<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
------------------- -------------------
Commission File Number 0-18195
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
U.S. LONG DISTANCE CORP.
9311 San Pedro, Suite 100
San Antonio, Texas 78216
================================================================================
<PAGE> 2
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants 3
Statements of Net Assets Available for Plan Benefits at December 31, 1996 and 1997 4
Statements of Changes in Net Assets Available for Plan Benefits for the Years Ended
December 31, 1996 and 1997 5
Notes to Financial Statements 6
Fund Information:
Exhibit I Statements of Net Assets Available for Plan Benefits with
Fund Information at December 31, 1996 and 1997 11
Exhibit II Statements of Changes in Net Assets Available for Plan Benefits with
Fund Information for the Years Ended December 31, 1996 and 1997 13
Supplemental Schedules:
Schedule I Item 27(a)- Schedule of Assets Held for Investment Purposes
at December 31, 1997 15
Schedule II Item 27(d)- Schedule of Reportable Transactions for the Year Ended
December 31, 1997 16
Signatures 17
</TABLE>
2
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE TRUSTEE OF THE U.S. LONG DISTANCE CORP.
401(k) RETIREMENT PLAN:
We have audited the accompanying statements of net assets available for plan
benefits of the U.S. Long Distance Corp. 401(k) Retirement Plan as of December
31, 1996 and 1997, and the related statements of changes in net assets available
for plan benefits for the years then ended. These financial statements and
schedules referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the U.S.
Long Distance Corp. 401(k) Retirement Plan as of December 31, 1996 and 1997, and
the changes in its net assets available for plan benefits for the years then
ended, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
index to financial statements are presented for purposes of additional analysis
and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
San Antonio, Texas
June 26, 1998
3
<PAGE> 4
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
ASSETS December 31,
- ------ ----------------------------
1996 1997
---------- ----------
<S> <C> <C>
Investments at fair value:
Merrill Lynch Basic Value Fund $ 335,921 $ 429,523
Merrill Lynch Corporate Bond Fund 99,962 116,783
Merrill Lynch Global Allocation Fund 415,697 493,921
Merrill Lynch Growth Fund for Investment and Retirement 629,618 794,512
Merrill Lynch International Equity Fund 42,377 48,780
Merrill Lynch Retirement Preservation Trust 190,846 280,232
U.S. Long Distance Corp. Common Stock 412,675 -
Billing Concepts Corp. Common Stock 1,074,512 1,514,422
LCI International, Inc. Common Stock - 1,707,437
Participant Loans 21,000 23,808
Cash 1,725 29,621
Contributions receivable:
Employee 285 -
Employer 58 -
---------- ----------
Total assets 3,224,676 5,439,039
LIABILITIES
Excess contribution refunds payable 19,181 21,776
---------- ----------
Net assets available for Plan benefits $3,205,495 $5,417,263
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the Year
Ended December 31,
----------------------------
1996 1997
---------- ----------
<S> <C> <C>
Increase in net assets attributed to:
Interest and dividend income $ 136,997 $ 196,725
Net appreciation in fair value of investments 1,524,256 1,653,591
Contributions:
Employee 747,334 657,047
Employee rollovers 85,243 20,466
Employer 159,617 55,964
---------- ----------
Total contributions 992,194 733,477
---------- ----------
Total increase 2,653,447 2,583,793
Decrease in net assets attributed to:
Distribution to Billing Concepts Corp.
401(k) Retirement Plan 1,246,389 0
Excess contributions refundable to participants 19,181 21,776
Termination and withdrawal benefits 542,873 350,249
---------- ----------
Total decrease 1,808,443 372,025
Net increase 845,004 2,211,768
Net assets available for Plan benefits:
Beginning of year 2,360,491 3,205,495
---------- ----------
End of year $3,205,495 $5,417,263
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1. PLAN DESCRIPTION
The following description of the U.S. Long Distance Corp. 401(k)
Retirement Plan (the "Plan") provides only general information. Participants
should refer to the Plan agreement for a more comprehensive description of the
Plan's provisions.
