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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to __________________
Commission file number 0-21602
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Amended and Restated LCI International, Inc. Employee Stock
Purchase Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
LCI International, Inc.
8180 Greensboro Drive
Suite 800
McLean, Virginia 22102
1-800-296-0220
Page 1 of 12 Pages
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REQUIRED INFORMATION
The following financial statements for the Amended and Restated LCI
International, Inc. Employee Stock Purchase Plan are being filed
herewith:
<TABLE>
<CAPTION>
Description Page No.
--------------
<S> <C>
Report of Independent Public Accountants 5
Statements of Financial Condition as of December 31, 1996 and
1995 6
Statements of Income and Other Changes in Plan Equity for the years
ended December 31, 1996, 1995 and 1994
7
Notes to Financial Statements 8
Financial Statement Schedules: Schedules I, II and III are not
applicable
The following exhibit is being filed herewith:
Exhibit No. Description
--------------- ------------------------------------------------------------
1 Consent of Independent Public Accountants
</TABLE>
Page 2 of 12 Pages
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
AMENDED AND RESTATED LCI INTERNATIONAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
(Name of Plan)
Date: March 25, 1997 By: /s/Joseph A. Lawrence
-----------------------
Joseph A. Lawrence
Senior Vice President Finance and Development
and Chief Financial Officer
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AMENDED AND RESTATED LCI INTERNATIONAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
ANNUAL REPORT ON FORM 11-K
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Description Page No.
---------------
Report of Independent Public Accountants 5
Statements of Financial Condition as of December 31, 1996 and 1995 6
Statements of Income and Other Changes in Plan Equity for the years
ended December 31, 1996, 1995 and 1994 7
Notes to Financial Statements 8
Financial Statement Schedules: Schedules I, II and III are not
applicable
</TABLE>
Page 4 of 12 Pages
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
Amended and Restated LCI International, Inc.
Employee Stock Purchase Plan:
We have audited the accompanying statements of financial condition of the
AMENDED AND RESTATED LCI INTERNATIONAL, INC. EMPLOYEE STOCK PURCHASE PLAN (the
Plan) as of December 31, 1996 and 1995, and the related statements of income and
other changes in plan equity for the years ended December 31, 1996, 1995 and
1994. These financial statements are the responsibility of the Plan
administrator. Our responsibility is to express an opinion on these financial
statements 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 financial condition of the Plan as of December 31,
1996 and 1995, and the income and other changes in plan equity for the years
ended December 31, 1996, 1995, and 1994 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Washington D.C.,
March 24, 1997.
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AMENDED AND RESTATED LCI INTERNATIONAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF FINANCIAL CONDITION
AS OF DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
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ASSETS:
<S> <C> <C>
Common stock of LCI International, Inc., at market
value (370,144 and 295,789 shares, respectively) $8,004,364 $6,063,675
Receivables 210,181 99,476
----------- -------------
Total assets 8,214,545 6,163,151
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TOTAL PLAN EQUITY $8,214,545 $6,163,151
=========== =============
</TABLE>
The accompanying notes to financial statements are an integral part
of these statements.
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AMENDED AND RESTATED LCI INTERNATIONAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF INCOME AND OTHER CHANGES IN PLAN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
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<S> <C> <C> <C>
ADDITIONS ATTRIBUTED TO:
Net unrealized (depreciation) appreciation in the
market value of Common Stock of LCI International,
Inc. $ (182,837) $1,507,587 $1,127,807
Contributions from participants 4,283,663 2,343,034 1,287,447
------------- ------------- -------------
Total additions 4,100,826 3,850,621 2,415,254
DEDUCTIONS ATTRIBUTED TO:
Withdrawals and terminations (2,049,432) (997,706) (588,732)
------------- ------------- -------------
Total deductions (2,049,432) (997,706) (588,732)
Net increase in plan equity 2,051,394 2,852,915 1,826,522
PLAN EQUITY, beginning of year 6,163,151 3,310,236 1,483,714
------------- ------------- -------------
PLAN EQUITY, end of year $8,214,545 $6,163,151 $3,310,236
============= ============= =============
</TABLE>
The accompanying notes to financial statements are an integral part
of these statements.
