depository Trust Company, New York, New York, which
we refer to as the "Depositary" or "DTC," and registered in the name of Cede &
Co., the Depositary's nominee. Unless and until certificated notes are issued
under the limited circumstances described in the accompanying prospectus under
"Book Entry Debt Securities," no beneficial owner of a note shall be entitled to
receive a definitive certificate representing a note. So long as the successor
Depository or its nominee is the registered holder of the Global Notes, the
Depository, or such nominee, as the case may be, will be considered to be the
sole owner or holder of the applicable notes for all purposes of the indenture.
Investors' interests in the Global Notes will be represented through financial
institutions acting on their behalf as direct and indirect participants in the
Depository. Such participants may include Euroclear, which is operated by the
Brussells, Belgium office of Morgan Guaranty Trust Company of New York, or
Clearstream Banking, societe anonyme.
A further description of the Depository's procedures with respect to
the Global Securities representing the notes is set forth in the accompanying
prospectus under "Book-Entry Debt Securities" beginning on page 18.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the notes will be made by the underwriter in
immediately available funds. So long as the notes are represented by the Global
Notes, all payments of principal and interest will be made by WorldCom in
immediately available funds.
The notes will trade in DTC's Same-Day Funds Settlement System
until maturity, and secondary market trading activity in the notes will
therefore be required by DTC to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the notes.
S-11
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement dated as of the date of this prospectus supplement, Salomon Smith
Barney Inc. agreed to purchase the notes, and we have agreed to sell the
notes to Salomon Smith Barney Inc.
Salomon Smith Barney Inc. is the sole manager for our offering of
notes.
The underwriting agreement provides that the obligations of the
underwriter to purchase the notes included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriter is obligated to purchase all the notes if it purchases any of
the notes.
WorldCom has been advised by the underwriter that it propose initially
to offer some of the notes to the public at the public offering prices set forth
on the cover page of this prospectus supplement and some of the notes to certain
dealers at the public offering price less concessions not in excess of .075% of
the principal amount of the notes. After the initial public offering, the public
offering prices and such concessions may be changed.
In connection with the offering, the underwriter may purchase and sell
notes in the open market. These transactions may include over-allotment,
syndicate covering transactions and stabilizing transactions. Over-allotment
involves syndicate sales of notes in excess of the principal amount of notes to
be purchased by the underwriter in the offering, which creates a syndicate
short position. Syndicate covering transactions involve purchases of the notes
in the open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of certain bids or
purchases of notes made for the purpose of preventing or retarding a decline in
the market price of the notes while the offering is in progress.
The underwriter may also impose a penalty bid. Penalty bids permit the
underwriter to reclaim a selling concession from a syndicate member when it, in
covering syndicate short positions or making stabilizing purchases, repurchases
notes originally sold by that syndicate member.
Any of these activities may cause the price of the notes to be higher
than the price that otherwise would exist in the open market in the absence of
such transactions. These transactions may be effected in the over-the-counter
market or otherwise and, if commenced, may be discontinued at any time.
We estimate that our total allocable expenses of this offering,
excluding underwriting discounts, will be approximately $30,000.
The underwriter and its affiliates have performed certain
investment banking and advisory and general financing and banking services
for us from time to time for which it has received customary fees and
expenses. The underwriter and its affiliates may, from time to time, be
customers of, engage in transactions with and perform services for us in the
ordinary course of their business. The underwriter has acted as financial
advisor to WorldCom in connection with the Sprint merger, for which it has
received certain fees and for which it expects to receive additional fees
upon the closing of the Sprint merger.
We have agreed to indemnify the underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the underwriter may be required to make in respect of any
of those liabilities.
The notes are a new issue of securities with no established trading
market. No assurance can be given as to the liquidity of, or the trading
markets for, the notes. We have been advised by the underwriter for the
notes that they intend to make a market in the notes, but they are not
obligated to do so and may discontinue such market-making at any time without
notice.
S-12
<PAGE>
It is expected that delivery of the notes will be made against payment
therefor on or about June 12, 2000, which is the eighth business day following
the date of this prospectus supplement (such settlement cycle being referred to
in this prospectus supplement as "T+8"). The ability to settle secondary market
trades of the notes effected on the date of pricing and the succeeding business
day may be affected by T+8.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You can inspect and copy these reports, proxy
statements and other information at the public reference facilities of the SEC,
in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade
Center, Suite 1300, New York, New York 10048; and Suite 1400, Citicorp Center,
500 W. Madison Street, Chicago, Illinois 60661-2511. You can also obtain copies
of these materials from the public reference section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. The SEC
also maintains a web site that contains reports, proxy and information
statements and other information filed with the SEC (http://www.sec.gov).
We have filed a registration statement and related exhibits with
the SEC under the Securities Act of 1933 (the "Securities Act"). This
prospectus is a part of that registration statement. The registration
statement contains additional information about us and the debt securities.
You may inspect the registration statement and exhibits without charge at the
office of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and you
may obtain copies from the SEC at prescribed rates. The SEC allows us to
"incorporate by reference" the information we file with it, which means that
we can disclose important information to you by referring to those documents.
The information incorporated by reference is an important part of this
prospectus, and information that we file later with the SEC will
automatically update and supersede this information. We incorporate by
reference the following documents we filed with the SEC under File No.
000-11258:
- Our Annual Report on Form 10-K for the year ended December 31, 1999.
- Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000.
- Our Current Reports on Form 8-K dated October 4, 1999 (filed October
6, 1999), Form 8-K dated October 5, 1999 (filed October 15, 1999),
Form 8-K-1 dated April 11, 2000 (filed April 11, 2000), Form 8-K-2
dated April 11, 2000 (filed April 11, 2000), Form 8-K dated May 16,
2000 (filed May 16, 2000) and Form 8-K dated May 19, 2000 (filed May
22, 2000).
- All documents filed by us with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the
date of this prospectus and before we stop offering the debt
securities (other than those portions of such documents described in
paragraphs (i), (k), and (l) of Item 402 of Regulation S-K promulgated
by the SEC).
You may receive a copy of any of these filings (except exhibits, unless the
exhibits are specifically incorporated), at no cost, by writing or telephoning:
WorldCom, Inc.
500 Clinton Center Drive
Clinton, Mississippi 39056
Telephone Number (601) 460-5600 or
(877) 624-9266
Attention: Investor Relations Department
S-13
<PAGE>
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information.
LEGAL MATTERS
The legality of the notes offered by this prospectus will be passed
upon for WorldCom by P. Bruce Borghardt, Esq., General Counsel--Corporate
Development of WorldCom. Mr. Borghardt is paid a salary by WorldCom, is a
participant in various employee benefit plans offered by WorldCom to employees
of WorldCom generally and owns and has options to purchase shares of WorldCom
common stock. Bryan Cave LLP, St. Louis, Missouri, is also representing us in
connection with some of the aspects of the notes.
