-----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, E3iSBYDhJcVlu9P0ggHWzUFndGLBH8uza6y31N16TYE/N87St5kuxn19SEHBQz4B feraTyIcAPV3Jnxz+L+low== 0000950138-99-000033.txt : 19990215 0000950138-99-000033.hdr.sgml : 19990215 ACCESSION NUMBER: 0000950138-99-000033 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990212 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: OZEMAIL LTD CENTRAL INDEX KEY: 0001013742 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-48161 FILM NUMBER: 99534248 BUSINESS ADDRESS: STREET 1: LOCKED BOG 5678 CITY: ST LEONARDS 2065 SYD STATE: C3 BUSINESS PHONE: 6129433240 MAIL ADDRESS: STREET 1: LOCKED BAG 5678 STREET 2: 2065 ST LEONARDS CITY: NSW AUSTRALIA STATE: C3 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MCI WORLDCOM INC 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: SC 13D/A BUSINESS ADDRESS: STREET 1: 515 EAST AMITE ST CITY: JACKSON STATE: MS ZIP: 39201-2702 BUSINESS PHONE: 6013608600 FORMER COMPANY: FORMER CONFORMED NAME: WORLDCOM INC /GA/ DATE OF NAME CHANGE: 19970127 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 SC 13D/A 1 AMENDMENT NO. 7 TO SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- AMENDMENT NO. 6 to SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND AMENDMENT NO. 7 TO SCHEDULE 13D --------------- OZEMAIL LIMITED (ACN # 066 387 157) (NAME OF SUBJECT COMPANY) UUNET HOLDINGS AUSTRALIA PTY LIMITED UUNET TECHNOLOGIES, INC. MCI WORLDCOM, INC. (BIDDER) --------------- ORDINARY SHARES AND AMERICAN DEPOSITARY SHARES, EACH REPRESENTING 10 ORDINARY SHARES (TITLE OF CLASS OF SECURITIES) --------------- [NONE] (ORDINARY SHARES) [692674104] (AMERICAN DEPOSITARY SHARES) (CUSIP NUMBER OF CLASS OF SECURITIES) --------------- CHARLES T. CANNADA SENIOR VICE PRESIDENT, CORPORATE DEVELOPMENT MCI WORLDCOM INC. 515 EAST AMITE STREET JACKSON, MISSISSIPPI 39201 (601) 360-8600 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER) --------------- WITH COPIES TO: R. RANDALL WANG, ESQ. MARTINA W. KNEE, ESQ. BRYAN CAVE LLP UUNET TECHNOLOGIES, INC. ONE METROPOLITAN SQUARE 3060 WILLIAMS DRIVE SUITE 3600 FAIRFAX, VIRGINIA 22031 ST. LOUIS, MISSOURI 63102 (703) 206-5600 (314) 259-2000 Page 1 of 8 pages Exhibit Index is located on page 7. ================================================================================ Amendment No. 6 to 14D-1 CUSIP NO. 692674104 Page 2 of 8 Pages - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS UUNET HOLDINGS AUSTRALIA PTY LIMITED (00-00000000) - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS* WC & BK - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) NOT APPLICABLE [_] - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION NEW SOUTH WALES, AUSTRALIA - ------------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 21,863,174 - ------------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES* NOT APPLICABLE [_] - ------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 14.9% - ------------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! Amendment No. 6 to 14D-1 CUSIP NO. 692674104 Page 3 of 8 Pages - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS UUNET TECHNOLOGIES, INC. 54-1543611 - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS* WC & BK - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) NOT APPLICABLE [_] - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ------------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 21,863,174 - ------------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES* NOT APPLICABLE [_] - ------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 14.9% - ------------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! Amendment No. 6 to 14D-1 CUSIP NO. 692674104 Page 4 of 8 Pages - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS MCI WORLDCOM, INC. 58-1521612 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS* WC & BK - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) NOT APPLICABLE [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION GEORGIA - -------------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 21,863,174 - -------------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES* NOT APPLICABLE [_] - -------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 14.9% - -------------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! Amendment No. 6 to 14D-1 CUSIP NO. 692674104 Page 5 of 8 Pages This Statement amends and supplements the combined Tender Offer Statement on Schedule 14D-1 and Amendment No. 1 to Schedule 13D filed with the Securities and Exchange Commission on January 7, 1999, which was amended on January 20, 1999, January 27, 1999, February 2, 1999, February 3, 1999 and February 9, 1999 (the "Schedule 14D-1"), and relates to the offer by UUNET Holdings Australia Pty Limited, a company incorporated in New South Wales, Australia ("Purchaser") and a wholly owned subsidiary of UUNET Technologies, Inc., a Delaware corporation ("Intermediate"), which is, in turn, a wholly-owned subsidiary of MCI WORLDCOM, Inc., a Georgia corporation ("Parent"), to purchase all outstanding: (a) ordinary shares (the "Shares") of OzEmail Limited, a corporation incorporated under the laws of the State of New South Wales, Australia (the "Company"), and (b) American Depositary Shares ("ADSs"), each representing 10 Ordinary Shares (the Shares and the ADSs collectively, the "Securities"), of the Company, at a price of US$2.20 per Share and US$22.00 per ADS, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 8, 1999 (Sydney time (January 7, 1999, New York time)), a copy of which was attached and filed with the Schedule 14D-1 as Exhibit (a)(1) thereto and (i) in the case of Shares, in the related Acceptance and Transfer Form, a copy of which was attached and filed with the Schedule 14D-1 as Exhibit (a)(2) thereto and (ii) in the case of ADSs, in the related Letter of Transmittal, a copy of which was attached and filed with the Schedule 14D-1 as Exhibit (a)(3) thereto (which Offer to Purchase, Acceptance and Transfer Form and Letter of Transmittal, as amended from time to time, together constitute the "Offer"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Schedule 14D-1. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. See Below. ITEM 10. ADDITIONAL INFORMATION. Item 9 and Item 10(f) are hereby amended and supplemented by the following: "On February 11, 1999 (Jackson, MS time) MCI WorldCom issued two press releases announcing (1) its earnings for the 1998 fiscal year and (2) a series of agreements with Electronic Data Systems Corp. ("EDS") relating to the outsourcing of certain services and EDS agreeing to acquire MCI Systemhouse, an IT services provider, for $1.65 billion in cash. Such press releases are filed as exhibits (a)(17) and (a)(18) and incorporated herein by reference. Section 8 of the Offer to Purchase ("Certain Information Concerning Purchaser, Intermediate, And MCI WorldCom") is hereby amended and supplemented by the addition of the following paragraph immediately after the last paragraph of the subsection entitled "MCI WorldCom": "On February 11, 1999 (Jackson, MS time) MCI WorldCom issued two press releases announcing (1) its earnings for the 1998 fiscal year and (2) a series of agreements with Electronic Data Systems Corp. ("EDS") relating to the outsourcing of certain services and EDS agreeing to acquire MCI Systemhouse, an IT services provider, for $1.65 billion in cash. Such press releases are filed as exhibits (a)(17) and (a)(18) and incorporated herein by reference." ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. Item 11 is hereby amended and supplemented by the addition of the following paragraph thereto: "(a)(17) News Release dated February 11, 1999 (Jackson, MS time), issued by Parent." "(a)(18) News Release dated February 11, 1999 (Jackson, MS time), issued by Parent." The undersigned hereby agree to jointly file a statement on Schedule 14D-1 and Schedule 13D, together with any amendments thereto, with the SEC pursuant to the requirements of Rule 14d-1 and Rule 13d-1 under the Securities Exchange Act of 1934, as amended. Amendment No. 6 to 14D-1 CUSIP NO. 692674104 Page 6 of 8 Pages SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: February 11, 1999 UUNET Holdings Australia Pty Limited By: * Name: Charles T. Cannada Title: Director UUNET Technologies, Inc. By: * Name: Mark F. Spagnolo Title: President and Chief Executive Officer MCI WORLDCOM, Inc. By: * Name: Scott D. Sullivan Title: Chief Financial Officer and Secretary *By: /s/ Charles T. Cannada --------------------------------------- Name: Charles T. Cannada Title: Authorized Representative and Attorney- in-Fact under Powers of Attorney filed with the original Schedule 14D-1 EXHIBIT INDEX *(a)(1) Offer to Purchase, dated January 8, 1999 (Sydney, Australia time) (January 7, 1999, New York time). *(a)(2) Acceptance and Transfer Form *(a)(3) Letter of Transmittal. *(a)(4) Notice of Guaranteed Delivery. *(a)(5) Letter from Merrill Lynch to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees holding OzEmail ADSs. *(a)(6) Letter to ADS Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees holding OzEmail ADSs. *(a)(7) Form of Summary Advertisement as published in the Wall Street Journal on January 7, 1999 (New York City time). *(a)(8) News Release dated January 7, 1999 (Jackson, MS time), issued by Parent. (a)(9) News Release dated December 13, 1998 (Jackson, MS time) and December 14, 1998 (Sydney, Australia time), issued by Parent (incorporated by reference to Schedule 1 to the Subscription Agreement, which appears as Exhibit 99.1 to Schedule 13D dated December 21, 1998 filed by MCI WorldCom, UUNET Technologies, Inc. and UUNET Holdings Australia Pty Limited with respect to OzEmail). (a)(10) News Release dated December 14, 1998 (Sydney, Australia time), issued by the Company (incorporated by reference to Schedule 2 to the Subscription Agreement, which appears as Exhibit 99.1 to Schedule 13D dated December 21, 1998 filed by MCI WorldCom, UUNET Technologies, Inc. and UUNET Holdings Australia Pty Limited with respect to OzEmail). *(a)(11) News Release dated January 20, 1999 (Jackson, MS time), issued by Parent. *(a)(12) Letter from Parent to Shareholders/ADS holders dated 27 January, 1999 (Sydney, Australia time). *(a)(13) Notice pursuant to Section 663(3) of the Corporation Law in the form filed by Purchaser with the Australian Stock Exchange on February 1, 1999. *(a)(14) News Release dated February 8, 1999 (Jackson, MS time), issued by Parent. *(a)(15) Letter from Parent to Shareholders/ADS holders dated 9 February, 1999 (Sydney, Australia time). *(a)(16) Notice of Variation pursuant to Section 657 of the Corporation Law in the form filed by Purchaser with the Australian Stock Exchange on 9 February, 1999 (Sydney, Australia time). (a)(17) News Release dated February 11, 1999 (Jackson, MS time), issued by Parent. (a)(18) News Release dated February 11, 1999 (Jackson, MS time), issued by Parent. (b)(1) Amended and Restated Facility A Revolving Credit Agreement among MCI WorldCom (borrower), NationsBank, N.A. (Arranging Agent and Administrative Agent), NationsBanc Montgomery Securities LLC (Lead Arranger), Bank of America NT & SA, Barclays Bank PLC, The Chase Manhattan Bank, Citibank, N.A., Morgan Guaranty Trust Company of New York, and Royal Bank of Canada (Co-Syndication Agents) and the lenders named therein dated as of August 6, 1998 (incorporated herein by reference to Exhibit 10.1 to MCI WorldCom's Current Report on Form 8-K dated August 6, 1998 (filed August 7, 1998) (File No. 0-11258)). (b)(2) 364-day Revolving Credit and Term Loan Agreement among MCI WorldCom (borrower), NationsBank, N.A. (Arranging Agent and Administrative Agent), NationsBanc Montgomery Securities LLC (Lead Arranger), Bank of America NT & SA, Barclays Bank