General
The Plan was adopted on January 1, 1992, and was amended and restated
effective July 1, 1994. The Plan is a defined contribution plan which has a
salary deferral feature under section 401(k) of the Internal Revenue Code of
1986, as amended (the "Code"). The Plan covers all eligible employees of U.S.
Long Distance Corp. (the "Company" or "USLD") and its subsidiaries. The Company
is the Plan administrator, and an officer of the Company is the Plan's trustee.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
Eligibility
An employee is eligible to join the Plan after completion of one year of
employment, provided the employee has worked at least 1,000 hours and has
attained the age of 21. Eligible employees may enter the Plan on the earlier of
January 1 or July 1, after completion of one year of employment with the
Company.
Contributions
Employees may elect to contribute up to 15% of their total eligible
compensation, as defined in the Plan agreement, to the Plan each year. Such
contributions may be directed to any of six mutual funds and two common stock
funds. Employee contributions include excess contributions which will be
refunded to certain highly compensated participants subsequent to year-end as
the contributions were determined to be in excess of maximum contribution levels
for highly compensated participants. A liability for excess contributions
payable in the amount of $19,181 and $21,776 has been reflected in the
statements of net assets available for Plan benefits at December 31, 1996 and
1997, respectively.
The Company's matching contribution is 50% of the first 3% of the
employee's compensation contributed to the Plan. Each participant account is
credited with the participant's contributions, the Company's matching
contribution, and an allocation of the Plan's earnings or losses. Allocations of
earnings or losses are based on the value of participant account balances, as
defined in the Plan agreement. Employees are permitted to rollover money held in
other qualified plans into the Plan, provided that the trust from which such
funds are transferred permits such transfers and the transfer does not
jeopardize the tax exempt status of the Plan.
Vesting
Participants immediately vest in that portion of their participant
accounts which are the result of their contributions and earnings thereon. The
portion of the participant accounts resulting from employer contributions and
earnings thereon vest 25% per year beginning after completion of the second year
of service. Participants become 100% vested in employer contributions and
earnings thereon upon completion of five years of service. If a participant's
service is terminated, prior to completion of five years of service, by
retirement on or after normal retirement age, as defined in the Plan agreement,
or for death or disability, the participant becomes 100% vested in employer
contributions and earnings thereon.
6
<PAGE> 7
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. PLAN DESCRIPTION (CONTINUED)
Investment Options
Upon enrollment in the Plan, a participant may direct contributions to any
one or more of the following eight investment options:
1) Merrill Lynch Basic Value Fund - Funds are invested in shares of a
registered investment company that invests primarily in equity securities
with the objective of capital appreciation and, secondarily, income.
2) Merrill Lynch Corporate Bond Fund - Funds are invested in shares of a
registered investment company that invests in investment grade corporate
fixed income securities.
3) Merrill Lynch Global Allocation Fund - Funds are invested in shares of a
registered investment company that invests in U.S. and foreign equity and
debt securities and money market instruments.
4) Merrill Lynch Growth Fund for Investment and Retirement ("Growth Fund") -
Funds are invested in shares of a registered investment company that
invests in a diversified portfolio of equity securities with the objective
of growth of capital and, secondarily, income.
5) Merrill Lynch International Equity Fund - Funds are invested in shares of
a registered investment company that invests in a diversified portfolio of
equity securities of issuers located in countries other than the United
States.
6) Merrill Lynch Retirement Preservation Trust - Funds are invested in shares
of a registered investment company that invests primarily in U.S.
government and U.S. government agency securities and Guaranteed Investment
Contracts.
7) U.S. Long Distance Corp. Common Stock ("USLD Common Stock") - Funds are
invested in the common stock of U.S. Long Distance Corp. On December 22,
1997, the Company was acquired by LCI International, Inc. ("LCI"). At this
time, all investments in USLD Common Stock were converted to shares of LCI
International, Inc. Common Stock ("LCI Common Stock"). See Note 2.
8) Billing Concepts Corp. Common Stock ("Billing Common Stock") - Funds are
invested in the common stock of Billing Concepts Corp. (previously named
Billing Information Concepts Corp. and referred to as "Billing"
hereinafter).