S-14
<PAGE>
PROSPECTUS
[LOGO]
DEBT SECURITIES
This prospectus describes debt securities which we may issue and sell at
various times:
o The debt securities may be debentures, notes or other unsecured
evidences of indebtedness of WorldCom.
o We may issue them in one or several series.
o The total principal amount of the debt securities we will issue under
this prospectus will be not more than U.S. $15 billion (or the
equivalent amount in other currencies).
o The terms of each series of debt securities (interest rates, maturity,
redemption provisions and other terms) will be determined at the time
of sale, and will be specified in a prospectus supplement which will
be delivered together with this prospectus at the time of the sale.
We may sell debt securities to or through underwriters, dealers or agents.
We may also sell debt securities directly to investors. More information about
the way we will distribute the debt securities is under the heading "Plan of
Distribution." Information about the underwriters or agents who will participate
in any particular sale of debt securities will be in the prospectus supplement
relating to that series of debt securities.
-------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED THAT
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is May 12, 2000.
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<PAGE>
We have not authorized anyone to give any information or to make any
representations concerning the offering of the debt securities except that which
is in this prospectus or in the prospectus supplement which is delivered with
this prospectus, or which is referred to under "Where You Can Find More
Information." If anyone gives you any other information or makes any other
representations, you should not rely on them. This prospectus is not an offer to
sell or a solicitation of an offer to buy any securities other than the debt
securities which are referred to in the prospectus supplement. This prospectus
is not an offer to sell or a solicitation of an offer to buy such debt
securities in any circumstances in which such offer or solicitation is unlawful.
You should not interpret the delivery of this prospectus, or any sale of debt
securities, as an indication that there has been no change in our affairs since
the date of this prospectus. You should also be aware that information in this
prospectus may change after this date.
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
About This Prospectus........................3 Ratio Of Earnings To Fixed Charges...........7
Where You Can Find More Information..........3 Description Of Debt Securities...............8
Cautionary Statement Regarding Forward- Plan Of Distribution........................17
Looking Statements..........................4 Book-Entry Debt Securities..................19
WorldCom.....................................6 Certain United States Federal Income Tax
Recent Developments..........................6 Documentation Requirements For Non-U.S.
Use Of Proceeds..............................7 Holders....................................21
Lawyers.....................................21
Experts.....................................21
</TABLE>
2
<PAGE>
ABOUT THIS PROSPECTUS
You should rely only on the information contained in or incorporated by
reference into this prospectus. This prospectus is part of a registration
statement that we filed with the Securities and Exchange Commission, or the
"SEC," utilizing a "shelf" registration process. Under this process, we may sell
any combination of the debt securities described in this prospectus in one or
more offerings up to a total dollar amount of U.S. $15,000,000,000 or the
equivalent in other currencies. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described under the next heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You can inspect and copy these reports, proxy
statements and other information at the public reference facilities of the SEC,
in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade
Center, Suite 1300, New York, New York 10048; and Suite 1400, Citicorp Center,
500 W. Madison Street, Chicago, Illinois 60661-2511. You can also obtain copies
of these materials from the public reference section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. The SEC
also maintains a web site that contains reports, proxy and information
statements and other information filed with the SEC (http://www.sec.gov).
We have filed a registration statement and related exhibits with the SEC
under the Securities Act of 1933 (the "Securities Act"). This prospectus is a
part of that registration statement. The registration statement contains
additional information about us and the debt securities. You may inspect the
registration statement and exhibits without charge at the office of the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549, and you may obtain copies from
the SEC at prescribed rates. The SEC allows us to "incorporate by reference" the
information we file with it, which means that we can disclose important
information to you by referring to those documents. The information incorporated
by reference is an important part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the following documents we filed with
the SEC under File No. 000-11258:
o Our Annual Report on Form 10-K for the year ended December 31, 1999.
o Our Current Reports on Form 8-K dated October 4, 1999 (filed October
6, 1999), Form 8-K dated October 5, 1999 (filed October 15, 1999),
Form 8-K-1 dated April 11, 2000 (filed April 11, 2000) and Form 8-K-2
dated April 11, 2000 (filed April 11, 2000).
o All documents filed by us with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the
date of this prospectus and before we stop offering the debt
securities (other than those portions of such documents described in
paragraphs (i), (k), and (l) of Item 402 of Regulation S-K promulgated
by the SEC).
3
<PAGE>
You may receive a copy of any of these filings (except exhibits, unless the
exhibits are specifically incorporated), at no cost, by writing or telephoning:
WorldCom, Inc.
500 Clinton Center Drive
Clinton, Mississippi 39056
Telephone Number (601) 460-5600 or
(877) 624-9266
Attention: Investor Relations Department
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The following statements are or may be forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995:
o any statements contained or incorporated herein regarding possible or
assumed future results of operations of WorldCom's business,
anticipated cost savings or other synergies, the markets for
WorldCom's services and products, anticipated capital expenditures,
the outcome of Euro conversion efforts, regulatory developments or
competition;
o any statements preceded by, followed by or that include the words
"intends," "estimates," "believes," "expects," "anticipates,"
"should," "could," or similar expressions; and
o other statements contained or incorporated by reference herein
regarding matters that are not historical facts.
Such statements are subject to risks and uncertainties. You should
understand that certain important factors, in addition to the factors discussed
in the documents we incorporate by reference in this prospectus, could affect
our future results and could cause those results to differ materially from those
expressed in our forward-looking statements. You should not place undue reliance
on any of our forward-looking statements, which speak only as of the date
thereof. The important factors that could cause actual results to differ
materially from those in the forward-looking statements herein include, without
limitation:
o whether the Sprint merger is completed and the ability to integrate
the operations of WorldCom and Sprint, including their respective
products and services;
o the effects of vigorous competition in the markets in which we
operate;
o the impact of technological change on our business, new entrants and
alternative technologies, and dependence on availability of
transmission facilities;
o risks of international business;
o regulatory risks, including the impact of the Telecommunications Act
of 1996;
o contingent liabilities;
o the impact of competitive services and pricing;
o risks associated with the Euro conversion efforts;
o risks associated with debt service requirements and interest rate
fluctuations;
o our degree of financial leverage, and
4
<PAGE>
o other risks referenced from time to time in our filings with the SEC.
Our independent public accountants have not examined or compiled the
forward-looking statements referred to above or any forecasts or other
projections incorporated by reference herein and, accordingly, they 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.
5
<PAGE>
WORLDCOM
Organized in 1983, WorldCom, Inc., a Georgia corporation, provides a broad
range of communications, outsourcing, and managed network services to both U.S.
and non-U.S. based corporations. We are a global communications company
utilizing a facilities-based, on-net strategy throughout the world. The on-net
approach allows our customers to send data streams or voice traffic across town,
across the U.S., or to any of our facilities-based networks in Europe or Asia,
without ever leaving the confines of our network. The on-net approach provides
our customers with superior reliability and low operating costs. Prior to
September 15, 1998, we were named WorldCom, Inc. From September 15, 1998 through
April 30, 2000, we were named MCI WORLDCOM, Inc. Effective May 1, 2000, we
changed our name back to WorldCom, Inc.
We leverage our facilities-based networks to focus on data and the
Internet. We provide the building blocks or foundation for the new e-conomy.