PLC, The Chase Manhattan Bank, Citibank, N.A., Morgan Guaranty Trust Company of New York, and Royal Bank of Canada (Co-Syndication Agents) and the lenders named therein dated August 6, 1998 (incorporated herein by reference to Exhibit 10.3 to MCI WorldCom's Current Report on Form 8-K dated August 6, 1998 (filed August 7, 1998) (File No. 0-11258)). (c) Subscription Agreement, dated December 11, 1998, by and between the Purchaser and the Company (incorporated by reference to Exhibit 99.1 to Schedule 13D dated December 21, 1998 filed by MCI WorldCom, UUNET Technologies, Inc. and UUNET UUNET Holdings Australia Pty Limited with respect to OzEmail). (d) [Not applicable.] (e) [Not applicable.] (f) [Not applicable.] *(g)(1) Powers of Attorney (contained on the signature pages to the original Schedule 14D-1, dated and filed on January 7, 1999). * Previously filed EX-99.(A)(17) 2 PRESS RELEASE AND FINANCIAL STATEMENTS Exhibit (a)(17) MCI WORLDCOM FOURTH QUARTER RESULTS/PAGE 2 [GRAPHIC OMITTED] FOR IMMEDIATE RELEASE Contacts: News Media: Frank Walter Investors: Gary Brandt (601) 360-8750 (601) 360-8544 800-644-NEWS MCI WORLDCOM REPORTS FOURTH QUARTER 1998 RESULTS Quarterly Revenue Tops $8 Billion EPS of $0.23 for Quarter and $0.81 for Year MCI Systemhouse Sold to EDS for $1.65 Billion JACKSON, MS (February 11, 1999) - MCI WORLDCOM, Inc. (NASDAQ:WCOM) today reported fourth quarter revenues, excluding Embratel, of $8.0 billion which was quadruple the fourth quarter 1997 revenues of $2.0 billion. Robust internal growth combined with the substantial impact of both the MCI merger and the CNS/ANS transactions included for the fourth quarter 1998, drove the year-over-year increase in reported revenue. Including Embratel, total fourth quarter revenues were $9.0 billion. On a pro forma and comparative basis, assuming the acquisitions of CNS, ANS and MCI occurred as of the beginning of the year for both periods -- which is indicative of internal growth -- communications services revenues, which comprises voice, data, international and Internet, increased 17 percent from $6.5 billion to $7.6 billion. Traffic, on a pro forma basis, increased 13 percent year-over-year. "We have intensified our focus on what we do best -- provide core communications services. Including today's announcement with EDS, over the past year we have shed virtually all of our non-communications services businesses," said Bernard J. Ebbers, president and chief executive officer of MCI WorldCom. "Strong revenue gains across all communications services combined with the first phases of network and SG&A synergies drove the stronger than anticipated earnings performance. We accelerated our capital spending in the fourth quarter particularly in international and next generation network deployment which should not only sustain future revenue growth but also drive significant cost reductions across all communications services," added Ebbers. Reported net income for the fourth quarter 1998, excluding Embratel, was $428 million, or $0.23 per common share, compared with reported net income of $95 million, or $0.10 per common share, in the fourth quarter of 1997. Reported net income for the full year 1998, excluding the merger related charges, was $1.07 billion or $0.81 per common share. After merger related and R&D charges from previous quarters, the net loss for the full year 1998 was $2.7 billion. FOURTH QUARTER AND FULL YEAR PRO FORMA REVENUES For internal growth comparison purposes, the following pro forma illustration includes CNS, ANS and MCI from the beginning of the earliest period presented. These tables do not include Embratel or the sold InternetMCI division. The impact of discontinued or sold businesses including SHL have been indicated in prior year figures to reflect revenue growth on a comparative basis. These amounts appear in the "Recasted Revenues" line, which now are virtually the same as the Communications Services line.