Participants may change their investment options on a daily basis.
Loans
Participants are permitted to borrow money from the Plan based upon their
vested account balances. However, certain limitations, as defined in the Plan
agreement, exist on the type and amount of loan. The term of the loan may not
exceed five years, unless such loan is for the purchase of a primary residence,
in which case the term of the loan may not exceed the life of the mortgage.
Loans outstanding at December 31, 1996 and 1997 bear interest at rates ranging
from 8.25% to 10.75%. Principal and interest are paid ratably through regular
payroll deductions.
Forfeitures
Forfeitures of the Company's matching contributions will be used to reduce
the Company's future matching contributions, as provided by the Plan.
Forfeitures available to reduce future Company matching contributions
7
<PAGE> 8
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. PLAN DESCRIPTION (CONTINUED)
amounted to approximately $76,000 and $45,000 at December 31, 1996 and 1997,
respectively. No forfeitures were used to reduce the Company's contributions in
1996, and forfeitures of $76,000 related to 1996 were used to reduce the
Company's contributions in 1997.
Voting
In 1996 and 1997, all shares of USLD Common Stock and beginning August 2,
1996, all shares of Billing Common Stock credited to a participant's account
were voted by the participants in accordance with the Plan's provisions.
Terminated Participants
Under the terms of the Plan, terminated participants whose vested account
balance is less than $3,500 ($5,000 beginning January 1, 1998) will receive a
lump-sum distribution at the date determined under the Plan. Although other
terminated participants may elect to defer receipt of their benefits until a
future date, that future date cannot be later than April 1 of the calendar year
following the calendar year in which the participant reaches the age of 70 1/2.
Plan Amendments
The Company has the right to amend the Plan at any time. However, no
amendment, change or modification may deprive a participant of any vested
benefits under the Plan.
Plan Termination
Although it has not expressed any intent to do so, the Company has the
right to discontinue its contributions to the Plan at any time and to terminate
the Plan subject to the provisions of ERISA, as amended. In the event of Plan
termination, participants will become 100% vested in their participant accounts.
NOTE 2. LCI ACQUISITION OF USLD
On December 22, 1997, the Company was acquired by LCI in a stock-for-stock
transaction that resulted in the Company becoming a wholly owned subsidiary of
LCI. Under the agreement, USLD stockholders of record as of that date received
.7576 of a share of LCI Common Stock for each share of USLD Common Stock held.
At that time, employees of the Company were advised that elections to invest in
USLD Common Stock should be redirected to one or more of the remaining
investment options. If an alternative option was not selected by the employee,
contributions directed to USLD Common Stock were invested in the default option,
the Merrill Lynch Retirement Preservation Trust.
NOTE 3. DISTRIBUTION TO BILLING
On August 2, 1996, the Company completed the spin-off of its wholly owned
subsidiary, Billing. The spin-off was a tax-free distribution of 100% of the
common stock of Billing to the Company's stockholders. Stockholders of record as
of the date of distribution received one share of Billing common stock for each
share of USLD common stock held. For purposes of the allocation of cost, the
fair market value per share of the common stock of each company was adjusted via
a formula adjustment based on the relative fair market values of the underlying
common stock of each of the two companies, or by a factor of 25.9% for USLD and
74.1% for Billing. The fair market value per share of common stock of each
company was defined as the average of the last sales price per share of that
common stock on the Nasdaq National Market for each of the ten consecutive
trading days immediately subsequent to the date of distribution. As a result of
the spin-off, the formation of the Billing Concepts Corp. Common Stock Fund was
created. This fund invests in the common stock of Billing. This new
8
<PAGE> 9
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. DISTRIBUTION TO BILLING (CONTINUED)
fund was offered as an additional investment option to participants effective
October 1, 1996.
NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented on the accrual basis
of accounting. Benefits are recorded when paid.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts in the financial statements and
disclosures. Actual results could differ from those estimates.
Investments
Investments are stated at fair market value. The fair market value of
investments is based on quotations obtained from The Wall Street Journal.
