<PAGE> 1
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, 1997
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:
LCI International 401(k) Savings Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
LCI International, Inc.
4250 North Fairfax Drive
Arlington, Virginia 22203
703-363-0220
1
<PAGE> 2
REQUIRED INFORMATION
--------------------
The following financial statements and schedules for the LCI International
401(k) Savings Plan are being filed herewith:
<TABLE>
<CAPTION>
Description Page No.
- ----------- ----------------
<S> <C>
Report of Independent Public Accountants 3
Statements of Net Assets Available for Plan Benefits with Fund
Information as of December 31, 1997 and 1996 4 - 5
Statement of Changes in Net Assets Available for Plan Benefits with
Fund Information for the Year Ended December 31, 1997 6
Notes to Financial Statements and Schedules 7 - 12
Schedule I - Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1997 13
Schedule II - Item 27d - Schedule of Reportable Transactions for the
Year Ended December 31, 1997 14
Signature 15
</TABLE>
The following exhibit is being filed herewith:
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- --------------- ----------------------------- ----------
<S> <C> <C>
23 Consent of Independent Public 17
Accountants
</TABLE>
2
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the LCI International
401(k) Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the LCI INTERNATIONAL 401(k) SAVINGS PLAN (the Plan) as of December
31, 1997 and 1996 and the related statement of changes in net assets available
for plan benefits for the year ended December 31, 1997. These financial
statements and the 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, net assets available for plan benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for plan
benefits for the year ended December 31, 1997, 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 of Assets Held
for Investment Purposes and Reportable Transactions are presented for the
purpose 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 fund information in the
statements of net assets available for plan benefits and statement of changes in
net assets available for plan benefits is presented for the purpose of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund. The
supplemental schedules and fund information 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
Columbus, Ohio,
June 5, 1998
3
<PAGE> 4
LCI INTERNATIONAL
401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
CIGNA Warburg Pincus Warburg Pincus
Guaranteed Advisor Capital Advisor
Long-Term Appreciation Emerging
Account Account Growth Account
--------------- ---------------- ------------------
<S> <C> <C> <C>
ASSETS:
Investments -
Investments, at market value $ - $ 4,525,755 $ 3,987,872
Investments, at contract value 5,231,407 - -
Participant loans - - -
--------------- ---------------- --------------
Total investments 5,231,407 4,525,755 3,987,872
--------------- ---------------- --------------
Receivables -
Employer contributions 12,360 9,533 11,940
Employee contributions 49,943 37,423 40,956
Loan interest 710 345 419
--------------- ---------------- --------------
Total receivables 63,013 47,301 53,315
--------------- ---------------- --------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 5,294,420 $ 4,573,056 $ 4,041,187
=============== ================ ==============
<CAPTION>
LCI Cigna
Common Stock Cigna
Stock Market Lifetime
Account Index Fund Funds
--------------- ---------------- ---------------
ASSETS:
Investments -
Investments, at market value $ 5,220,816 $ 572,634 $ 636,079
Investments, at contract value - - -
Participant loans - - -
--------------- ---------------- ---------------
Total investments 5,220,816 572,634 636,079
--------------- ---------------- ---------------
Receivables -
Employer contributions 14,611 5,392 5,136
Employee contributions 39,478 31,811 25,553
Loan interest 339 60 88
--------------- ---------------- ---------------
Total receivables 54,428 37,263 30,777
--------------- ---------------- ---------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 5,275,244 $ 609,897 $ 666,856
=============== ================ ===============
<CAPTION>
PBHG
Growth
Account Loan Fund Total
--------------- ---------------- ----------------
ASSETS:
Investments -
Investments, at market value $ 430,478 $ - $ 15,373,634
Investments, at contract value - - 5,231,407
Participant loans - 510,426 510,426
--------------- ---------------- ----------------
Total investments 430,478 510,426 21,115,467
--------------- ---------------- ----------------
Receivables -
Employer contributions 3,299 - 62,271
Employee contributions 14,832 - 239,996
Loan interest 63 - 2,024
--------------- ---------------- ----------------
Total receivables 18,194 - 304,291
--------------- ---------------- ----------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 448,672 $ 510,426 $ 21,419,758
=============== ================ ================
</TABLE>
The accompanying notes and schedules are an integral part of this
financial statement.