FOURTH QUARTER FULL YEAR ($ MILLIONS) Pro Forma Revenues 1998 1997 Change 1998 1997 Change ---- ---- ------ ---- ---- ------ Voice $4,997 $4,641 8% $19,480 $17,932 9% Data 1,616 1,255 29% 5,827 4,550 28% Internet 658 408 61% 2,246 1,325 69% International 328 211 55% 1,130 726 56% ----- ------ --- ----- ------- --- Communications Services $7,599 $6,515 17% $28,683 $24,533 17% IT Services and Other 410 513 (20%) 1,733 1,999 (13%) ------ ------ ----- ------- ------- ---- Total Revenues $8,009 $7,028 14% $30,416 $26,532 15% ------ ------ ----- ------- ------- ---- Business Sold: MFS Network Technologies - (71) - (64) (262) - SHL and Other (405) (433) - (1,620) (1,537) - Operator Services - - - - (69) - Broadcast Operations - - - - (40) - ------ ------ ----- ------- ------- ---- Recasted Revenues $7,604 $6,524 17% $28,732 $24,624 17% ------ ------ ----- ------- ------- ----
COMMUNICATIONS SERVICES MCI WorldCom reported pro forma fourth quarter communications services revenues, excluding Embratel, of $7.6 billion and year-to-date communications services revenues of $28.7 billion, in both cases, an increase of 17 percent, as compared with the same periods in 1997. Voice revenues, representing 62 percent of total revenues grew eight percent to $5.0 billion, for the fourth quarter. On a full year basis, voice revenue was $19.5 billion, up nine percent as compared with $17.9 billion for the comparable period in 1997. Growth in voice traffic is particularly evident in the business markets where MCI WorldCom's ability to provide competitive prices and services over a high quality network is driving strong growth from commercial sales. On the consumer side, the company continues to market a range of integrated services, promote transaction brands and leverage partner marketing programs to improve customer retention. Local voice revenues grew over 80 percent for the full year 1998 as compared with 1997 and represents two percent of voice revenues. Data revenues increased 29 percent to $1.6 billion for the fourth quarter 1998. Full year data revenues of $5.8 billion were up 28 percent as compared with 1997. Virtual data services, including frame relay and ATM services, combined with continued strength in private line sales are driving overall revenue growth. Rapidly growing demand for higher bandwidth services is driving local data revenue growth of over 40 percent for the full year 1998 as compared with 1997. This growth, correlating to the jump in local building connections and a 65 percent increase in voice grade equivalents, is an early indication of the impact that electronic commerce and other advanced data applications are having on data communications services revenues. Internet revenues increased 61 percent and 69 percent to $658 million and $2.2 billion for the fourth quarter and full year ended December 31, 1998, respectively. Revenues from MCI's former Internet business have been excluded in all periods because of the divestiture. UUNET continues to be an industry leader in network deployment and revenue growth, and has begun to leverage the systems integration expertise provided by MCI WorldCom Advanced Networks (CNS/ANS) for large corporate intranet applications. These organizations will all take advantage of the strong UUNET global identity in 1999. International revenues were up 55 percent to $328 million for the fourth quarter and up 56 percent to $1.1 billion for the full year ended December 31, 1998 as compared with the same periods in 1997, respectively. Significant percentage gains in international revenues are being achieved in continental Europe in response to our rapidly expanding networks and sales effort. The pan-European networks and national networks in the U.K., France, Germany and Belgium are driving a much higher proportion of enhanced data sales, internationally. This revenue mix shift is contributing to the improving margins, in spite of the competitive pricing environment. INFORMATION TECHNOLOGY AND OTHER IT Services, which consists primarily of the operations of MCI Systemhouse, includes equipment deployment, consulting and systems integration and outsourcing services. These revenues decreased 20 percent and 13 percent to $410 million and $1.7 billion for the 3 months and full year