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AMENDED AND RESTATED LCI INTERNATIONAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(1) DESCRIPTION OF THE PLAN
The following description of the Amended and Restated LCI
International, Inc. Employee Stock Purchase Plan (the Amended Plan or the
Plan) is provided for general information purposes only. More complete
information regarding the Plan's provisions may be found in the Plan
document.
General
-------
The Amended Plan, formerly known as the 1993 Employee Stock Purchase Plan
of LCI International Management Services, Inc. (the Original Plan), is an
employee stock purchase plan which allows for participation by all
eligible employees of LCI International, Inc. and its subsidiaries (the
Company) within the meaning of Section 423 of the Internal Revenue Code
of 1986 (Code). The Amended Plan, effective August 13, 1995, replaced the
Original Plan which was established effective May 12, 1993.
The purpose of the Plan is to provide eligible employees who wish to
become stockholders of the Company or who wish to increase their stock
holdings of the Company, with an opportunity to purchase shares of the
Company's Common Stock, $.01 par value per share (Common Stock). Funds
used to purchase shares under the Plan are withheld from employee
compensation (as defined by the Plan) through payroll deductions. The
Common Stock is held by Fifth Third Bank (the Custodian). The Custodian
holds all of the Plan assets and executes all of the Plan's transactions.
The Plan is administered by the Stock Purchase Plan Committee (the
Committee), which was established by the Board of Directors of the
Company. All administrative expenses are paid by the Company. Under the
Amended Plan, 1,800,000 shares of Common Stock are reserved for issuance
pursuant to the terms of the Plan. The Plan is not subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Amendments
----------
In December 1994, the Board of Directors of the Company approved the
Amended Plan, which is a continuation of the Original Plan. The Original
Plan, in effect since May 12, 1993, expired on August 12, 1995. The
Amended Plan is effective August 13, 1995 and
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will have a term of no more than 27 months. Under the Amended Plan, the
number of Common Stock shares reserved for purchase was increased from
1,200,000 to 1,800,000; the contribution limit for eligible employees was
increased from 10% to 15% of a participant's salary; and the automatic
Base Option Price reset mechanism, as defined, was changed to be
discretionary on the part of the Committee. All other terms of the
Original Plan were retained.
During 1994, the Board of Directors of the Company approved two
administrative changes to the Plan. The first change permitted employees
to take up to 90 days of disability leave or an approved leave of absence
and continue to contribute to the Plan during such leave. If an employee
does not contribute to the Plan during such leave, but returns from leave
within 90 days, the Base Option Price, as defined, applicable to that
employee does not reset. The second change reduced the employment
eligibility requirement from six months to 90 days, beginning effective
January 1, 1995.
Eligibility
-----------
Any full-time employee of the Company who has been continuously employed
for a period of ninety days or more may participate in the Plan. Also,
any part-time employee whose customary employment terms are for more than
twenty-hours per week or for five months or more in any calendar year may
participate in the Plan. An employee may enroll in the plan on the first
trading day of any month after the eligibility requirements have been
satisfied. No employee having a 5% or greater ownership interest in the
Company may participate in the Plan.
As of December 31, 1996 and 1995, there were 1,856 and 931 employees,
respectively, participating in the Plan.
Contributions
-------------
Through August 12, 1995, participants could authorize a biweekly payroll
deduction of up to 10% and starting August 13, 1995 can authorize up to
15% of eligible compensation per pay period. Participant deductions are
subject to a maximum deduction per employee of $25,000 per year to be
applied to the purchase of shares. The maximum number of shares an
employee may purchase during an offering period is 20,000 shares. All
amounts obtained from payroll deductions under the Plan are used to
purchase shares of the Company's Common Stock. The purchase price for a
share of Common Stock purchased under the Plan is the lower of: (a) the
participant's Base Option Price, or (b) 85% of the FMV of the Common
Stock at the purchase date. The purchase date for shares of the Company's
Common Stock is the last trading date of each month. On August 13, 1995,
the Base Option Price for all participants participating in the Plan on
that date was reset under the Amended Plan to $15.62; representing 85% of
the FMV of a share of Common Stock on August 14, 1995, the first day of
trading under the Amended Plan. The
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Base Option price for participants entering the Plan after August 13,
1995 is the greater of 85% of the FMV of a share of Common Stock on the
date the participant is eligible to enroll in the plan, or 85% of the FMV
of a share of Common Stock on the participant's Plan entry date.