4
<PAGE> 5
LCI INTERNATIONAL
401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
CIGNA CIGNA Warburg Pincus
Guaranteed Guaranteed Advisor Capital
Short-Term Long-Term Appreciation
Account Account Account
------------------- -------------------- ------------------------
<S> <C> <C> <C>
ASSETS:
Cash $ - $ 1,601 $ 3,661
Investments -
Investments, at market value - - 3,071,805
Investments, at contract value 528,142 4,037,835 -
Participant loans - - -
------------------- -------------------- -------------------
Total investments 528,142 4,037,835 3,071,805
------------------- -------------------- -------------------
Receivables -
Employer contributions 2,139 10,149 8,285
Employee contributions 6,206 36,042 27,218
Loan interest 1,968 254 924
------------------- -------------------- -------------------
Total receivables 10,313 46,445 36,427
------------------- -------------------- -------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 538,455 $4,085,881 $3,111,893
=================== ==================== ===================
<CAPTION>
Warburg Pincus LCI
Advisor Common
Emerging Stock
Growth Account Account Loan Fund
------------------------ -------------------- -------------------
<S> <C> <C> <C>
ASSETS:
Cash $ 16,319 $ 30,974 $ -
Investments -
Investments, at market value 2,921,986 2,568,860 -
Investments, at contract value - - -
Participant loans - - 263,944
------------------------ -------------------- -------------------
Total investments 2,921,986 2,568,860 263,944
------------------------ -------------------- -------------------
Receivables -
Employer contributions 12,450 14,414 -
Employee contributions 38,550 35,464 -
Loan interest 1,248 1,018 -
------------------------ -------------------- -------------------
Total receivables 52,248 50,896 -
------------------------ -------------------- -------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $2,990,553 $2,650,730 $ 263,944
======================== ==================== ===================
<CAPTION>
Total
-----------------------
<S> <C>
ASSETS:
Cash $ 52,555
Investments -
Investments, at market value 8,562,651
Investments, at contract value 4,565,977
Participant loans 263,944
-----------------------
Total investments 13,392,572
-----------------------
Receivables -
Employer contributions 47,437
Employee contributions 143,480
Loan interest 5,412
-----------------------
Total receivables 196,329
-----------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $13,641,456
=======================
</TABLE>
The accompanying notes and schedules are an integral part of this financial
statement.
5
<PAGE> 6
LCI INTERNATIONAL
401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CIGNA CIGNA Warburg Pincus
Guaranteed Guaranteed Advisor Capital
Short-Term Long-Term Appreciation
Account Account Account
-------------------- ------------------- -----------------------
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income -
Interest $ 6,418 $ 272,305 $ -
Net appreciation in market
Value of investments - - 988,611
-------------------- ------------------- -----------------------
6,418 272,305 988,611
-------------------- ------------------- -----------------------
Contributions -
Employer (net of forfeitures in the
amount of $130,028) 10,272 107,573 176,314
Employee 36,277 1,047,096 709,741
-------------------- ------------------- -----------------------
46,549 1,154,669 886,055
-------------------- ------------------- -----------------------
Total additions 52,967 1,426,974 1,874,666
-------------------- ------------------- -----------------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Distributions to participants
(including loans) (41,348) (680,644) (342,677)
Loan repayments (including interest) (248) 70,972 27,809
-------------------- ------------------- -----------------------
Total deductions (41,596) (609,672) (314,868)
INTERFUND TRANSFERS (549,826) 391,237 (98,635)
-------------------- ------------------- -----------------------
Net (decrease) increase (538,455) 1,208,539 1,461,163
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 538,455 4,085,881 3,111,893
-------------------- ------------------- -----------------------
End of year $ - $ 5,294,420 $ 4,573,056
==================== =================== =======================
<CAPTION>
Warburg Pincus LCI Cigna
Advisor Common Stock
Emerging Growth Stock Market
Account Account Index Fund
------------------------ -------------------- -------------------
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income -
Interest $ - $ - $ -
Net appreciation in market
Value of investments 614,772 1,652,614 40,118
------------------------ -------------------- -------------------
614,772 1,652,614 40,118
------------------------ -------------------- -------------------
Contributions -
Employer (net of forfeitures in the
amount of $130,028) 222,330 272,182 47,476
Employee 881,094 1,005,160 321,330
------------------------ -------------------- -------------------
1,103,424 1,277,342 368,806
------------------------ -------------------- -------------------
Total additions 1,718,196 2,929,956 408,924
------------------------ -------------------- -------------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Distributions to participants