Investment transactions are recognized on the trade date (the date the order to
buy or sell is executed). The cost of investments sold is based on the average
purchase price. Net appreciation in the fair value of investments includes both
realized and unrealized gains and losses incurred during the year. Unrealized
appreciation or depreciation in the market values of investments held at
year-end and gain or loss on sales of investments during the year are determined
using the market value at the beginning of the year or the purchase price if
acquired during the year. Net unrealized gains or losses are reflected in the
statements of changes in net assets available for Plan benefits.
Investments that represent 5 percent or more of the Plan's net assets are
as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1997
---------- ----------
<S> <C> <C>
Merrill Lynch Basic Value Fund $ 335,921 $ 429,523
Merrill Lynch Global Allocation Fund 415,697 493,921
Merrill Lynch Growth Fund 629,618 794,512
USLD Common Stock 412,675 -
Billing Common Stock 1,074,512 1,514,422
LCI Common Stock - 1,707,437
</TABLE>
Plan Administration
Expenses incident to the administration of the Plan, such as trustee,
legal, accounting and auditing fees have been paid by the Company. During the
years ended December 31, 1996 and 1997, the Company incurred approximately
$65,000 and $69,000, respectively, in expenses incident to the administration of
the Plan.
Subsequent Event
On March 8, 1998, the Company entered into a merger agreement with Qwest
Communications International, Inc. (Qwest) and a subsidiary of Qwest pursuant to
which the Company became a wholly owned subsidiary of Qwest effective June 5,
1998. As a result, all shares of LCI Common Stock will be converted into Qwest
shares using the exchange ratio set forth in the merger agreement. Beginning
June 25, 1998, participants may elect to invest in Qwest stock for future
payroll contributions and fund transfers. The plan will be effective throughout
the 1998 plan year, however the Company is unable to predict the consequences of
the merger on the plan after December 31, 1998.
9
<PAGE> 10
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. FEDERAL INCOME TAXES
The Internal Revenue Service has determined and informed the Company by a
letter dated November 13, 1995 that the Plan and related trust are designed in
accordance with applicable sections of the Code. The Plan is qualified under the
provisions of Sections 401(a) and 401(k) and is tax exempt from federal income
taxes under provision 501(a) of the Code.
NOTE 6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for Plan
benefits according to the financial statements to Form 5500:
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1997
---------- ----------
<S> <C> <C>
Net assets available for Plan benefits per the
financial statements $3,205,495 $5,417,263
Amounts allocated to withdrawing
participants (113,009) (176,642)
---------- ----------
Net assets available for Plan benefits per
Form 5500 $3,092,486 $5,240,621
========== ==========
</TABLE>
The following is a reconciliation of termination and withdrawal benefits
paid to participants according to the financial statements to Form 5500:
<TABLE>
<CAPTION>
Year Ended
December 31,
1997
---------
<S> <C>
Termination and withdrawal benefits per the financial statements $ 350,249
Add: Amounts allocated to withdrawing participants at December 31, 1997 176,642
Less: Amounts allocated to withdrawing participants at December 31, 1996 (113,009)
---------
Termination and withdrawal benefits per Form 5500 $ 413,882
=========
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, but not yet paid as of that date.