The Base Option Price for all participants may be adjusted at the
discretion of the Committee at the midpoint of the interval between the
offering and the end of the offering (the Revaluation Date), provided the
offering has a period of at least fifteen months. The adjusted Base
Option Price for all participants would be 85% of the average of the FMV
of a share of Common Stock during a period of twenty trading days ending
one month before the Revaluation Date. If the adjusted Base Option Price
results in a lower price than a participant's initial Base Option Price,
then that participant's Base Option Price remains unchanged.
Distribution
------------
The shares of the Company's Common Stock allocated to participants'
accounts are held in trust by the Custodian until such shares become
fully distributable to the participants or the participant's beneficiary
in the event of:
- Retirement,
- Total disability prior to retirement,
- Death while an employee,
- Termination of employment,
- Reaching or exceeding Plan maximums,
- Discontinuance of the Plan, or
- Upon a request by the participant for Stock Certificates.
Administrative Fees
-------------------
All administrative expenses of the Plan were paid by the Company during
1996 and 1995.
(2) STOCK SPLIT
Effective September, 1995 a 2-for-1 split effected in the form of a stock
dividend for Common Stock was approved by the Board of Directors. Share
and per share amounts have been restated to reflect the impact of this
stock split.
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(3) SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting
-------------------
The financial statements are prepared using the accrual basis of
accounting. Unrealized appreciation/depreciation of assets is determined
as the difference between the excess of market value over cost at
year-end and the excess of market value over cost at the beginning of the
Plan year.
Investments
-----------
Investments as of December 31, 1996 and 1995 are valued at fair market
value, as measured by the New York Stock Exchange (NYSE). As of December
31, 1996 and 1995, there were 370,144 and 295,789 shares in the Plan,
respectively, at a market value of $21.63 and $20.50 per share,
respectively.
Estimates
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from such
estimates.
Reclassifications
-----------------
Certain 1995 amounts have been reclassified to conform with 1996
presentation.
(4) INCOME TAX STATUS
The Plan is an employee stock purchase plan under Section 423 of the
Internal Revenue Code of 1986 (IRC) and is not subject to income taxes.
Employees are responsible for the income tax consequences arising from
ownership of Common Stock purchased through the Plan.
Gains or losses on sales of Common Stock purchased by a participant
pursuant to the Plan must be reported to the Internal Revenue Service by
the participant in the year of sale. Gains and losses may be
characterized as ordinary or capital as defined by the IRC.
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(5) PLAN TERMINATION
The Plan and all rights of participants will terminate (i) on the date as
of which participants have exercised options to purchase a number of
shares equal to or greater than the number of shares then subject to the
Plan or (ii) if earlier, the date as of which the Committee or the Board
of Directors of the Company terminates the Plan. The Board of Directors,
with the consent of shareholders, may elect to extend another offer or,
authorize additional shares for this purpose. Upon termination of the
Plan, the entire account of each participant will be distributed as soon
as practicable.
(6) NET UNREALIZED APPRECIATION (DEPRECIATION)
<TABLE>
<CAPTION>
December 31
------------------------------ Net Change in
1996 1995 1996
------------- ------------- --------------
<S> <C> <C> <C>
Investment in common stock of LCI
International, Inc., at market value $8,004,364 $6,063,675 $1,940,689
Investment in common stock of LCI
International, Inc., at cost 4,706,509 2,582,983 2,123,526
------------- ------------- --------------
Net unrealized appreciation (depreciation)
in market value $3,297,855 $3,480,692 $ (182,837)
============= ============= ==============
</TABLE>
(7) WITHDRAWAL REQUESTS
The cost of shares to be distributed to participants due to withdrawal
requests or terminations at December 31, 1996 and 1995 were $83,978 and
$10,385, respectively. In accordance with generally accepted accounting
principles, these amounts are not reflected as liabilities in the
accompanying statements of financial condition.
Page 12 of 12 Pages
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EXHIBIT 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report, dated March 24, 1997, included in this Form 11-K, into
the Company's previously filed Form S-8 Registration Statements File No.
33-64838 and No. 33-94120.
ARTHUR ANDERSEN LLP
Washington D.C.,
March 24, 1997.