ended December 31, 1998 respectively, over comparable periods in 1997. Excluding the impact of Canadian exchange rates and the businesses previously exited by MCI Systemhouse (SHL), revenues were essentially flat year-over-year and up a strong 12 percent sequentially from third quarter 1998. Earlier today, MCI WorldCom and EDS Corporation announced the signing of definitive agreements to sell MCI Systemhouse (SHL) to EDS for $1.65 billion. In addition, both companies agreed to significant outsourcing contracts which will capitalize on the individual strengths of each company. The definitive agreements for these outsourcing contracts will be finalized in the second quarter of 1999. GLOBAL INVESTMENTS Embratel On July 29, 1998, MCI WorldCom acquired a 52 percent voting interest and 19 percent economic interest in Embratel Participacoes S.A. (Embratel), Brazil's only facilities-based national communications provider. At closing $900 million of the purchase price was paid in U.S. dollars with the remaining purchase price (approximately 60%) to be paid in installments of local currency prior to July 29, 2000. Embratel results have been consolidated with MCI WorldCom from the date of the MCI merger closing on September 14, 1998. On a standalone basis, Embratel pro forma financials are as follows:
THIRD QUARTER FOURTH QUARTER 3 months ended 3 months ended September 30, 1998 % December 31 , 1998 % ------------------ --- ------------------ --- ($ in millions) Revenues $932 100% $1,008 100% EBITDA 245 26% 262 26% Operating Income 80 9% 112 11% Net Income Before Minority Interest 56 6% 96 10% Minority Interest 51 5% 82 9% ----- ---- ------ ---- Net Income to MCI WorldCom $ 5 1% $ 14 1% ----- ---- ------ ----
Avantel Avantel, MCI WorldCom's Mexican joint venture company, has close to 10 percent of the addressable long distance market. The company continues to expand its base in the business market, winning a number of key new corporate and government contracts and growing its share of higher-margin services such as data and Internet services. Avantel continues to work closely with Mexican regulatory bodies to reduce interconnection charges and discriminatory practices that are hindering true competition in the Mexican telecommunications market. For the fourth quarter, equity losses in Avantel were approximately $21 million. OUTLOOK Commenting on the company's outlook, Ebbers added: "With the merger integration efforts successfully underway and our heightened focus on our core communications services, we are confident in our ability to deliver on our financial targets in 1999 and beyond. "Our capital investments in new markets, combined with technology advances which will continue to drive down our network costs as a percent of revenues, give us confidence in our ability to grow revenues profitably. We are attacking new and fast-growing markets such as the $100 billion U.S. local market, the $500 billion international market and the over $50 billion rapidly expanding data and Internet market. In this golden age of communications, MCI WorldCom, with just four percent of the global market, is well positioned in the fastest growing segments of the business," said Ebbers. FORWARD LOOKING STATEMENT Except for the historical information contained herein, this news release may be deemed to include forward-looking statements that involve risk and uncertainty, including financial, regulatory environment and trend projections. Although the company believes that its expectations are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. The important factors that could cause actual results to differ materially from those in the forward-looking statements herein (the "Cautionary Statements") include, without limitation, the company's degree of financial leverage, risks associated with debt service requirements and interest rate fluctuations, risks associated with acquisitions and the integration thereof, risks of international business, dependence on availability of transmission facilities, regulation risks including the impact of the Telecom Act, contingent liabilities, and the impact of competitive services and pricing, as well as other risks referenced from time to time in the company's filings with the SEC. All subsequent