8-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004

______________

FORM 8-K

______________

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 3, 2005

MCI, Inc.

(Exact Name of Registrant as Specified in Charter)

DELAWARE	001-10415	20-0533283
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

22001 Loudoun County Parkway,	20147
Ashburn, Virginia
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (703) 886-5600

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

2

Item 2.02. Results of Operation and Financial Condition.

      On November 3, 2005, MCI, Inc. (“MCI”) issued a press release announcing its operating results for the three-month period ended September 30, 2005. A copy of the press release, together with the related financial schedules, is attached hereto as Exhibit 99.1, the text of which are incorporated under Item 2.02 of this Form 8-K by reference herein.

Limitation on Incorporation by Reference

      In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(a)	Financial Statements of Businesses Acquired.
	Not applicable.
(b)	Pro Forma Financial Information.
	Not applicable.
(c)	Exhibits.

Exhibit No.	Description of Exhibit
99.1	Press release dated November 3, 2005 and related financial schedules

3

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MCI, INC.
	(Registrant)
Dated: November 3, 2005	By:	/s/ Robert T. Blakely
		Name:	Robert T. Blakely
		Title:	Executive Vice President and Chief Financial Officer

	EXHIBIT INDEX
Exhibit No.	Description
99.1	Press release dated November 3, 2005 and related financial schedules

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE
Contacts:	Media	Investors
	Brad Burns	Susan Watson
	Peter Lucht	(703) 886-5282
	(800) 644-NEWS

MCI ANNOUNCES THIRD QUARTER 2005 RESULTS

EPS of $0.82 per diluted share

Cash, cash equivalents and marketable securities total $5.4 billion

Verizon merger on track

ASHBURN, Va., November 3, 2005 – MCI, Inc. (NASDAQ:MCIP) today reported its results for the third quarter ended September 30, 2005.

MCI generated net income of $271 million, or $0.82 per diluted share, in the third quarter as new products and cost reduction initiatives launched in 2004 continued to yield benefits; also, the Company incurred and recorded a $164 million tax reduction in the quarter. In last year’s quarter, the Company reported a net loss of $3.4 billion, or $10.65 per share, largely reflecting impairment charges of $3.5 billion. In the second quarter of 2005, MCI reported net income of $64 million, or $0.19 per diluted share.

Revenues for the third quarter were $4.5 billion, down 5 percent sequentially and 12 percent year-over-year. Operating expenses fell to $4.3 billion, down 7 percent sequentially and 49 percent year-over-year (as the prior year included a $3.5 billion impairment charge). MCI incurred $67 million of severance, reorganization and merger related costs during the quarter, which were more than offset by gains on bankruptcy settlements, and lower depreciation and amortization expense. The Company recognized depreciation and amortization expense of $305 million in the third quarter of 2005, $325 million in the second quarter of 2005, and $493 million in the third quarter of 2004.

Operating income was $159 million in the third quarter, compared to operating income of $61 million in the second quarter of 2005 and an operating loss of $3.4 billion in the year-earlier third quarter.

MCI’s third quarter net income was positively impacted by reductions made to the Company’s deferred tax liabilities resulting from tax settlements reached in the quarter.

“In the third quarter we continued to deliver on our strategy, launching new IP-based products and delivering industry-leading customer service,” said Michael D. Capellas, MCI president and CEO. “With all U.S. federal and international regulatory approvals complete, we remain on track to close our merger with Verizon later this year or early in 2006.”

For the first nine months of 2005, revenues were $13.9 billion, down 11 percent year-over-year. Operating income was $335 million, compared to an operating loss of $3.6 billion in 2004, which included impairment charges of $3.5 billion. Operating income in the first three quarters of 2005 included $958 million of depreciation and amortization expense, compared to $1.6 billion in 2004. Net income for the first nine months of 2005 was $333 million or $1.01 per diluted share, compared to a net loss of $3.9 billion in the nine months of 2004, or $12.00 per share.

