-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HUMAMSKM6vGy83J07g69Jy+0t0ZYUvrRK7fYtpS9t0KeLpJ2/M7umc5ptzQIVmUr +q8crHP+qx94Dmo3nS57SA== 0001047469-97-000296.txt : 19971010 0001047469-97-000296.hdr.sgml : 19971010 ACCESSION NUMBER: 0001047469-97-000296 CONFORMED SUBMISSION TYPE: DFAN14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19971009 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MCI COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000064079 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 520886267 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DFAN14A SEC ACT: SEC FILE NUMBER: 000-06547 FILM NUMBER: 97693185 BUSINESS ADDRESS: STREET 1: 1801 PENNSYLVANIA AVE N W CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: 2028721600 MAIL ADDRESS: STREET 1: 1801 PENNSYVANIA AVENUE NW CITY: WASHINGTON STATE: DC ZIP: 20006 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WORLDCOM INC /GA/ CENTRAL INDEX KEY: 0000723527 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 581521612 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DFAN14A BUSINESS ADDRESS: STREET 1: 515 EAST AMITE ST CITY: JACKSON STATE: MS ZIP: 39201-2702 BUSINESS PHONE: 6013608600 FORMER COMPANY: FORMER CONFORMED NAME: LDDS COMMUNICATIONS INC /GA/ DATE OF NAME CHANGE: 19930916 FORMER COMPANY: FORMER CONFORMED NAME: RESURGENS COMMUNICATIONS GROUP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CENTRAL CORP /GA/ DATE OF NAME CHANGE: 19890523 DFAN14A 1 DFAN14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. 1) Filed by the Registrant / / Filed by a Party other than the Registrant /X/ Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Proxy Statement / / Definitive Additional Materials /X/ Soliciting Material Pursuant to Section240.14a-11(c) or Section240.14a-12 MCI COMMUNICATIONS CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) WORLDCOM, INC. - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ----------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ----------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ----------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ----------------------------------------------------------------------- (5) Total fee paid: ----------------------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ----------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ----------------------------------------------------------------------- (3) Filing Party: ----------------------------------------------------------------------- (4) Date Filed: ----------------------------------------------------------------------- INTRODUCTION - -------------------------------------------------------------------------------- Bernard J. Ebbers President and Chief Executive Officer WHY ARE WE HERE? - -------------------------------------------------------------------------------- Today We Are Announcing: [Brooks Fiber Logo] o We have signed a definitive merger agreement with Brooks Fiber [MCI Logo] o We have made a superior offer to MCI shareholders for a merger with WorldCom BROOKS FIBER MERGER - -------------------------------------------------------------------------------- Merger Agreement with Brooks Fiber o Brooks Fiber shareholders will receive 1.65 shares of WorldCom for each share of Brooks Fiber [WorldCom & Brooks o Stock-for-stock transaction Fiber Logo] o Pooling of interest transaction -- accretive to WorldCom consensus earnings BROOKS FIBER MERGER - -------------------------------------------------------------------------------- Merger Agreement with Brooks Fiber (Continued) [WorldCom & Brooks o Accelerates local market entry in Fiber Logo] secondary markets by 1-2 years o Brooks Fiber expands WorldCom's local presence from 52 markets to 86 markets o Fuels strong top-line revenue growth o Adds additional local access expertise o Adds significant local fiber networks and local switching capacity MCI MERGER - -------------------------------------------------------------------------------- MCI WorldCom Offers MCI Shareholders Better Deal MCI MERGER - -------------------------------------------------------------------------------- WorldCom's Offer is More Attractive ------------------------------------------------------------------- BT's Offer ------------------------------------------ Initial Offer Revised Offer WorldCom's Offer ------------------------------------------------------------------- Terms 0.54 BT ADS's 0.375 BT ADS's plus 1.038 to 1.221 plus $6.00 Cash $7.75 Cash WCOM Shares less $3.22 