Whether it is an emerging e-business or a larger, more established company who
is embracing an e-business approach, we provide the communications
infrastructure to help make them successful. From private networking - frame
relay and asynchronous transfer mode ("ATM") - to high capacity Internet and
related services, to hosting for complex, high volume mega-sites, to turn-key
network management and outsourcing, we provide the broadest range of Internet
and traditional, private networking services available from any provider.
Our core business is communications services, which includes voice, data,
Internet and international services. During each of the last three years, more
than 90% of our operating revenues were derived from communications services.
We serve as a holding company for our subsidiaries' operations. Our
principal executive offices are located at 500 Clinton Center Drive, Clinton,
Mississippi 39056, and our telephone number is (601) 460-5600.
RECENT DEVELOPMENTS
On October 5, 1999, we announced that we had entered into an Agreement and
Plan of Merger dated as of October 4, 1999, which was amended and restated on
March 8, 2000, between WorldCom and Sprint Corporation. Under the terms of the
Sprint merger agreement, Sprint will merge with and into WorldCom.
Sprint is a diversified telecommunications company, providing long
distance, local and wireless communications services. Sprint's business is
organized in two groups: the Sprint PCS group and Sprint FON group. Sprint built
and operates the United States' first nationwide all-digital, fiber-optic
network and is a leader in advanced data communications services. In 1999 Sprint
had $20 billion in annual revenues and serves more than 20 million business and
residential customers. Additional information regarding Sprint and the Sprint
merger agreement is contained in our Current Reports on Form 8-K-1 dated April
11, 2000 (filed April 11, 2000) and Form 8-K-2 dated April 11, 2000 (filed April
11, 2000), which is incorporated by reference herein.
Under the merger agreement with Sprint, each outstanding share of Sprint
FON common stock will be exchanged for $76.00 of WorldCom common stock, subject
to a collar. In addition, each share of Sprint PCS common stock will be
exchanged for one share of a new WorldCom PCS tracking stock and 0.116025 shares
of WorldCom common stock. The terms of the WorldCom PCS tracking stock will be
virtually identical to the terms of Sprint's PCS common stock and will be
designed to track the performance of the PCS business of the surviving company
in the Sprint merger. Holders of Sprint class A stock will receive that amount
of WorldCom common stock and WorldCom PCS tracking stock as if such class A
stock had been converted into Sprint FON common stock and Sprint PCS common
stock immediately before the Sprint merger. Holders of the other classes or
series of Sprint capital stock will
6
<PAGE>
receive one share of a class or series of our capital stock with virtually
identical terms, which will be established in connection with the Sprint merger,
for each share of Sprint capital stock that they own. Sprint has announced that
it will redeem for cash each outstanding share of the Sprint first and second
series preferred stock on May 25, 2000. The Sprint merger will be accounted for
as a purchase and will be tax-free to Sprint stockholders.
The actual number of shares of WorldCom common stock to be exchanged for
each share of Sprint FON common stock will be determined based on the average
trading prices of WorldCom common stock prior to the closing, but will not be
less than 1.4100 shares (if WorldCom's average stock price equals or exceeds
$53.9007) or more than 1.8342 shares (if WorldCom's average stock price equals
or is less than $41.4350).
Consummation of the Sprint merger is subject to various conditions set
forth in the merger agreement with Sprint, including the adoption of the merger
agreement by stockholders of Sprint, the approval of the Sprint merger by
shareholders of WorldCom, the approval of the issuance of WorldCom capital stock
in the Sprint merger by shareholders of WorldCom, certain U.S. and foreign
regulatory approvals and other customary conditions. On April 28, 2000, special
meetings of the shareholders of WorldCom and Sprint were held and the merger
proposals were adopted and approved. It is anticipated that the Sprint merger
will close in the second half of 2000. Additionally, if the Sprint merger is
consummated, the integration and consolidation of Sprint would require
substantial management and financial resources and involve a number of
significant risks, including potential difficulties in assimilating technologies
and services of Sprint and in achieving anticipated synergies and cost
reductions.
USE OF PROCEEDS
Unless we indicate otherwise in the prospectus supplement which accompanies
this prospectus, we will use the net proceeds from the sale of the debt
securities for general corporate purposes. These may include, but are not
limited to, the repayment of indebtedness, acquisitions, additions to working
capital, and capital expenditures. Pending such use, the proceeds may be
invested temporarily in short-term marketable securities. The prospectus
supplement relating to the an offering will contain a more detailed description
of the use of proceeds of any specific offering of securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to our fixed
charges for each of the five years ended December 31, 1999. We base these ratios
on our historical consolidated financial statements.
For current information on the ratio or earnings to fixed charges, see
"Where You Can Find More Information" on page 3.
<TABLE>
<CAPTION>
Historical
----------- ---------------------------------------- ------
Year Ended December 31,
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges .... 2.28:1 -- 1.84:1 -- 5.75:1
Deficiency of Earnings to Fixed Charges (in
millions) ........................... -- $(2,288) -- $(1,834) --
</TABLE>
7
<PAGE>
NOTE 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 pretax income (loss) from continuing operations,
excluding minority interests in losses of consolidated subsidiaries, and
fixed charges consist of pretax interest (including capitalized interest)
on all indebtedness, amortization of debt discount and expense, and that
portion of rental expense which we believe to be representative of
interest. For the historical year ended December 31, 1996 and 1998,
earnings were inadequate to cover fixed charges by the amounts shown.
DESCRIPTION OF DEBT SECURITIES
This section describes some of the general terms of the debt securities.
The prospectus supplement describes some of the particular terms of the debt
securities we are offering. The prospectus supplement also indicates the extent,
if any, to which some of such general provisions may not apply to the debt
securities being offered.
We may offer under this prospectus up to $15,000,000,000 aggregate
principal amount of debt securities, or if debt securities are issued at a
discount, or in a foreign currency or composite currency, such principal amount
as may be sold for an initial public offering price of up to $15,000,000,000 or
its equivalent in other currencies. Unless otherwise specified in a supplement
to this prospectus, the debt securities will be our direct, unsecured
obligations and will rank equally with all of our other unsecured and
unsubordinated indebtedness.
THE INDENTURE
We will issue the debt securities under an indenture between us and Chase
Manhattan Trust Company, National Association, which is serving as trustee. The
indenture is an exhibit to the registration statement. We are summarizing some
of the important provisions of the debt securities and the indenture. This is
not a complete description of the important terms. You should read to the
specific terms of the indenture for a complete statement of the terms of the
indenture and the debt securities. When we use capitalized terms which we do not
define here, those terms have the meanings given in the indenture. When we use
references to sections, we mean sections in the indenture. When we refer to
those terms or use those references, we are incorporating those terms or
sections by reference in this prospectus.
GENERAL
The indenture does not limit the amount of debt securities that we may
issue under the indenture, nor does it limit other debt that we may issue. We
may issue the debt securities at various times in different series, each of
which may have different terms.
We will establish the terms of each series of debt securities through a
resolution of our board of directors, or under authority granted by our board,
or under a supplement to the indenture. Unless a prospectus supplement relating
to a particular series of debt securities provides otherwise, the indenture and
the terms of the debt securities will not contain any covenants designed to
afford holders of any debt securities protection in a highly leveraged or other
transaction involving us, whether or not resulting in a change of control, that
may adversely affect holders of the debt securities.