Consolidated Results
($Millions)		Quarter Ended
		9/30/05			9/30/04			6/30/05
Revenues	$	4,468		$	5,076		$	4,683
Cost of sales and services		2,971			3,209			3,128
S, G & A		1,033			1,253			1,169
Depreciation and amortization		305			493			325
Impairment charges		-			3,513			-
Operating income (loss)		159			(3,392	)		61
Other expense, net		(48	)		(69	)		(18	)
Income (loss) from continuing
operations before income taxes		111			(3,461	)		43
Income tax benefit		(164	)		(61	)		(24	)
Income (loss) from continuing operations		275			(3,400	)		67
(Loss) income from discontinued ops		(4	)		2			(3	)
Net income (loss)	$	271		$	(3,398	)	$	64
Basic EPS	$	0.84		$	(10.65	)	$	0.20
Diluted EPS	$	0.82		$	(10.65	)	$	0.19
Segment Results

MCI’s operations are organized into three distinct business units defined by their respective customer bases: Enterprise Markets, US Sales & Service and International & Wholesale Markets. The quarterly operating results of these business segments follow:

Enterprise Markets

Enterprise Markets, which includes the Company’s most sophisticated, high-end accounts in business and government, provide local-to-global business data, Internet and voice services, as well as managed network services and solutions.

($Millions)		Quarter Ended
		9/30/05		9/30/04			6/30/05
Revenues	$	1,146	$	1,182		$	1,166
Cost of sales and services		738		712			759
S, G & A		259		238			274
Depreciation and amortization		73		127			78
Impairment charges		-		870			-
Operating income (loss)	$	76	$	(765	)	$	55

In the third quarter of 2005, Enterprise Markets generated $1.1 billion of revenues, down 2 percent sequentially and down 3 percent year-over-year. Enterprise revenues were slightly lower sequentially as a decline in traditional voice business was partially offset by continuing growth momentum in Private IP and managed network services.

Operating income was $76 million in the third quarter of 2005, compared to an operating loss of $765 million a year earlier and operating income of $55 million in the second quarter of 2005. Results improved as the Company continues to generate strong volumes and provide new services to its global and large government customers.

US Sales & Service

US Sales & Service (USS&S) is comprised of Commercial Accounts, which includes small to large business customers based in the United States, plus Mass Markets, which includes consumer and small business customers, and SkyTel.

($Millions)		Quarter Ended
		9/30/05		9/30/04			6/30/05
Revenues	$	1,886	$	2,221		$	1,970
Cost of sales and services		1,138		1,174			1,184
S, G & A		538		728			597
Depreciation and amortization		134		228			140
Impairment charges		-		1,627			-
Operating income (loss)	$	76	$	(1,536	)	$	49

In the third quarter of 2005, USS&S generated $1.9 billion of revenues, down 4 percent sequentially and 15 percent compared to the year-earlier quarter due to pricing pressure in the commercial channel partially offset by increased Internet revenues from Private IP and VoIP services.

Mass Markets revenues fell to $1.0 billion, down 5 percent sequentially and 22 percent year-over-year, reflecting the Company’s reduced emphasis on customer acquisition related to market and regulatory changes.

Operating income from US Sales & Service was $76 million in the third quarter of 2005, compared to an operating loss of $1.5 billion a year ago and operating income of $49 million in the second quarter of 2005. Results improved significantly from the prior year due to lower marketing costs, strategic sales mix and receivables management.

International & Wholesale Markets

MCI’s International & Wholesale Markets segment serves customers in 140 countries around the world, as well as wholesale customers in the United States.

($Millions)		Quarter Ended
		9/30/05		9/30/04			6/30/05
Revenues	$	1,436	$	1,673		$	1,547
Cost of sales and services		1,095		1,323			1,185
S, G & A		236		287			298
Depreciation and amortization		98		138			107
Impairment charges		-		1,016			-
Operating income (loss)	$	7	$	(1,091	)	$	(43	)

During the third quarter of 2005, International & Wholesale Markets contributed revenues of $1.4 billion, down 7 percent sequentially and 14 percent year-over-year. International accounts generated revenues of $754 million, down 13 percent sequentially and 19 percent compared to the third quarter of 2004. Wholesale revenues were $682 million, flat compared to the second quarter, and 8 percent lower than last year’s third quarter.

MCI’s International group continues to focus on improving profitability through the provision of new, on-net value-added services, cost controls and facilities optimization. In 2005, the International group also implemented a new pricing strategy intended to improve profitability and shed less profitable business.

Wholesale revenues were flat sequentially and fell 8 percent year-over-year. Compared to the third quarter of 2004, data and Internet revenues declined reflecting the industry shift from dial-up to broadband.