(including loans) (434,983) (213,436) 1,638
Loan repayments (including interest) 33,231 53,608 1,994
------------------------ -------------------- -------------------
Total deductions (401,752) (159,828) 3,632
INTERFUND TRANSFERS (265,810) (145,614) 197,341
------------------------ -------------------- -------------------
Net (decrease) increase 1,050,634 2,624,514 609,897
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 2,990,553 2,650,730 -
------------------------ -------------------- -------------------
End of year $ 4,041,187 $ 5,275,244 $ 609,897
======================== ==================== ===================
<CAPTION>
Cigna PBHG
Lifetime Growth
Funds Account Loan Fund Total
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income -
Interest $ - $ - $ - $ 278,723
Net appreciation in market
Value of investments 25,706 3,697 - 3,325,518
------------------- ------------------- ------------------- -------------------
25,706 3,697 - 3,604,241
------------------- ------------------- ------------------- -------------------
Contributions -
Employer (net of forfeitures in the
amount of $130,028) 39,760 37,505 - 913,412
Employee 356,288 192,440 - 4,549,426
------------------- ------------------- ------------------- -------------------
396,048 229,945 - 5,462,838
------------------- ------------------- ------------------- -------------------
Total additions 421,754 233,642 - 9,067,079
------------------- ------------------- ------------------- -------------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Distributions to participants
(including loans) (19,362) 892 381,650 (1,348,270)
Loan repayments (including interest) 2,178 5,117 (135,168) 59,493
------------------- ------------------- ------------------- -------------------
Total deductions (17,184) 6,009 246,482 (1,288,777)
INTERFUND TRANSFERS 262,286 209,021 - -
------------------- ------------------- ------------------- -------------------
Net (decrease) increase 666,856 448,672 246,482 7,778,302
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year - - 263,944 13,641,456
------------------- ------------------- ------------------- -------------------
End of year $ 666,856 $ 448,672 $ 510,426 $ 21,419,758
=================== =================== =================== ===================
</TABLE>
The accompanying notes and schedules are an integral part of this financial
statement.
6
<PAGE> 7
LCI INTERNATIONAL
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1997 AND 1996
(1) DESCRIPTION OF THE PLAN
-----------------------
The following description of the LCI International 401(k) Savings
Plan (the Plan) is provided for general information purposes only.
More complete information regarding the Plan's provisions can be
found in the Plan document.
The Plan is a defined contribution plan available to all
eligible employees of LCI International, Inc. and subsidiaries (the
Company). The Plan was established effective September 1, 1984.
The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended (ERISA). Certain
employees of the Company have been appointed to the Administrative
Committee of the Plan. On December 22, 1997, the Company acquired
USLD Communications Corp. (USLD), in a stock-for-stock merger that
was accounted for as a pooling of interests. Employees of USLD
continue to participate in the USLD Communications Corp. 401(k)
Retirement Plan whose Annual Report on Form 11-K was filed
separately.
The Plan has a group annuity contract with Connecticut General Life
Insurance Company (CIGNA or the Custodian). The Custodian pools the
Company's funds with those of other pension plans and executes
investment transactions. At December 31, 1997, participants have
invested or may invest in one or more of the following accounts.
o CIGNA Guaranteed Long-Term Account - Invests primarily in
commercial mortgages and private bond placements which
provide a guaranteed rate of return based on current
investment conditions.
o Warburg Pincus Advisor Capital Appreciation Account -
Invests in shares of the Warburg Pincus Counsellors
Capital Appreciation Fund, a no-load mutual fund. This
fund is invested primarily in common stocks of U.S. based
companies. Its investment objective is to generate
long-term capital appreciation.
7
<PAGE> 8
o Warburg Pincus Advisor Emerging Growth Account - Invests
in shares of Warburg, Pincus Counsellors Emerging Growth
Fund, Inc., a no-load mutual fund. This fund is primarily
invested in small or medium-sized companies that have
passed their start-up phase and show positive earnings and
prospects of achieving significant profit in a relatively
short period of time. Its investment objective is to
maximize capital appreciation.
o LCI Common Stock Account - Invests in shares of LCI
International, Inc. Common Stock. The purpose of this
fund is to allow employees to invest in the Company's
common stock. See footnote (7).
Effective March 1, 1997, the Plan Investment Committee approved the
addition of the following Plan investment options:
0 CIGNA Stock Market Index Fund - This investment option
is structured to match the overall stock market
performance as measured by the S&P 500 Index, which is
heavily weighted towards large blue chip companies.