The prospectus supplement relating to the particular series of debt
securities we are offering includes the following information concerning those
debt securities:
o The title of the debt securities.
o Any limit on the aggregate amount of the debt securities that we may
offer.
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o The price at which we are offering the debt securities. We will
usually express the price as a percentage of the principal amount.
o The maturity date or dates, or the method for determining the maturity
date or dates of the debt securities.
o The interest rate or rates per annum on the debt securities. We may
specify a fixed rate or a variable rate, or we may specify a method
for determining such rate or rates, or we may offer debt securities
that do not bear interest but that are sold at a substantial discount
from the amount payable at maturity.
o The date or dates from which interest on the debt securities will
accrue.
o The date or dates on which we will pay interest and the regular record
dates for determining who is entitled to receive the interest. Unless
we otherwise specify in the prospectus supplement, we will calculate
interest on the basis of a year of 360 days of twelve 30-day months.
o Where we will make payments on the debt securities and where you may
transfer or exchange debt securities.
o If applicable, the date or dates on which or after which, and the
prices at which, we have the option or obligation to redeem the debt
securities or you have the option to require us to redeem the debt
securities and any detailed terms and provisions of those repurchase
or redemption provisions, including any sinking fund or similar
provisions.
o The currency or currencies in which we will make payments on the debt
securities. Payments on the debt securities may be in two or more
currencies or in currency units or composite currencies.
o Whether payments on the debt securities will be determined from an
index, formula or other method (which may be, but need not be, based
on one or more currencies, currency units or composite currencies).
o The name of any security registrar or paying agent or other agents for
the debt securities, if the trustee will not be performing such
functions.
o The amount that we would be required to pay if the maturity of the
debt securities is accelerated, if that amount is other than the
principal amount.
o Any special rights that the holders of the debt securities may have if
specified events occur.
o If applicable, any limitations on our rights to defease our
obligations under the debt securities by depositing cash or
securities.
o Any additional or modified covenants or other material terms relating
to the debt securities, or any provisions of the indenture that will
not apply to the debt securities.
o Any additional or changes in the events of default that will apply to
the debt securities, or any events of default which will not apply to
the debt securities. (Section 301).
None of our stockholders, employees, officers, directors or incorporators,
past, present or future, will have any personal liability in respect of our
obligations of under the indenture or the debt securities on account of such
status. (Section 113).
ORIGINAL ISSUE DISCOUNT SECURITIES
If debt securities are original issue discount securities, we will offer
and sell them at a substantial discount below their stated principal amount. We
will describe Federal income tax consequences and other special considerations
applicable to any such original issue discount securities in the prospectus
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supplement. "Original issue discount security" means any security which provides
that less than the full principal amount will be due if the maturity is
accelerated or if the security is redeemed before its maturity.
FOREIGN CURRENCIES
If we denominate the purchase price of any of the debt securities in a
foreign currency or currencies or a foreign currency unit or units, or if the
principal of and any premium and interest on any series of debt securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
we will provide you with information on the restrictions, elections, general tax
considerations, specific terms and other information with respect to that issue
of debt securities and such foreign currency or currencies or foreign currency
unit or units in the applicable prospectus supplement.
FORM AND DENOMINATIONS
Unless we otherwise indicate in the prospectus supplement, the debt
securities will be in fully registered form, without coupons, in denominations
of $1,000 or any multiple thereof. (Section 302).
TRANSFER AND EXCHANGE
Each debt security will be represented by either one or more global
securities registered in the name of The Depository Trust Company, as
depositary, or a nominee (we will refer to any debt security represented by a
global debt security as a "book-entry debt security"), or a certificate issued
in definitive registered form (we will refer to any debt security represented by
a certificated security as a "certificated debt security") as set forth in the
applicable prospectus supplement. Except as set forth under the heading
"Book-Entry Debt Securities" below, book-entry debt securities will not be
issuable in certificated form.
In the case of certificated debt securities, you may transfer or exchange
certificated debt securities at any office we maintain for this purpose in
accordance with the terms of the indenture. No service charge will be made for
any transfer or exchange of certificated debt securities, but we may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection with a transfer or exchange.
You may effect the transfer of certificated debt securities and the right
to receive the principal of, premium, if any, and interest on certificated debt
securities only by surrendering the certificate representing those certificated
debt securities and either reissuance by us or the trustee of the certificate to
the new holder or the issuance by us or the trustee of a new certificate to the
new holder. (Section 305).
PRIORITY OF THE DEBT SECURITIES
The debt securities will be our senior unsecured obligations and will rank
PARI PASSU (i.e., equally and ratably) with all of our other senior unsecured
and unsubordinated indebtedness.
The debt securities will be effectively subordinated to any of our
secured indebtedness to the extent of the value of the assets securing that
indebtedness. The indenture permits us and our Restricted Subsidiaries
(defined below) to incur or permit to be outstanding secured indebtedness up
to 10% of the total assets of WorldCom and our subsidiaries, in addition to
permitted liens which are described below under "Certain
Restrictions--Limitation on Liens." Our assets consist principally of the
stock of and advances to our subsidiaries. Almost all of our operating assets
are owned by our subsidiaries and we rely primarily on interest and dividends
from our subsidiaries to meet our obligations to make payments on our debt
and to pay our other expenses. The debt securities will be "structurally
subordinated" to all obligations, including trade payables, of our
subsidiaries, which means that, in case of insolvency or bankruptcy, the
claims of the direct creditors of our subsidiaries would have to be satisfied
before any funds would be available to the holders of the debt securities as
creditors of WorldCom only. The indenture does not restrict our subsidiaries
from incurring unsecured indebtedness.
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A "subsidiary" is an entity of which we own a majority of the outstanding
voting securities having voting power for the election of directors (or their
equivalent). Corporations owned by our subsidiaries are also considered to be
our subsidiaries.
A "Restricted Subsidiary" is any of our subsidiaries (1) which has
substantially all of its property in the United States (other than its
territories and possessions) and (2) in which the total of our securities of,
loans and advances to and other investments in, such subsidiary exceeded 10% of
our Consolidated Net Tangible Assets (as defined below) at the end of the
quarter preceding the date of this determination, except that:
o a subsidiary we acquire after the date of the indenture will not be a
Restricted Subsidiary unless our Board of Directors designates it as
such or unless it is treated similarly under our $10.75 billion bank
credit facilities or another agreement we enter into for borrowed
money;
o a special purpose "receivables subsidiary," which is a wholly-owned
subsidiary created specifically to sell, convey, or grant a security
interest in or otherwise transfer undivided percentage interests in
its receivables, will not be considered a Restricted Subsidiary; and
o any subsidiary we have designated as unrestricted for purposes of our
$10.75 billion bank credit facilities or another agreement we enter
into for borrowed money will not be considered a Restricted
Subsidiary.
"Property" means any interest of any person in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible (including
capital stock in other corporations), but it does not include capital stock that
we have issued to others.