Balance Sheet

At June 30, 2005, cash, cash equivalents and marketable securities totaled approximately $5.3 billion. During the third quarter, MCI paid $41 million in bankruptcy claims, completed an asset purchase from Totality Corporation for $71 million, and invested $327 million in property, plant and equipment. At September 30, 2005, cash, cash equivalents and marketable securities totaled $5.4 billion. On October 27, 2005, MCI disbursed approximately $1.8 billion, or $5.60 per MCI common share, as a special cash dividend in accordance with its merger agreement with Verizon.

Total debt of approximately $5.9 billion included $245 million of capitalized leases. The Company incurred interest expense of $109 million in the quarter and earned $49 million of interest income on its portfolio of cash and marketable securities. On November 1, MCI paid $219 million in semi-annual interest on its outstanding notes.

Merger Update

On October 27, 2005, the Department of Justice cleared the Company’s merger with Verizon subject to a proposed consent decree. The Federal Communications Commission also approved the merger on October 31, 2005. Although additional approvals are required from some state jurisdictions prior to closing and other closing conditions remain to be satisfied, the Company expects to close the merger later this year or early in 2006.

Conference Call

Management will host a conference call to discuss today’s results at 8:30 am EST. Investors are invited to access a live audio feed at the Company’s website, www.mci.com. An audio archive of the discussion will be available on the website for a minimum of 30 days.

About MCI

MCI, Inc. (NASDAQ) is a leading global communications provider, delivering innovative, cost-effective advanced communications connectivity to businesses, governments and consumers. With one of the industry’s most expansive IP backbones and wholly-owned data networks, MCI develops the converged communications products and services that are the foundation for commerce and communications in today’s market. For more information, visit www.mci.com.

Forward-Looking Statements

This document contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: a significant change in the timing of, or the imposition of any government conditions to, the closing of the previously announced proposed transaction between MCI and Verizon; actual and contingent liabilities; and the extent and timing of our ability to obtain revenue enhancements and cost savings following the previously announced proposed transaction between MCI and Verizon. Additional factors that may affect the future results of MCI and Verizon are set forth in their respective filings with the Securities and Exchange Commission, which are available at http://investor.verizon.com/SEC/ and http://www.mci.com/about/investor_relations/sec/.

This release references certain financial measures which are deemed to be non-GAAP. The Company believes that the inclusion of these measures is important because it provides readers of the report a different view of its operating results. In particular, MCI presents information about operating income, excluding certain various non-cash items, including depreciation and amortization, impairment charges and gains and losses on property dispositions and excluding costs related to our pending merger with Verizon. MCI presents this information to allow investors to determine its cash operating expenses, and because these expenses have varied significantly over time due to changes in MCI's balance sheet relating to fresh-start reporting and impairment.

# # #

MCI, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine-Month Periods Ended September 30, 2005 and 2004
(In Millions, Except Per Share Data)

	Three-Month Period Ended September 30,						Nine-Month Period Ended September 30,
		2005			2004			2005			2004
Revenues	$	4,468		$	5,076		$	13,940		$	15,716
Operating expenses:
Access costs		2,369			2,580			7,425			8,156
Costs of services and products		602			629			1,827			1,915
Selling, general and administrative		1,033			1,253			3,395			4,174
Depreciation and amortization		305			493			958			1,583
Impairment charges related to property, plant and equipment		—			2,775			—			2,775
Impairment charges related to intangible assets		—			738			—			738
Total operating expenses		4,309			8,468			13,605			19,341
Operating income (loss)		159			(3,392	)		335			(3,625	)
Other (expense) income, net:
Interest expense		(109	)		(104	)		(345	)		(299	)
Miscellaneous income, net		61			35			192			60
Income (loss) from continuing operations before income taxes		111			(3,461	)		182			(3,864	)
Income tax benefit		(164	)		(61	)		(69	)		(8	)
Income (loss) from continuing operations		275			(3,400	)		251			(3,856	)
(Loss) income from discontinued operations, net of tax		(4	)		2			82			(1	)
Net income (loss)	$	271		$	(3,398	)	$	333		$	(3,857	)
Basic income (loss) per share:
Continuing operations	$	0.85		$	(10.66	)	$	0.78		$	(12.00	)
Discontinued operations		(0.01	)		0.01			0.26			—
Basic income (loss) per share	$	0.84		$	(10.65	)	$	1.04		$	(12.00	)
Diluted income (loss) per share:
Continuing operations	$	0.83		$	(10.66	)	$	0.76		$	(12.00	)
Discontinued operations		(0.01	)		0.01			0.25			—
Diluted income (loss) per share	$	0.82		$	(10.65	)	$	1.01		$	(12.00	)
Basic shares used in calculation		322.8			319.1			321.6			321.4
Diluted shares used in calculation		329.8			319.1			329.0			321.4