It does not attempt to outperform the stock market,
so there is little risk that it will substantively
underperform the market. This fund seeks a combination of
capital growth and current income.
0 CIGNA Lifetime Funds -This is a family of funds comprised
of five distinct, multi-asset class, multi-manager
investment portfolios, which offer a range of risk/return
characteristics. This investment option is based on the
life-cycle theory of investing which means that different
bond/stock mixes are appropriate for individuals at
different stages of their lives. These funds seek a
combination of growth, income and capital preservation
through stocks, bonds, and short-term investments.
0 PBHG Growth Account - This CIGNA account invests solely in
the PBHG Growth Fund. This fund offers risk tolerant
investors the potential for maximum capital appreciation
by investing in small to medium companies with strong
balance sheets and high growth potential. This fund seeks
rapid growth of capital.
Effective April 1, 1997, the Plan Investment Committee approved the
elimination of the CIGNA Guaranteed Short-Term Account as a Plan
investment option. The amounts invested in this account were
transferred to other investments at the direction of the participant.
The employees choose the percentage of their salary, up to 15% of a
participant's base compensation, to be contributed to the Plan and
how it is to be allocated among the seven accounts. As limited by the
Internal Revenue Code of 1986, as amended (IRC), a participant's
pretax deferrals cannot exceed $9,500 in 1997.
All income is allocated to the members of each fund in the same
proportion that the value of their account in the fund bears to the
total value of all accounts in such fund.
The Company provides matching contributions to be allocated to the
accounts as directed by the employees. The Company matches $.50 for
each $1.00 contributed, except that no matching contribution will be
made with respect to contributions exceeding 6% of the employee's
base compensation. Participants are immediately vested in their
salary deferrals plus actual earnings thereon. Effective October 1,
1997, vesting in Company matching contributions and earnings thereon,
is as follows:
8
<PAGE> 9
<TABLE>
<CAPTION>
Years of Service * Vesting Percent
----------------------------------- ---------------------------------
<S> <C>
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
</TABLE>
* A year of service is credited for each calendar year
during which an employee completes 1,000 hours of service.
Service prior to January 1, 1992, will not count for
vesting purposes.
Effective October 1, 1997, employees become eligible as participants
in the Plan immediately upon hire and may begin making contributions.
Employees who were not currently eligible before October 1, 1997,
became eligible to participate in the Plan on October 1, 1997.
Effective October 1, 1997, the Plan shall permit salary deferral
agreements to be changed at any time during the year.
All administrative expenses are paid by the Company. As permitted by
the Plan agreement, forfeitures may be used as an offset to
administrative expenses or the employer contributions. For the year
ended December 31, 1997, forfeitures were used to reduce employer
contributions.
Each participant may elect, with spousal consent if required, a
distribution in the form of an annuity, single lump sum cash payment,
Qwest Common Stock, or a combination of the above. See footnote (7).
In addition, the Plan includes a provision for employees to make
withdrawals from their accounts under certain "hardship"
circumstances, if approved by the Trustees. Participants are
permitted to borrow against their accounts in accordance with the
regulations of the IRC and the Plan provisions.
Although it has not expressed any intent to do so, the Company has
the right under the Plan to discontinue its matching contributions at
any time and to terminate the Plan subject to provisions of ERISA. In
the event of Plan termination, participants will become fully vested
in their account balances.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying financial statements have been prepared on an
accrual basis.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect 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
revenue and expenses during the reporting period. Actual results
could differ from those estimates and assumptions.
9
<PAGE> 10
Investments
The CIGNA Guaranteed Short-Term Account and the CIGNA Guaranteed
Long-Term Account are guaranteed investment contracts and are stated
at contract value, which approximates fair value, as reported to the
Plan by CIGNA. Contract value represents contributions made under the
contracts, plus earnings, less Plan withdrawals. The remaining
investments are stated at market value as determined by the Custodian
based on the established market prices of the underlying investments.
The average annual yield and the year-end rate for the Guaranteed
Long-Term Account was 5.9% and 6.1%, respectively for 1997 and 5.8%
and 5.7% respectively for 1996. This rate can change every six months
on January 1st and July 1st. There is no minimum interest rate
associated with the Guaranteed Long-Term Account or limitations on
liquidating the fund.