"Capital stock" means shares or other equivalents of corporate stock,
partnership interest or any other equity interest, but excludes any debt
security convertible or exchangeable into an equity interest.
Our "Consolidated Net Tangible Assets" are our consolidated total assets (with
our subsidiaries) as reflected in our most recent balance sheet, less:
o current liabilities, excluding current maturities of long-term debt
and capital lease obligations (which is an indebtedness represented by
obligations under a lease that we are required to capitalize for
financial reporting purposes); and
o goodwill, trademarks, patents and minority interests of others.
CERTAIN RESTRICTIONS
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate or merge with or sell, lease or convey all or
substantially all of our assets to, any other corporation unless (a) the
surviving corporation (if it is not WorldCom) is a corporation organized and
existing under the laws of the United States or one of the fifty United States
and it expressly assumes (pursuant to a supplemental indenture) to pay the
principal and any interest on your debt securities and to perform and observe
all of the covenants and conditions under the indenture, and (b) immediately
after such transactions, there is no default in the performance of any of our
covenants or the conditions of the indenture. Upon any such consolidation,
merger or sale, the successor corporation will succeed to and be substituted for
us under the indenture. (Section 801).
LIMITATION ON LIENS
A lien is a preference arrangement on property, such as
o a mortgage or deed of trust;
o a pledge;
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o a hypothecation;
o an assignment;
o a deposit arrangement;
o a security interest;
o a charge;
o an easement or zoning restriction that materially impairs usefulness
or marketability;
o an encumbrance;
o a preference;
o a priority;
o a security agreement;
o a capital lease obligation;
o a conditional sale;
o any other agreement that has the same economic effect as any of the
above; or
o any "sale and leaseback transaction," which is an arrangement whereby
we, or a Restricted Subsidiary, would sell and then lease back
property from the purchaser.
Under the indenture, we may not, and we may not allow our Restricted
Subsidiaries to, allow any lien on any of our property or assets (which includes
capital stock), unless the lien secures your debt securities equally and ratably
with, or prior to, any other indebtedness secured by such lien, subject to
certain exceptions described below. (Section 1004). The indenture excepts from
this limitation secured debt which we or our Restricted Subsidiaries may issue,
assume, guarantee or permit to exist up to 10% of the value of our total assets
as shown on our most recent balance sheet at the time. This restriction will not
apply to:
o liens existing at the date of the indenture;
o liens on property that exist when we acquire the property and liens
that secure payment of the purchase price of the property;
o liens that secure debt which a Restricted Subsidiary owes to us or to
another Restricted Subsidiary;
o liens on property, shares of stock or indebtedness of any entity that
exists when (a) it becomes a Restricted Subsidiary, (b) is merged into
or consolidated with us or a Restricted Subsidiary, or (c) we or a
Restricted Subsidiary acquires all or substantially all of the assets
of the entity, provided that no such lien extends to any other
property of us or a Restricted Subsidiary;
o liens on property to secure debt incurred for development or
improvement of the property;
o liens 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 similar nondelinquent obligations, in each case
incurred in the ordinary course of business;
o 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;
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o 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 our access in excess of
those set forth by regulations promulgated by the Federal Reserve
Board and such deposit account is not intended by us to provide
collateral to the depository institution;
o pledges or deposits under worker's compensation laws, unemployment
insurance laws or similar legislation;
o statutory and tax liens for sums not yet due or delinquent or which
are being contested or appealed in good faith by appropriate
proceedings;
o 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;
o liens on personal property (other than shares or debt of Restricted
Subsidiaries) securing loans maturing in not more than one year or on
accounts receivables in connection with a receivables financing
program; or
o extensions, renewals or replacement of any of the liens described
above, if limited to all or any part of the same property securing the
original lien.
EVENTS OF DEFAULT, NOTICE AND WAIVER
An event of default in respect of any series of debt securities means:
o default for 30 days in payment of any interest installment;
o default in payment of principal, premium, if any, or sinking fund
obligation when due;
o default, for 90 days after we receive notice as provided in the
indenture, in performance of any other covenant or breach of any
warranty in the indenture governing such series;
o certain events of our bankruptcy, insolvency or reorganization or
receivership; and
o any other events which we may specify for such series, which will be
indicated in the prospectus supplement for such series.
(Section 501).
Within 90 days after a default in respect of any series of debt securities,
the trustee must give to the holders of such series notice of all uncured and
unwaived defaults by us known to it. However, except in the case of default in
payment, the trustee may withhold such notice if it determines that such
withholding is in the interest of such holders. (Section 601). The trustee is
not deemed to have notice of any default described in the first three bullet
points unless specifically notified in writing by WorldCom or the holders of 10%
of the aggregate principal of the debt securities then outstanding.(Section
602).
If an event of default occurs in respect of any outstanding series of debt
securities, 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 or indexed 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 us (and to the
trustee if given by the holders). However, at any time after such a declaration
of acceleration but before a judgment or decree for payment of the money due has
been obtained, the holders of a majority in principal amount of outstanding debt
securities of such series may, subject to certain conditions, rescind and annul
such acceleration if all events of default, other than the non-payment of
accelerated
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principal (or premium, if any) or interest on debt securities of such series
have been cured or waived as provided in the indenture. (Section 502).
The holders of a majority in principal amount of the outstanding debt
securities of a series, on behalf of the holders of all debt securities of such
series, may waive any past default and its consequences, but may not waive an
uncured default in payment or default which cannot be waived without the consent
of the holders of all outstanding securities of that series. (Section 513).
Within 120 days after the close of each fiscal year, we 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 1005).
Subject to provisions in the indenture relating to its duties in case of
default, the trustee is not required to take action at the request of any
holders of debt securities, unless such holders have offered to the trustee
reasonable security or indemnity. (Section 602).
Subject to such indemnification requirements and certain limitations in the
indenture, if any event of default has occurred, the holders of a majority in
principal amount of the outstanding debt securities of any series may direct the
time, method and place of conducting proceedings for remedies available to the
trustee, or exercising any trust or power conferred on the trustee, in respect
of such series. (Section 512).
MODIFICATION OR AMENDMENT OF THE INDENTURE
We and the trustee may enter into supplemental indentures without the
consent of the holders for certain purposes, including:
o to evidence the succession of another entity to WorldCom and the
assumption by such entity of our covenants in the indenture;
o to add to our covenants for the benefit of all or any series of the
debt securities or to surrender any of our rights or powers under the
indenture;
o to add events of default for the benefit of the holders of all or any
series of the debt securities, which may provide for a particular
period of grace after 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 to
waive such default;
o to change or eliminate any provisions of the indenture, as long as
such change or elimination is 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 the provisions being changed or eliminated;
o to provide security for the debt securities;
o to establish the form or terms of any series of debt securities in
accordance with the indenture;
o to provide for the acceptance and appointment of a successor trustee
for any series of debt securities or to provide for or facilitate the
administration of the trusts under the indenture by more than one
trustee;
o 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 are not inconsistent with
the provisions of the indenture, as long as the additional provisions
do not adversely affect the interests of any holders in any material
respects; or
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o 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 the
indenture, as long as such action does not adversely affect the
interests of any holders in any material respect. (Section 901).