MCI, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three-Month Periods Ended September 30, 2005 and June 30, 2005
(In Millions, Except Per Share Data)

	Three-Month Period Ended
	September 30, 2005			June 30, 2005
Revenues	$	4,468		$	4,683
Operating expenses:
Access costs		2,369			2,512
Costs of services and products		602			616
Selling, general and administrative		1,033			1,169
Depreciation and amortization		305			325
Total operating expenses		4,309			4,622
Operating income		159			61
Other (expense) income, net:
Interest expense		(109	)		(116	)
Miscellaneous income, net		61			98
Income from continuing operations before income taxes		111			43
Income tax benefit		(164	)		(24	)
Income from continuing operations		275			67
Loss from discontinued operations, net of tax		(4	)		(3	)
Net income	$	271		$	64
Basic income (loss) per share:
Continuing operations	$	0.85		$	0.21
Discontinued operations		(0.01	)		(0.01	)
Basic income per share	$	0.84		$	0.20
Diluted income (loss) per share:
Continuing operations	$	0.83		$	0.20
Discontinued operations		(0.01	)		(0.01	)
Diluted income per share	$	0.82		$	0.19
Basic shares used in calculation		322.8			321.3
Diluted shares used in calculation		329.8			329.4

MCI, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2005 and December 31, 2004
(In Millions, Except Share Data)

	As of September 30, 2005			As of December 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	4,297		$	4,449
Marketable securities		1,077			1,055
Accounts receivable, net of allowance for doubtful accounts of $525 for 2005
and $729 for 2004		2,474			2,855
Other current assets		544			724
Assets held for sale		—			10
Total current assets		8,392			9,093
Property, plant and equipment, net of accumulated depreciation of $1,382 for 2005 and $512
for 2004		6,122			6,259
Investments		21			116
Intangible assets, net of accumulated amortization of $181 for 2005 and $59 for 2004		1,001			991
Other assets		604			601
	$	16,140		$	17,060
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	523		$	784
Accrued access costs		1,243			1,491
Current portion of long-term debt		23			24
Accrued interest		211			93
Deferred income taxes		438			598
Other current liabilities		2,638			3,198
Liabilities of assets held for sale		—			15
Total current liabilities		5,076			6,203
Long-term debt, excluding current portion		5,887			5,909
Other liabilities		671			718
Commitments and contingencies
Shareholders’ equity:
MCI common stock, par value $0.01 per share; authorized: 3,000,000,000 shares; issued and
outstanding: 327,923,027 shares for 2005 and 319,557,905 shares for 2004		3			3
Additional paid-in capital		8,331			8,365
Deferred stock-based compensation		(131	)		(114	)
Accumulated deficit		(3,669	)		(4,002	)
Accumulated other comprehensive loss		(28	)		(22	)
Total shareholders’ equity		4,506			4,230
	$	16,140		$	17,060

MCI, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine-Month Periods Ended September 30, 2005 and 2004
(In Millions)

	Nine-Month Period Ended September 30,
	2005			2004
OPERATING ACTIVITIES
Net income (loss)	$	333		$	(3,857	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		958			1,583
Impairment charges related to property, plant and equipment and intangible assets		—			3,513
Net realized gain on sale of investments		(30	)		(5	)
Gain on disposal of discontinued operations		(82	)		(9	)
Bad debt provision		250			514
Deferred income tax benefit		(159	)		(98	)
Amortization of debt discount		—			114
Stock-based compensation expense		47			23
Other		9			(17	)
Changes in assets and liabilities:
Accounts receivable		139			300
Other current assets		51			92
Non current assets		10			38
Accounts payable and accrued access costs		(450	)		(935	)
Other current liabilities		(310	)		(843	)
Other liabilities		(2	)		11
Net cash provided by operating activities		764			424
INVESTING ACTIVITIES
Additions to property, plant and equipment		(870	)		(650	)
Proceeds from sale of property, plant and equipment and intangible assets		75			39
Purchases of marketable securities		(1,938	)		—
Proceeds from sale of marketable securities and investments		1,934			9
Proceeds from sale of an equity investment and assets held for sale		186			581
Cash paid for acquisitions, net of cash received		(189	)		(13	)
Other		8			—
Net cash used in investing activities		(794	)		(34	)
FINANCING ACTIVITIES
Principal repayments on debt		(24	)		(38	)
Dividends paid on common stock		(130	)		(127	)
Cash restricted for letters of credit		3			(141	)
Other		29			(59	)
Net cash used in financing activities		(122	)		(365	)
Net change in cash and cash equivalents		(152	)		25
Net change in cash and cash equivalents from discontinued operations		—			(615	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		4,449			6,178
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	4,297		$	5,588