Dividend ------------------------------------------------------------------- Value of $41.98 $31.53 $41.50 Offer ------------------------------------------------------------------- Premium to 43% 7% 41% Latest MCI Price ------------------------------------------------------------------- Presentation contains forward-looking statements. Actual results may vary. MCI MERGER - -------------------------------------------------------------------------------- Greater Identifiable Synergy Benefits (Estimates) ----------------------------------------------------------------- Timing BT WorldCom ----------------------------------------------------------------- 1999 $400M $2,500M+ ----------------------------------------------------------------- Five Year Cumulative Synergies $2,400M $15,000M+ ----------------------------------------------------------------- Presentation contains forward-looking statements. Actual results may vary. MCI MERGER - -------------------------------------------------------------------------------- Potential Offer Structure [Line Graph] The proposed offer would incorporate a fixed price of $41.50 within a band of prices for WorldCom of $34 to $40 and a floating price outside the band. Presentation contains forward-looking statements. Actual results may vary. MCI MERGER - -------------------------------------------------------------------------------- Our Objective Has Not Changed. It is to be the most profitable, single-source provider of communications services to business around the world. WORLDCOM'S SHAREHOLDERS - -------------------------------------------------------------------------------- Why a Merger with MCI is Attractive for WorldCom [WorldCom Logo] o Immediately adds value for shareholders o Accretive from Day One o More than triples WorldCom's revenues o Provides WorldCom the assets and products to better address large business customers o Leverages WorldCom's substantial investments in local business market WORLDCOM'S SHAREHOLDERS - -------------------------------------------------------------------------------- Why a Merger with MCI is Attractive for WorldCom (Continued) [WorldCom Logo] o Enhances potential for greater stock price performance o Enhances WorldCom's position as the only end-to-end facilities based provider of local, long distance, Internet and international service o Significantly expands network capacity of WorldCom o Adds management depth/expertise o Compelling business fit MCI'S SHAREHOLDERS - -------------------------------------------------------------------------------- Why WorldCom's Offer is Superior Price, Premium, Performance [MCI Logo] o MCI shareholders get a higher premium o MCI shareholders receive better performing stock o MCI shareholders end up owning more of WorldCom versus BT o WorldCom offer recognizes value of underlying assets o MCI benefits from much greater synergies MCI'S SHAREHOLDERS - -------------------------------------------------------------------------------- Why WorldCom's Offer is Superior (Continued) [MCI Logo] o Higher probability of market success due to WorldCom's track record of: -- Industry leading growth and -- Successful mergers o Better strategic fit with WorldCom o Addresses MCI's local access dilemma o More compatible entrepreneurial cultures BT'S SHAREHOLDERS - -------------------------------------------------------------------------------- Why WorldCom's Offer is Also Good for BT [BT Logo] o Provides BT over $1B gain on its investment in MCI o BT receives better performing stock for their stake o Potentially permits alliance with stronger U.S. partner o Addresses BT's institutional investors' concerns about U.S. market risks COMPARATIVE ANALYSIS - -------------------------------------------------------------------------------- As a shareholder comparing the two deals, you have to ask yourself one question... COMPARATIVE ANALYSIS - -------------------------------------------------------------------------------- ...whose stock do you want to own? CREATION OF SHAREHOLDER VALUE - -------------------------------------------------------------------------------- WorldCom: #1 Among All Telecoms [excerpt from Wall Street Journal] Shareholder Scoreboard [Chart Regarding Telephone Service] CREATION OF SHAREHOLDER VALUE - -------------------------------------------------------------------------------- WorldCom: #2 Among 500 Companies Ranked By Total Return to Investors [excerpt from Fortune regarding Highest 500 Total Return To Investors] CREATION OF SHAREHOLDER VALUE - -------------------------------------------------------------------------------- $100 Invested in 1989 common stock WCOM $3,137 BT 191 MCI 132 AT&T 198 SPRINT 183 September 18, 1997 Note: WorldCom does not pay dividends on its common stock. Other companies' dividends were assumed to be reinvested. CREATION OF SHAREHOLDER VALUE - -------------------------------------------------------------------------------- If you were a shareholder of MCI...which stock would you want to own? FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Scott D. Sullivan Chief Financial Officer FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- We are absolutely on track with the current business plan. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Announced Acquisitions Accretive [AOL Logo] o ANS and CNS transactions moving on track and will be accretive in the first year [CSi Logo] [Brooks Fiber Logo] o Brooks Fiber is expected to close Q1 1998 and will be neutral to accretive in the first year -- Accelerates our target of reaching 70% of business market FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Key Messages -- MCI Offer o WorldCom's offer is more attractive financially to MCI's shareholders o WorldCom/MCI combination generates greater indentifiable synergy benefits o More than 20% accretive from Day One FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Synergies Are Real Annual Savings Estimate ($ millions) Line Costs 1999 2002 ------------ ------------ o Originating Line Cost--DALs $300 - 400 $500 - 600 o Avoided Access Costs--Switched Minutes $100 - 150 $400 - 600 o Variable Line Cost $50 - 100 $100 - 150 o International $100 - 150 $350 - 450 Presentation contains forward-looking statements. Actual results may vary. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Synergies Are Real (Continued) Annual Savings Estimate ($ millions) 1999 2002 --------------- -------------- o Avoided MCI Local Losses $500 - 900 $1,400 - 1,500 o SG&A $900 - 1,000 $1,200 - 1,300 o Depreciation $100 - 200 $450 - 550 o Capital Expenditures $1,000 - 1,500 $1,500 - 1,600 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Synergy Summary Anticipated Annual Savings ($ in billions) Category 1999 2002 - ------------------------------------------- -------- -------- Core SG&A $1.0 $1.3 Avoided MCI Local Losses $0.7 $1.5 Domestic Line Costs $0.6 $1.3 International Line Costs $0.1 $0.3 Capex--Long Distance $0.8 $1.2 Capex--Local $0.7 $0.3 Potential revenue benefits are not included Presentation contains forward-looking statements. Actual results may vary. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Cost Synergies Are Reasonable Pre-tax Operating Costs Fiscal Year Ended December 31, 1999 2000 2001 2002 - -------------------------------------------------------------------------------- Total pretax operating $2,350 $2,964 $3,770 $4,444 cost synergies As a % of combined < ----- 8% to 9% ----- > operating expenses Presentation contains forward-looking statements. Actual results may vary. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Purchase Accounting EPS Impact Offer Price $41.50 Premium to Market 41% EPS MCI WorldCom Accretion % Ownership Price 1999 of WorldCom -------- --------- ----------- $40.00 28% 42% $35.38 21% 45% $34.00 20% 46% Presentation contains forward-looking statements. Actual results may vary. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Combination Strengthens Position As World Class Competitor [BAR GRAPH OMITTED] o Triples 1998 Proforma WorldCom revenues from approximately $10B to $30B o More than doubles 1998 Proforma WorldCom EBITDA from $3B to approx. $7B o More than 20% accretive to WorldCom's EPS under purchase accounting Presentation contains forward-looking statements. Actual results may vary. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Roadmap to Completing Exchange Offer Timing ------ o WorldCom obtains FCC approval of voting trust Q4/97 o MCI shareholders vote "NO" to merger with BT Q4/97 o WorldCom shareholders approve WorldCom share issuance Q4/97 o MCI amends rights plan Q1/98 o WorldCom receives antitrust clearances Q1/98 o Exchange offer closed Q1/98 Presentation contains forward-looking statements. Actual results may vary. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Example: Stock Price of $100 within 3 years o 3x Revenues -- reasonable given $50 B revenue growing 20% per annum o 22x P/E -- less than one times 25% EPS growth FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Conclusion Superior Offer o Higher value today and in future o Larger ownership in faster growth company Superior Stock o Superior shareholder return history -- 53% annual return to investors (1986-1996) Greater Identifiable Synergies o Reasonable at 8 - 9% of operating expenses Track Record of Performance o Operating and financial o Delivering synergies - -------------------------------------------------------------------------------- John W. Sidgmore Vice Chairman and Chief Operations Officer NETWORK HIGHLIGHTS - -------------------------------------------------------------------------------- Impact on U.S. Network o Substantially increases reach and capacity o With Brooks Fiber and MCImetro, we will accelerate our local city network deployment in secondary markets by one to two years o With MCI, we more than double domestic fiber system route miles from 20,000 miles to 45,000 miles NETWORK AND OPERATIONAL HIGHLIGHTS - -------------------------------------------------------------------------------- Brooks Fiber Further Expands WorldCom's Local Presence o Adds over 40 cities to WorldCom's local networks o Increases route miles by 2000 miles o Expands buildings connected by 2000 buildings o Increases local switches by 22 switches o Adds 1600 employees with proven competitive local exchange expertise BROOKS FIBER'S LOCAL NETWORKS - -------------------------------------------------------------------------------- Brooks Fiber's Local Networks [Map listing locations of Brooks Fiber's networks in operation or development] MCI'S LOCAL NETWORKS - -------------------------------------------------------------------------------- MCImetro Local Networks [Map listing locations of MCImetro networks in operation or development] WORLDCOM'S LOCAL NETWORKS... - -------------------------------------------------------------------------------- WorldCom Local Networks [Map listing locations of WorldCom networks in operation or development] COMBINED LOCAL NETWORKS... - -------------------------------------------------------------------------------- Combined Local Networks (WorldCom/MCI/Brooks) [Map listing locations of WorldCom/MCI/Brooks networks in operation or development] NETWORK HIGHLIGHTS - -------------------------------------------------------------------------------- Network Statistics (Approximate) Brooks WorldCom Fiber MCI Combined -------- ------- --- -------- Domestic Cities 52 45 35 92(Net) (Fiber Networks) Local Route Miles 4,000 2,000 3,000 9,000 Long Distance Route Miles 20,000 -- 25,000 45,000 International Route Miles 5,000 -- -- 5,000 Local Switches 38 22 24 84 Employees 15,000 1,600 50,000 66,600 NETWORK HIGHLIGHTS - -------------------------------------------------------------------------------- Owning the Right Networks (Combined) Long Distance (Domestic) o 45,000 route miles o OC-48 and OC-192 plus Wave Division Multiplexing Local Access (MFS/MCI/Brooks Fiber) o 92 Domestic local city networks o 70% of U.S. business market Internet (UUNET/MCI/CNS/ANS) o OC-12 backbone o Significant increase in capacity International (Gemini/Ulysses) o Build/Expand 35 networks in key financial cities o Build pan-European network and trans-Atlantic cable PRODUCT HIGHLIGHTS - -------------------------------------------------------------------------------- WorldCom/MCI Combination Increases Value-Added Products and Services: [WorldCom/MCI Logo] o Adds leading information technology and systems integration platform o Enhances scale and range of Internet offerings -- Added to CompuServe Intranet/Extranet expertise o Enhances full service bundled offerings NETWORK HIGHLIGHTS - -------------------------------------------------------------------------------- Summary of Network Services Benefits o Leverages large long distance "footprint" o Leverages local network investments and international investments o Enhances end-to-end service portfolio o Adds substantial capacity and expands local reach NETWORK HIGHLIGHTS - -------------------------------------------------------------------------------- New Value-Added Products and Services Round Out Portfolio Data Networking Telecommunication Services - --------------- -------------------------- Network and Systems Local Integration Services Long Distance Public Internet Wireless Intranets and VPN International SUMMARY - -------------------------------------------------------------------------------- Path to $100 Stock Price [Chart] - -------------------------------------------------------------------------------- WORLDCOM -----END PRIVACY-ENHANCED MESSAGE-----