If we receive the consent of the holders of a majority in principal amount
of the outstanding debt securities affected, we may enter into supplemental
indentures with the trustee that would:
o add, change or eliminate provisions in the indenture; or
o change the rights of the holders of any series of debt securities.
However, unless we receive the consent of all of the affected holders, we
may not enter into supplemental indentures that would, with respect to the debt
securities of such holders:
o change the maturity of the principal, premium, if any, or any
installment of principal or interest;
o reduce the principal amount or any premium or additional payments;
o reduce the interest rate;
o reduce any amount payable on redemption or reduce the amount of the
principal of an original issue discount security that would be payable
on acceleration or provable in bankruptcy, or adversely affect any
right of repayment of any holder;
o adversely change any right you may have to require repayment;
o change the place where, or the currency or currencies in which,
payments are made;
o impair or affect your right to institute suit for payment;
o reduce the requirement for majority approval of supplemental
indentures; or
o modify any of the provisions of the indenture relating to supplemental
indentures or waiver of past defaults with respect to such series,
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 series without the consent of the holders of each such
debt security. (Section 902).
A supplemental indenture which changes or eliminates any covenant or other
provision of the indenture which was 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,
will only require the consent 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 of the proposed supplemental indenture. (Section 902).
DEFEASANCE; SATISFACTION AND DISCHARGE
LEGAL DEFEASANCE. The indenture provides that, unless otherwise provided by
the terms of the applicable series of debt securities, we may be discharged from
any and all obligations in respect of the debt securities of any series (except
for certain obligations to register the transfer or exchange of debt securities
of such series, to replace stolen, lost or mutilated debt securities of such
series, and to maintain paying agencies and certain provisions relating to the
treatment of funds held by paying agents). We will be so discharged upon the
deposit with the trustee, in trust, of money and/or government obligations
(which term is described below) that, through the payment of interest and
principal in accordance with their terms, will provide money in an amount
sufficient in the opinion of a nationally recognized firm of
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independent public accountants to pay and discharge each installment of
principal, premium, if any, and interest on and any mandatory sinking fund
payments in respect of the debt securities of that series on the stated
maturity of those payments in accordance with the terms of the indenture and
those debt securities.
This discharge may occur only if, among other things, we have delivered to
the trustee an opinion of counsel to the effect that the holders of the debt
securities of that series will not recognize income, gain or loss for United
States federal income tax purposes as a result of the defeasance and will be
subject to United States federal income tax on the same amounts and in the same
manner and at the same times as would have been the case if the defeasance had
not occurred. (Sections 1402 and 1404).
DEFEASANCE OF CERTAIN COVENANTS. The indenture provides that, unless
otherwise provided by the terms of the applicable series of debt securities,
upon compliance with certain conditions:
o we may omit to comply with the covenants described under the heading
"Consolidation, Merger and Sale of Assets" and "Limitations on Liens"
and certain other covenants set forth in the indenture, as well as any
additional covenants which may be set forth in the applicable
prospectus supplement; and
o any omission to comply with those covenants will not constitute a
default or an event of default with respect to the debt securities of
that series, which we refer to as a "covenant defeasance." (Section
1403).
The conditions include:
o depositing with the trustee money and/or Government obligations, that,
through the payment of interest and principal in accordance with their
terms, will provide money in an amount sufficient in the opinion of a
nationally recognized firm of independent public accountants to pay
and discharge each installment of principal of, premium, if any, and
interest on and any mandatory sinking fund payments in respect of the
debt securities of that series on the stated maturity of those
payments in accordance with the terms of the indenture and those debt
securities; and
o delivering to the trustee an opinion of counsel to the effect that the
holders of the debt securities of that series will not recognize
income, gain or loss for United States federal income tax purposes as
a result of the covenant defeasance and will be subject to United
States federal income tax on the same amounts and in the same manner
and at the same times as would have been the case if the covenant
defeasance had not occurred. (Section 1404).
COVENANT DEFEASANCE AND EVENTS OF DEFAULT. In the event we exercise our
option to effect covenant defeasance with respect to any series of debt
securities and the debt securities of that series are declared due and
payable because of the occurrence of any event of default, the amount of
money and/or Government obligations on deposit with the trustee will be
sufficient to pay amounts due on the debt securities of that series at the
time of their stated maturity but may not be sufficient to pay amounts due on
the debt securities of that series at the time of the acceleration resulting
from the event of default. However, we will remain liable for those payments.
The term "government obligations" means securities which are (1) direct
obligations of the United States or the government which issued the foreign
currency in which the debt securities are payable, for the payment of which its
full faith and credit is pledged, or (2) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States or
the government which issued such foreign currency, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States or such foreign government, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and also includes a depository
receipt issued by a bank or trust company as custodian with respect to any such
Government obligation or a specific payment of
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interest on or principal of any such Government obligation held by such
custodian for the 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).
We may exercise our defeasance option even if we have already exercised our
covenant defeasance option.
There may be additional provisions relating to defeasance which we will
describe in the prospectus supplement. (Sections 1401 and 1402).
GOVERNING LAW
The indenture and the debt securities will be governed by, and construed in
accordance with, the internal laws of the State of New York. (Section 111).
TITLE
WorldCom, the trustee and any agent of us or the trustee may treat the
person in whose name a debt security is registered as the absolute owner
thereof, whether or not such debt security may be overdue, for the purpose of
receiving payment and for all other purposes. (Section 309).
REGARDING THE TRUSTEE
The trustee is Chase Manhattan Trust Company, National Association. The
trustee is a lender to us under our bank credit agreements. From time to time,
we may enter into other banking and other commercial relationships with the
trustee.
There may be more than one trustee under the indenture, each with respect
to one or more series of debt securities. (Section 101). Any trustee may resign
or be removed with respect to one or more series of debt securities, and a
successor trustee may be appointed to act with respect to such series (Section
608).
If two or more persons are acting as trustee with respect to different
series of debt securities, each trustee will be a trustee of a trust under the
indenture separate from the trust administered by any other such trustee. Except
as otherwise indicated in this prospectus, any action 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. (Section 609).
PLAN OF DISTRIBUTION
We may sell the debt securities to one or more underwriters for public
offering and sale by them and may also sell the debt securities to investors
directly or through agents. We will name any underwriter or agent involved in
the offer and sale of debt securities in the applicable prospectus
supplement. We have also reserved the right to sell or exchange debt
securities directly to investors on our own behalf in those jurisdictions
where we are authorized to do so. We may distribute the debt securities from
time to time in one or more transactions:
o at a fixed price or prices, which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to such prevailing market prices; or
o at negotiated prices.
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We may also, from time to time, authorize dealers, acting as our agents, to
offer and sell debt securities upon the terms and conditions set forth in the
applicable prospectus supplement. In connection with the sale of debt
securities, we, or the purchasers of debt securities for whom the underwriters
may act as agents, may compensate underwriters in the form of underwriting
discounts or commissions. Underwriters may sell the debt securities to or
through dealers, and those dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agent. Unless otherwise indicated
in a prospectus supplement, an agent will be acting on a best efforts basis and
a dealer will purchase debt securities as a principal, and may then resell the
debt securities at varying prices to be determined by the dealer.