MCI, INC. AND SUBSIDIARIES

SEGMENT RESULTS
For the Three-Month Periods Ended September 30, 2005, June 30, 2005, and September 30, 2004
(In Millions)

	Three-Month Period Ended September 30, 2005
		Enterprise Markets			U.S. Sales & Service			International & Wholesale Markets			Total
Revenues:
Voice	$	418		$	1,340		$	843		$	2,601
Data		549			320			327			1,196
Internet		179			226			266			671
Total revenues		1,146			1,886			1,436			4,468
Costs of sales and services		738			1,138			1,095			2,971
Selling, general and administrative expenses		259			538			236			1,033
Depreciation and amortization expenses		73			134			98			305
Operating income	$	76		$	76		$	7		$	159
	Three-Month Period Ended June 30, 2005
		Enterprise Markets			U.S. Sales & Service			International & Wholesale Markets			Total
Revenues:
Voice	$	446		$	1,420		$	936		$	2,802
Data		547			330			337			1,214
Internet		173			220			274			667
Total revenues		1,166			1,970			1,547			4,683
Costs of sales and services		759			1,184			1,185			3,128
Selling, general and administrative expenses		274			597			298			1,169
Depreciation and amortization expenses		78			140			107			325
Operating income (loss)	$	55		$	49		$	(43	)	$	61
	Three-Month Period Ended September 30, 2004
		Enterprise Markets			U.S. Sales & Service			International & Wholesale Markets			Total
Revenues:
Voice	$	449		$	1,661		$	1,006		$	3,116
Data		576			378			353			1,307
Internet		157			182			314			653
Total revenues		1,182			2,221			1,673			5,076
Costs of sales and services		712			1,174			1,323			3,209
Selling, general and administrative expenses		238			728			287			1,253
Depreciation and amortization expenses		127			228			138			493
Impairment charges		870			1,627			1,016			3,513
Operating loss	$	(765	)	$	(1,536	)	$	(1,091	)	$	(3,392	)

MCI, INC. AND SUBSIDIARIES

SEGMENT RESULTS
For the Nine-Month Periods Ended September 30, 2005 and 2004
(In Millions)

	Nine-Month Period Ended September 30, 2005
		Enterprise Markets			U.S. Sales & Service			International & Wholesale Markets			Total
Revenues:
Voice	$	1,317		$	4,256		$	2,733		$	8,306
Data		1,642			1,013			1,001			3,656
Internet		510			637			831			1,978
Total revenues		3,469			5,906			4,565			13,940
Costs of sales and services		2,251			3,489			3,512			9,252
Selling, general and administrative expenses		804			1,760			831			3,395
Depreciation and amortization expenses		229			420			309			958
Operating income (loss)	$	185		$	237		$	(87	)	$	335
	Nine-Month Period Ended September 30, 2004
		Enterprise Markets			U.S. Sales & Service			International & Wholesale Markets			Total
Revenues:
Voice	$	1,363		$	5,146		$	3,165		$	9,674
Data		1,716			1,211			1,112			4,039
Internet		494			547			962			2,003
Total revenues		3,573			6,904			5,239			15,716
Costs of sales and services		2,204			3,733			4,134			10,071
Selling, general and administrative expenses		804			2,398			972			4,174
Depreciation and amortization expenses		404			664			515			1,583
Impairment charges		870			1,627			1,016			3,513
Operating loss	$	(709	)	$	(1,518	)	$	(1,398	)	$	(3,625	)