Net appreciation (depreciation) in market value of assets is based on
the market value at the Plan year-end and the market value at the
beginning of the Plan year or cost at the time of purchase during the
year.
Purchases and sales of securities are recorded on a trade-date basis.
Participant Loans
Subject to the provisions of the IRC and the Plan, a participant may
borrow against the balance in their account. The participant executes
a promissory note with an interest rate based on prevailing
commercial lending rates. Loan principal and interest are paid over
periods ranging from one, but not more than five years; except for
loans to purchase a principal residence, which can be paid over a
maximum of 15 years. Participant loans are valued at cost which
approximates fair value.
(3) TAX STATUS
The Plan obtained its latest determination letter on January 8, 1996,
in which the Internal Revenue Service stated that the Plan as then
designed, was in compliance with the applicable requirements of the
IRC. The Company believes that the Plan is currently designed and
operated in compliance with the applicable requirements of the IRC
and is qualified, and that the related trust is tax exempt.
(4) INVESTMENTS
The Custodian of the Plan held the Plan's investments and executed
the transactions per the participant's instructions. The fair
market values of individual assets that represent 5% or more of
the Plan's net assets as of December 31, 1997 and 1996 are
as follows:
10
<PAGE> 11
<TABLE>
<CAPTION>
1997 1996
---------------- ---------------
<S> <C> <C>
CIGNA Guaranteed Short-Term Account $ - $ 528,142
CIGNA Guaranteed Long-Term Account 5,231,407 4,037,835
Warburg Pincus Advisor Capital Appreciation Account 4,525,755 3,071,805
Warburg Pincus Advisor Emerging Growth Account 3,987,872 2,921,986
LCI Common Stock Account 5,220,816 2,568,860
</TABLE>
(5) RELATED PARTY
The Warburg Pincus Advisor Capital Appreciation Account and the
Warburg Pincus Advisor Emerging Growth Account invest in mutual funds
managed by Warburg, Pincus Counsellors, Inc., a wholly-owned
subsidiary of E.M. Warburg, Pincus & Co., Inc. E.M. Warburg Pincus &
Co., Inc. through affiliates, is a shareholder of the Company.
Certain Plan investment funds are managed by the Custodian of the
Plan. The Common Stock of the Company is included in the Plan
investments. Transactions resulting from the above constitute
party-in-interest transactions.
(6) RECONCILIATION TO FORM 5500
As of December 31, 1997 and 1996, the Plan had $20,480 and $52,423,
respectively, of pending distributions to participants who elected to
withdraw from the Plan. These amounts are recorded as a liability in
the Plan's Form 5500; however, these amounts are not recorded as a
liability in the accompanying statements of net assets available for
plan benefits in accordance with generally accepted accounting
principles.
The following table reconciles net assets available for plan benefits
per the financial statements to Form 5500 as filed by the Company for
the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
Benefits Net Assets Available
Payable to Benefits for Plan Benefits
Participants Paid December 31
--------------------- ----------------- ---------------------------------------
1997 1996
--------------- -----------------
<S> <C> <C> <C> <C>
Financial statement balance $ - $ 1,288,777 $ 21,419,758 $13,641,456
Accrued benefit payments 20,480 20,480 (20,480) (52,423)
Less: 1996 accrual for benefit payment - (52,423) - -
------------------ ----------------- --------------- -----------------
Form 5500 balance $ 20,480 $ 1,256,834 $ 21,399,278 $13,589,033
================== ================= =============== =================
</TABLE>
11
<PAGE> 12
(7) SUBSEQUENT EVENTS
On June 5, 1998, the Company consummated 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. The LCI International 401(k) Savings Plan will remain in
effect, however the LCI Common Stock Account will no longer be an
investment option. All shares of LCI Common Stock will be converted
into Qwest shares using the exchange ratio set forth in the merger
agreement. Beginning June 22, 1998, participants may elect to invest
in Qwest stock for future payroll contributions and fund transfers.