We will describe in the applicable prospectus supplement any compensation
we pay to underwriters or agents in connection with the offering of debt
securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers. Dealers and agents participating in the
distribution of debt securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the debt securities may be deemed to be underwriting discounts and
commissions. We may enter into agreements to indemnify underwriters, dealers and
agents against certain civil liabilities, including liabilities under the
Securities Act of 1933, and to reimburse these persons for certain expenses.
To facilitate the offering of debt securities, certain persons
participating in the offering may engage in transactions that stabilize,
maintain, or otherwise affect the price of the debt securities. This may include
over-allotments or short sales of the debt securities, which involves the sale
by persons participating in the offering of more debt securities than we sold to
them. In these circumstances, these persons would cover such over-allotments or
short positions by making purchases in the open market or by exercising their
over-allotment option. In addition, these persons may stabilize or maintain the
price of the debt securities by bidding for or purchasing debt securities in the
open market or by imposing penalty bids, whereby selling concessions allowed to
dealers participating in the offering may be reclaimed if debt securities sold
by them are repurchased in connection with stabilization transactions. The
effect of these transactions may be to stabilize or maintain the market price of
the debt securities at a level above that which might otherwise prevail in the
open market. These transactions may be discontinued at any time.
Certain of the underwriters, dealers or agents and their associates may
engage in transactions with and perform services for us in the ordinary course
of our business.
Each series of debt securities offered will be a new issue of securities
and will have no established trading market. Such debt securities offered may or
may not be listed on a national securities exchange. No assurance can be such as
to the liquidity of or the existence of trading markets for any debt securities
offered.
BOOK-ENTRY DEBT SECURITIES
The prospectus supplement will indicate whether we are issuing the related
debt securities as book-entry securities. Book-entry securities of a series will
be issued in the form of one or more global notes that will be deposited with
The Depository Trust Company, New York, New York, or "DTC," as depositary, or a
nominee, and will evidence all of the debt securities of that series. This means
that we will not issue certificates to each holder. We may issue one or more
global securities to DTC, which will keep a computerized record of its
participants (for example, your broker) whose clients have purchased the debt
securities. DTC has indicated it intends to follow the following procedures with
respect to book-entry debt securities. Additional or differing terms of the
depositary arrangements will be described in the applicable prospectus
supplement.
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Ownership of beneficial interests in book-entry debt securities will be
limited to persons that have accounts with DTC for the related global debt
security, referred to as "participants," or persons that may hold interests
through participants. Upon the issuance of a global debt security, DTC will
credit, on its book-entry registration and transfer system, the participants'
accounts with the respective principal amounts of the book-entry debt securities
represented by such global debt security beneficially owned by such
participants. The accounts to be credited will be designated by any dealers,
underwriters or agents participating in the distribution of the book-entry debt
securities. Ownership of book-entry debt securities will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by DTC for the related global debt security (with respect to
interests of participants) and on the records of participants (with respect to
interests of persons holding through participants).
Unless it is exchanged in whole or in part for a security evidenced by
individual certificates, a global security may not be transferred, except that
DTC, its nominees and their successors may transfer a global security as a whole
to one another.
The laws of some jurisdictions require that certain purchasers of
securities such as debt securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to acquire or
transfer beneficial interests in the global security.
So long as DTC for a global debt security, or its nominee, is the
registered owner of that global debt security, DTC or its nominee, as the case
may be, will be considered the sole owner or holder of the book-entry debt
securities represented by such global debt security for all purposes under the
indenture. Except as described below, beneficial owners of book-entry debt
securities will not be entitled to have securities registered in their names,
will not receive or be entitled to receive physical delivery of a certificate in
definitive form representing securities and will not be considered the owners or
holders of those securities under the indenture. Accordingly, each person
beneficially owning book-entry debt securities must rely on the procedures of
DTC for the related global debt security 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 indenture.
We understand, however, that under existing industry practice, DTC will
authorize the persons on whose behalf it holds a global debt security to
exercise certain rights of holders of debt securities, and the indenture
provides that we, the trustee and our respective agents will treat as the holder
of a debt security the persons specified in a written statement of DTC with
respect to that global debt security for purposes of obtaining any consents or
directions required to be given by holders of the debt securities pursuant to
the indenture. (Section 309).
We will make payments on each series of book-entry debt securities to
DTC or its nominee, as the sole registered owner and holder of the global
security. Neither WorldCom, the trustee nor any of their agents will be
responsible or liable for any aspect of DTC's records relating to or payments
made on account of beneficial ownership interests in a global security or for
maintaining, supervising or reviewing any of DTC's records relating to such
beneficial ownership interests.
We expect that DTC, upon receipt of any payment of principal of, premium or
interest on a global debt security, will immediately credit participants'
accounts with payments in amounts proportionate to the respective amounts of
book-entry debt securities held by each participant as shown on the records of
DTC. We also expect that payments by participants to owners of beneficial
interests in book-entry debt securities held through those participants will be
governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name." However, payments will be the responsibility of
those participants and not of DTC, the trustee or us.
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We will issue certificated debt securities in exchange for each global debt
security only if:
o DTC notifies us that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered under
the Securities Exchange Act of 1934 and we do not appoint a successor
within 90 days;
o we decide that the global security shall be exchangeable; or
o there is an event of default under the indenture or an event which
with the giving of notice or lapse of time or both would become an
event of default with respect to the debt securities represented by
such global security. (Section 305)
If that occurs, we will issue debt securities of that series in certificated
form in exchange for such global security. An owner of a beneficial interest in
the global security then will be entitled to physical delivery of a certificate
for debt securities of such series equal in principal amount to such beneficial
interest and to have such debt securities registered in its name. We would issue
the certificates for such debt securities in denominations of $1,000 or any
larger amount that is an integral multiple thereof, and we would issue them in
registered form only, without coupons. (Section 305)
DTC has provided us the following information: 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 United States
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its direct participants deposit with DTC. DTC also records the
settlement among direct participants of securities transactions, such as
transfers and pledges, in deposited securities through computerized records for
direct participant's accounts. This eliminates the need to exchange
certificates. Direct participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
direct participant. The rules that apply to DTC and its participants are on file
with the SEC. DTC is owned by a number 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.
No fees or costs of DTC will be charged to you.
We have obtained the foregoing information concerning DTC and DTC's
book-entry system from sources we believe to be reliable, but we take no
responsibility for the accuracy of this information.
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 S.A.
("CEDEL"), or the Euroclear system or through participants. The global
securities may betraded 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.