10
<PAGE> 11
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN Exhibit I
STATEMENT OF NET ASSETS AVAILABLE
FOR PLAN BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Merrill Lynch
--------------------------------------------------------------------------------
Basic Corporate Global International Retirement USLD
Value Bond Allocation Growth Equity Preservation Common
Fund Fund Fund Fund Fund Trust Stock
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
- -------
Merrill Lynch
Basic Value Fund $ 335,921 $ - $ - $ - $ - $ - $ -
Merrill Lynch
Corporate Bond Fund - 99,962 - - - - -
Merrill Lynch Global
Allocation Fund - - 415,697 - - - -
Merrill Lynch Growth Fund - - - 629,618 - - -
Merrill Lynch International
Equity Fund - - - - 42,377 - -
Merrill Lynch Retirement
Preservation Trust - - - - - 190,846 -
USLD Common Stock - - - - - - 412,675
Billing Common Stock - - - - - - -
Participant Loans 1,468 1,251 1,379 11,572 - - 5,330
Cash - - - - - - 1,725
Contributions receivable:
Employee - - - - - 41 161
Employer - - - - - 8 37
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets 337,389 101,213 417,076 641,190 42,377 190,895 419,928
Liabilities:
- ------------
Excess contribution
refunds payable 2,906 603 3,171 6,388 452 216 2,142
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets available for plan
benefits $ 334,483 $ 100,610 $ 413,905 $ 634,802 $ 41,925 $ 190,679 $ 417,786
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Billing
Common
Stock Total
---------- ----------
<S> <C> <C>
Assets:
- -------
Merrill Lynch
Basic Value Fund $ - $ 335,921
Merrill Lynch
Corporate Bond Fund - 99,962
Merrill Lynch Global
Allocation Fund - 415,697
Merrill Lynch Growth Fund - 629,618
Merrill Lynch International
Equity Fund - 42,377
Merrill Lynch Retirement
Preservation Trust - 190,846
USLD Common Stock - 412,675
Billing Common Stock 1,074,512 1,074,512
Participant Loans - 21,000
Cash - 1,725
Contributions receivable:
Employee 83 285
Employer 13 58
---------- ----------
Total assets 1,074,608 3,224,676
Liabilities:
- ------------
Excess contribution
refunds payable 3,303 19,181
---------- ----------
Net assets available for plan
benefits $1,071,305 $3,205,495
========== ==========
</TABLE>
11
<PAGE> 12
Exhibit I (continued)
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE
FOR PLAN BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Merrill Lynch
--------------------------------------------------------------------------------
Basic Corporate Global International Retirement USLD
Value Bond Allocation Growth Equity Preservation Common
Fund Fund Fund Fund Fund Trust Stock
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch
Basic Value Fund $ 429,523 $ - $ - $ - $ - $ - $ -
Merrill Lynch
Corporate Bond Fund - 116,783 - - - - -
Merrill Lynch
Global Allocation Fund - - 493,921 - - - -
Merrill Lynch Growth Fund - - - 794,512 - - -
Merrill Lynch
International Equity Fund - - - - 48,780 - -
Merrill Lynch Retirement
Preservation Trust - - - - - 280,232 -
USLD Common Stock - - - - - - -
Billing Common Stock - - - - - - -
LCI Common Stock - - - - - - -
Participant Loans 6,659 1,033 1,835 467 313 2,628 5,070
Cash 3,164 863 3,645 5,858 381 1,497 1,725
Contributions Receivable:
Employee - - - - - - -
Employer - - - - - - -
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Assets 439,346 118,679 499,401 800,837 49,474 284,357 6,795
Liabilities:
- ------------
Excess contribution
refunds payable 3,310 595 1,272 3,251 129 310 -
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets available for plan
benefits $ 436,036 $ 118,084 $ 498,129 $ 797,586 $ 49,345 $ 284,047 $ 6,795
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Billing LCI
Common Common
Stock Stock Total
---------- ---------- ----------
<S> <C> <C> <C>
Merrill Lynch
Basic Value Fund $ - $ - $ 429,523
Merrill Lynch
Corporate Bond Fund - - 116,783
Merrill Lynch
Global Allocation Fund - - 493,921
Merrill Lynch Growth Fund - - 794,512
Merrill Lynch
International Equity Fund - - 48,780
Merrill Lynch Retirement
Preservation Trust - - 280,232
USLD Common Stock - - -
Billing Common Stock 1,514,422 - 1,514,422