12
<PAGE> 13
SCHEDULE I
LCI INTERNATIONAL
401(k) SAVINGS PLAN
EMPLOYER IDENTIFICATION NUMBER 31-1115867
PLAN NUMBER 001
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Market
Identity of Party or Fund Description Cost Value
- --------------------------------------------- ---------------------------------- --------------- ----------------
<S> <C> <C> <C>
* Connecticut General Life Insurance Guaranteed Long-Term Account $ 5,231,407 $ 5,231,407
* Connecticut General Life Insurance Warburg Pincus Advisor Capital
Appreciation Account $ 2,909,706 $ 4,525,755
Warburg Pincus Advisor Emerging
* Connecticut General Life Insurance Growth Account $ 3,049,696 $ 3,987,872
* National Financial Services Corporation LCI Common Stock Account $ 3,558,101 $ 5,220,816
* Connecticut General Life Insurance CIGNA Stock Market Index Account $ 532,603 $ 572,634
* Connecticut General Life Insurance CIGNA Lifetime Funds $ 611,352 $ 636,079
Connecticut General Life Insurance PBHG Growth Account $ 427,981 $ 430,478
Various Participants Participant Loans (Interest rates
ranging from 6.5% to 11.1%) $ 510,426 $ 510,426
</TABLE>
* Denotes party-in-interest transactions
13
<PAGE> 14
SCHEDULE II
LCI INTERNATIONAL
401(k) SAVINGS PLAN
EMPLOYER IDENTIFICATION NUMBER 31-1115867
PLAN NUMBER 001
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Number of Purchase Selling
Identity of Party Involved Description of Asset Transactions Price Price
- ------------------------------------------ --------------------------------- ----------------- ------------- --------------
<S> <C> <C> <C> <C>
Connecticut General Life Insurance Guaranteed Long-Term Account Various $ 2,185,646 N/A
Connecticut General Life Insurance Guaranteed Long-Term Account Various N/A $ 1,264,378
National Financial Services Corp. LCI Common Stock Account 83 $ 1,696,114 N/A
National Financial Services Corp. LCI Common Stock Account 107 N/A $ 823,313
Connecticut General Life Insurance Warburg Pincus Advisor Capital
Appreciation Account 93 $ 1,138,547 N/A
Connecticut General Life Insurance Warburg Pincus Advisor Capital
Appreciation Account 117 N/A $ 659,047
Connecticut General Life Insurance Warburg Pincus Advisor Emerging
Growth Account 91 $ 1,379,027 N/A
Connecticut General Life Insurance Warburg Pincus Advisor Emerging
Growth Account 134 N/A $ 896,140
<CAPTION>
Current Value
Cost of at Transaction Net Realized
Identity of Party Involved Description of Asset Asset Date Gain(Loss)
- ------------------------------------------ --------------------------------- -------------- ------------------- ---------------
Connecticut General Life Insurance Guaranteed Long-Term Account $ 2,185,646 $ 2,185,646 N/A
Connecticut General Life Insurance Guaranteed Long-Term Account $ 1,264,378 $ 1,264,378 $ -
National Financial Services Corp. LCI Common Stock Account $ 1,696,114 $ 1,696,114 N/A
National Financial Services Corp. LCI Common Stock Account $ 703,891 $ 823,313 $ 119,422
Connecticut General Life Insurance Warburg Pincus Advisor Capital
Appreciation Account $ 1,138,547 $ 1,138,547 N/A
Connecticut General Life Insurance Warburg Pincus Advisor Capital
Appreciation Account $ 453,651 $ 659,047 $ 205,396
Connecticut General Life Insurance Warburg Pincus Advisor Emerging
Growth Account $ 1,379,027 $ 1,379,027 N/A
Connecticut General Life Insurance Warburg Pincus Advisor Emerging
Growth Account $ 733,256 $ 896,140 $ 162,884
</TABLE>
14
<PAGE> 15
SIGNATURE
---------
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the Administrative Committee has duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly
authorized.
LCI INTERNATIONAL 401(k) SAVINGS PLAN
(Name of Plan)
By: /s/ JOSEPH A. LAWRENCE
Date: June 29, 1998 --------------------------------
Joseph A. Lawrence
Executive Vice President of Corporate
Development and Chief Administrative Officer
15
<PAGE> 16
LCI INTERNATIONAL 401(k) SAVINGS PLAN
ANNUAL REPORT ON FORM 11-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1997
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- -------------------- --------------------------------------------- --------------------
<S> <C> <C>
23 Consent of Independent Public Accountants Page 17
99 LCI International 401(k) Savings Plan *
</TABLE>
*Incorporated By Reference to Exhibit 99 to the LCI International, Inc.'s Form
S-8 Registration Statement filed on April 29, 1997.
16
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K, into the Company's previously filed
Registration Statements File No. 33-74246, No. 333-2580 and No. 333-26175.
ARTHUR ANDERSEN LLP
Columbus, Ohio,
June 29, 1998.