CERTAIN UNITED STATES FEDERAL INCOME TAX DOCUMENTATION
REQUIREMENTS FOR NON-U.S. HOLDERS
If you are a beneficial owner of global securities holding securities,
directly or indirectly, through CEDEL or Euroclear (or through DTC if you have
an address outside the United States), you will generally 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. You will not be subject to the 30% United States withholding tax if:
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(1) 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 you and us (as the entity required to withhold
tax) complies with applicable certification requirements; and
(2) you take one of the steps described below to obtain an exemption or
reduced tax rate:
The Internal Revenue Service ("IRS") issued new withholding
regulations (the "withholding regulations"), which make certain
modifications to withholding, backup withholding and information
reporting rules. The withholding regulations attempt to unify
certification requirements and modify certain reliance standards. The
withholding regulations will generally be effective for payments made
after December 31, 2000, although you may begin complying with the
withholding regulations immediately.
o EXEMPTION FOR NON-U.S. PERSONS (FORM W-8 OR NEW FORM W-8BEN). If you
are a non-U.S. person (as defined below) and you are not a beneficial owner
owning, actually or constructively, 10% or more of the total combined
voting power of all classes of our stock entitled to vote or a controlled
foreign corporation that is related to us actually or constructively
through stock ownership, you can obtain a complete exemption from the
withholding tax by filing a properly completed Form W-8 (Certificate of
Foreign Status) or new Form W-8BEN (Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding). The Form W-8 is valid
until the earlier of (i) three years beginning on the date that the form is
signed, or (ii) December 31, 2000. After December 31, 2000, only Form
W-8BEN will be acceptable. Form W-8BEN is valid for a period of three years
beginning on the date that the form is signed. If the information shown on
Form W-8 or Form W-8BEN changes, you must file a new Form W-8 or Form
W-8BEN within 30 days of such change.
o EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME
(FORM 4224 OR NEW FORM W-8ECI).If you are a non-U.S. person (as defined
below), including a non-U.S. corporation or bank with a United States
branch, for which the interest income is effectively connected with your
conduct of a trade or business in the United States, you 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) or new Form W-8ECI
(Certificate of Foreign Person's Claim for Exemption from Withholding on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States). The Form 4224 is valid until the earlier of (i) one year
beginning on the date the form is signed, or (ii) December 31, 2000. After
December 31, 2000, only Form W-8ECI will be acceptable. Form W-8ECI is
valid for a period of three years beginning on the date that the form is
signed.
o EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY
COUNTRIES (FORM 1001 OR NEW FORM W-8BEN). If you are a non-U.S. person (as
defined below) that is entitled to the benefits of an income tax treaty
with the United States, you 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) or new Form W-8BEN
(Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding). If Form 1001 is provided and the treaty provides only for a
reduced rate, we will withhold tax at that rate unless you alternatively
file Form W-8. Either you or your agent may file Form 1001 or Form W-8BEN.
The Form 1001 is valid until the earlier of (i) three years beginning on
the date that the form is signed, or (ii) December 31, 2000 . After
December 31, 2000, only Form W-8BEN will be acceptable. Form W-8BEN is
valid for a period of three years beginning on the date that the form is
signed.
o EXEMPTION FOR U.S. PERSONS (FORM W-9). If you are a U.S. person, you
can obtain a complete exemption from the withholding tax by filing a
properly completed Form W-9 (Payer's Request for Taxpayer Identification
Number and Certification).
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UNITED STATES FEDERAL INCOME TAX REPORTING PROCEDURE
Under the existing rules you (or, in the case of a Form 1001 or a Form 4224
filer, your agent) must submit the appropriate form to the entity through whom
you directly hold the global security. For example, if you are listed directly
on the books of Euroclear or CEDEL as the holder of the debt security, you must
provide Euroclear or CEDEL, as the case may be, the IRS Form. Each person
through which a debt security is held must submit, on your behalf, 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 payable 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. The withholding
regulations revise the procedures that withholding agents and payees must follow
to comply with, or to establish an exemption from, withholding for payments made
after December 31, 2000. You should consult your own tax advisors regarding
compliance with these procedures under the withholding regulations.
The term "U.S. person" means:
o a citizen or resident of the United States;
o a corporation or partnership organized in or under the laws of the
United States or any State thereof or the District of Columbia;
o an estate that is subject to U.S. federal income taxation regardless
of the source of its income; or
o a trust if (A) a court within the United States 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. Notwithstanding the preceding sentence, to the
extent provided in Treasury Regulations, certain trusts in existence
on August 20, 1996, and treated as U.S. persons prior to such date,
that elect to continue to be treated as U.S. persons will also be a
U.S. person.
The term "non-U.S. person" means any person who is not a U.S. person as
described above. The terms "United States" and "U.S." means the United States of
America (including the States and the District of Columbia).
This summary does not deal with all aspects of U.S. federal income and
withholding taxes, the application of the withholding regulations or the
application of any U.S. income or estate tax treaty that may be relevant to
foreign beneficial owners of the global securities. You are advised to consult
your own tax advisors for specific tax advice concerning your holding and
disposing of beneficial interests in the global securities.
LAWYERS
The legality of the debt securities offered by this prospectus will be
passed upon for WorldCom by P. Bruce Borghardt, Esq., General Counsel--Corporate
Development of WorldCom. Mr. Borghardt is paid a salary by WorldCom, is a
participant in various employee benefit plans offered by WorldCom to employees
of WorldCom generally and owns and has options to purchase shares of WorldCom
common stock. Bryan Cave LLP, St. Louis, Missouri, is also representing us in
connection with some of the aspects of the debt securities.
EXPERTS
The consolidated financial statements of WorldCom as of December 31, 1999
and 1998, and for each of the years in the three-year period ended December 31,
1999, have been audited by Arthur Andersen LLP, independent public accountants,
as indicated in their report with respect thereto, and are included in
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WorldCom's Annual Report on Form 10-K for the year ended December 31, 1999, and
are incorporated herein by reference, in reliance upon the authority of such
firm as experts in accounting and auditing in giving such reports.
The consolidated financial statements of Brooks Fiber Properties, Inc. for
the year ended December 31, 1997, have been incorporated by reference in this
document and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, included in WorldCom's Annual
Report on Form 10-K for the year-ended December 31, 1999 and incorporated by
reference in this document, and upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements and schedules of Sprint and the
combined financial statements and schedules of the Sprint FON Group and the
Sprint PCS Group appearing in WorldCom's Current Report on Form 8-K-2 dated
April 11, 2000 (filed April 11, 2000), have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included therein and
incorporated herein by reference which, as to the years 1998 and 1997 for Sprint
and the Sprint PCS Group, are based in part on the reports of Deloitte & Touche
LLP, independent auditors. Such consolidated and combined financial statements
and schedules are incorporated herein by reference in reliance upon such reports
given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Sprint Spectrum Holding Company,
L.P. as of December 31, 1998, and for each of the years in the two-year period
ended December 31, 1998, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is included in WorldCom's Current
Report on Form 8-K-2 dated April 11, 2000 (filed April 11, 2000), and are
incorporated herein by reference, and have been incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
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===============================================================================
$60,000,000
WorldCom, Inc.
FLOATING RATE NOTES DUE 2002
[WORLDCOM]
----------
P R O S P E C T U S S U P P L E M E N T
MAY 31, 2000
(INCLUDING PROSPECTUS
DATED MAY 12, 2000)
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SALOMON SMITH BARNEY
===============================================================================