LCI Common Stock - 1,707,437 1,707,437
Participant Loans 5,803 - 23,808
Cash 11,683 805 29,621
Contributions Receivable:
Employee - - -
Employer - - -
---------- ---------- ----------
Total Assets 1,531,908 1,708,242 5,439,039
Liabilities:
- ------------
Excess contribution
refunds payable 6,162 6,747 21,776
---------- ---------- ----------
Net assets available for plan
benefits $1,525,746 $1,701,495 $5,417,263
========== ========== ==========
</TABLE>
12
<PAGE> 13
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN Exhibit II
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Merrill Lynch
-------------------------------------------------------------------------------------------
Basic Corporate Global International Retirement
Value Bond Allocation Growth Equity Preservation
Fund Fund Fund Fund Fund Trust
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest and
dividend income $ 23,773 $ 6,883 $ 42,414 $ 47,197 $ 2,018 $ 8,979
Net appreciation/(depreciation)
in fair value of investments 21,109 (4,951) 20,548 101,850 (965) 91
Contributions:
Employee 90,488 38,207 134,365 160,561 28,681 18,753
Employee rollovers 1,142 140 - 36,844 2,432 1,364
Employer 22,255 9,241 27,557 33,113 5,854 5,956
----------- ----------- ----------- ----------- ----------- -----------
Total contributions 113,885 47,588 161,922 230,518 36,967 26,073
Distribution to Billing (70,903) (33,529) (152,319) (131,808) (4,339) (33,265)
Excess contributions
refundable to participants (2,906) (603) (3,171) (6,388) (452) (216)
Termination and
withdrawal benefits (40,043) (5,407) (83,417) (130,046) (877) (45,309)
Transfers (to) from other
funds 66,936 7,045 16,997 57,358 9,573 83,231
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) 111,851 17,026 2,974 168,681 41,925 39,584
Net assets available
for Plan benefits:
Beginning of year 222,632 83,584 410,931 466,121 - 151,095
----------- ----------- ----------- ----------- ----------- -----------
End of year $ 334,483 $ 100,610 $ 413,905 $ 634,802 $ 41,925 $ 190,679
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
USLD Billing
Common Common
Stock Stock Total
----------- ----------- -----------
<S> <C> <C> <C>
Interest and
dividend income $ 5,363 $ 370 $ 136,997
Net appreciation/(depreciation)
in fair value of investments 570,929 815,645 1,524,256
Contributions:
Employee 271,614 4,665 747,334
Employee rollovers 43,181 140 85,243
Employer 54,901 740 159,617
----------- ----------- -----------
Total contributions 369,696 5,545 992,194
Distribution to Billing (253,929) (566,297) (1,246,389)
Excess contributions
refundable to participants (2,142) (3,303) (19,181)
Termination and
withdrawal benefits (156,902) (80,872) (542,873)
Transfers (to) from other
funds (1,141,357) 900,217 -
----------- ----------- -----------
Net increase (decrease) (608,342) 1,071,305 845,004
Net assets available
for Plan benefits:
Beginning of year 1,026,128 - 2,360,491
----------- ----------- -----------
End of year $ 417,786 $ 1,071,305 $ 3,205,495
=========== =========== ===========
</TABLE>
13
<PAGE> 14
Exhibit II (continued)
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Merrill Lynch
------------------------------------------------------------------------------------------
Basic Corporate Global International Retirement
Value Bond Allocation Growth Equity Preservation
Fund Fund Fund Fund Fund Trust
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest and
dividend income $ 30,888 $ 6,722 $ 62,279 $ 64,511 $ 9,178 $ 10,249
Net appreciation/(depreciation)
in fair value of investments 62,643 507 (18,543) 42,779 (11,907) -
Contributions:
Employee 63,329 19,318 86,694 146,775 23,529 27,458
Employee rollovers 14 3,994 3,979 3,994 14 28
Employer 2,181 660 2,673 4,190 760 955
----------- ----------- ----------- ----------- ----------- -----------
Total contributions 65,524 23,972 93,346 154,959 24,303 28,441
Excess contributions
refundable to participants (3,310) (595) (1,272) (3,251) (129) (310)
Termination and
withdrawal benefits (50,231) (15,676) (59,454) (72,860) (14,179) (8,136)
Transfers (to) from other
funds (3,961) 2,544 7,868 (23,354) 154 63,124
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) 101,553 17,474 84,224 162,784 7,420 93,368
Net assets available for Plan benefits:
Beginning of year 334,483 100,610 413,905 634,802 41,925 190,679
----------- ----------- ----------- ----------- ----------- -----------
End of year $ 436,036 $ 118,084 $ 498,129 $ 797,586 $ 49,345 $ 284,047
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
USLD Billing LCI
Common Common Common
Stock Stock Stock Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest and
dividend income $ 11,577 $ 1,321 $ - $ 196,725
Net appreciation/(depreciation)
in fair value of investments 882,364 609,908 85,840 1,653,591
Contributions:
Employee 221,889 68,055 - 657,047
Employee rollovers 8,443 - - 20,466
Employer 43,065 1,480 - 55,964
----------- ----------- ----------- -----------
Total contributions 273,397 69,535 - 733,477
Excess contributions
refundable to participants - (6,162) (6,747) (21,776)
Termination and
withdrawal benefits (51,302) (78,411) - (350,249)
Transfers (to) from other
funds (1,527,027) (141,750) 1,622,402 -
----------- ----------- ----------- -----------
Net increase (decrease) (410,991) 454,441 1,701,495 2,211,768
Net assets available for Plan benefits:
Beginning of year 417,786 1,071,305 - 3,205,495
----------- ----------- ----------- -----------
End of year $ 6,795 $ 1,525,746 $ 1,701,495 $ 5,417,263
=========== =========== =========== ===========
</TABLE>
14
<PAGE> 15
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN Schedule I
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Identity of Issuer, Borrower Description of Current
Lessor or Similar Party Investment Cost Value
- ------------------------------------ ------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Merrill Lynch* Basic Value Fund $ 363,105 $ 429,523
Merrill Lynch* Corporate Bond Fund 118,750 116,783
Merrill Lynch* Global Allocation Fund 523,445 493,921
Merrill Lynch* Growth Fund 714,017 794,512
Merrill Lynch* International Equity Fund 71,694 48,780
Merrill Lynch* Retirement Preservation Trust 209,311 280,232
Billing Concepts Corp. Common Stock 482,122 1,514,422
LCI International, Inc. Common Stock 1,622,402 1,707,437
U.S. Long Distance Corp.
401(k) Retirement Plan * Participant Loans at Interest Rates Ranging
from 8.25% to 10.75% 23,808 23,808
------------- -------------
$ 4,128,654 $ 5,409,418
============= =============
</TABLE>
* A party in interest to the Plan.
15
<PAGE> 16
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN Schedule II
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Identity of Party Involved/ Purchase Selling Cost of Net
Description of Asset Price Price Assets Gain
- ----------------------------------------------------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Series Transactions:
- --------------------
Merrill Lynch Basic Value Fund:
Purchases $ 100,551 $ - $ 100,551 $ -
Sales - 69,592 56,821 12,771
Merrill Lynch Global Allocation Fund:
Purchases 181,114 - 181,114 -
Sales - 84,347 77,386 6,961
Merrill Lynch Growth Fund:
Purchases 239,123 - 230,790 -
Sales - 117,008 92,274 24,734
USLD Common Stock:
Purchases 388,354 - 388,354 -
Sales/Exchanges - 1,683,393 801,029 882,364
Billing Common Stock:
Purchases 104,540 - 104,540 -
Sales - 274,538 125,114 149,424
Individual Transactions:
- ------------------------
LCI Common Stock:
Exchange pursuant to LCI
acquisition of USLD 1,622,402 - 1,622,402 -
USLD Common Stock:
Exchange pursuant to LCI
acquisition of USLD - 1,622,402 729,432 892,970
</TABLE>
Note: This schedule is a listing of individual investment transactions or
series of investment transactions in the same security which exceeded 5%
of the market value of the Plan assets as of January 1, 1997, and are
deemed to be reportable transactions for the year ended December 31,
1997. The current value of assets on transaction date for a purchase and
sale is equal to the purchase price and selling price, respectively. The
purchase price and selling price are net of related transaction
expenses.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
U.S. LONG DISTANCE CORP. 401(k) RETIREMENT PLAN
By
--------------
David S. Horne
Trustee
Date: June 26, 1998
17