written and oral forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. The company does not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. MCI WorldCom is a global leader in communications services with 1998 revenues of more than $30 billion and established operations in over 65 countries encompassing the Americas, Europe and the Asia-Pacific regions. MCI WorldCom is a premier provider of facilities-based and fully integrated local, long distance, international and Internet services. MCI WorldCom's global networks, including its state-of-the-art pan-European network and transoceanic cable systems, provide end-to-end high-capacity connectivity to more than 40,000 buildings worldwide. MCI WorldCom is traded on NASDAQ under WCOM. For more information on MCI WorldCom, visit the World Wide Web at www.wcom.com. MCI WORLDCOM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months ended December 31, 1997 and 1998 (Unaudited. In Millions, Except Per Share Data)
Pro Forma Reported Reported (excluding (excluding (including Reported Embratel) Embratel) Embratel) 4Q 1997 4Q 1997 4Q 1998 4Q 1998 ---------- -------------- ------------ ------------ Revenues: Voice $ 1,090 $ 4,641 $ 4,997 $ 4,997 Data 458 1,255 1,616 1,616 International 211 211 328 1,336 Internet 182 408 658 658 Communications services 1,941 6,515 7,599 8,607 Information technology and other 78 513 410 410 Total 2,019 7,028 8,009 9,017 Operating expenses: Line costs 981 3,628 3,750 4,276 Selling, general and administrative 425 2,419 2,188 2,408 Depreciation and amortization 258 934 950 1,100 Total 1,664 6,981 6,888 7,784 Operating income 355 47 1,121 1,233 Other income (expense): Interest expense (106) (289) (286) (286) Miscellaneous 8 (38) 1 6 Income (loss) before income taxes and minority interests 257 (280) 836 953 Provision for income taxes 155 11 393 414 Net income (loss) before minority intrerests 102 (291) 443 539 Minority interests (82) - - - Net income (loss) 102 (291) 443 457 Preferred dividends and distributions on Trust securities 7 22 15 15 Net income (loss) applicable to common shareholders $95 [313) $ 428 $ 442 Earnings (loss) per common share - Net income (loss) applicable to common shareholders: Basic $ .10 [0.18) $ 0.23 $ 0.24 Diluted $0.10 $ [0.18) $ 0.23 $ 0.23 Shares utilized in calculation: Basic 980 1,723 1,831 1,831 Diluted 1,044 1,723 1,894 1,894
MCI WORLDCOM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Year Ended December 31, 1997 and 1998 (Unaudited. In Millions, Except Per Share Data) Reported, Before Charges Reported, After Charges (excluding (including (including Reported Embratel) Embratel) Embratel) Year 1997 Year 1998 Year 1998 Year 1998 ---------- ------------- ----------- --------- Revenues: Voice $ 4,062 $ 9,243 $ 9,243 $ 9,243 Data 1,618 3,384 3,384 3,384 International 726 1,130 2,312 2,312 Internet 566 2,165 2,165 2,165 Communications services 6,972 15,922 17,104 17,104 Information technology and other 412 574 574 574 Total 7,384 16,496 17,678 17,678 Operating expenses: Line costs 3,764 7,763 8,380 8,416 Selling, general and administrative 1,626 4,032 4,291 4,312 Depreciation and amortization 976 2,017 2,200 2,200 In process research and development and other charges - - - 3,725 Total 6,366 13,812 14,871 18,653 Operating income (loss) 1,018 2,684 2,807 (975) Other income (expense): Interest expense (395) (634) (637) (637) Miscellaneous 40 28 41 41 Income (loss) before income taxes, extraordinary items and minority interests 663 2,078 2,211 (1,571) Provision for income taxes 416 977 1,002 876 Net income (loss) before extraordinary items and minority 247 1,101 1,209 (2,447) interests Extraordinary items, net of taxes of $0 in 1997 and $78 in 1998 (3) - - (129) Net income (loss) before minority interests 244 1,101 1,209 (2,576) Minority interests - - (93) (93) Net income (loss) 244 1,101 1,116 (2,669) Preferred dividends and distributions on Trust securities 26 31 31 31 Net income (loss) applicable to common shareholders $ 218 $ 1,070 $ 1,085 [2,700) Earnings (loss) per common share - Net income (loss) applicable to common shareholders before extraordinary items: Basic $ 0.23 $ 0.84 $ 0.85 [2.02) Diluted $ 0.22 $ 0.81 $ 0.83 [2.02) Extraordinary item $ - $ - $ - [0.10) Net income (loss) applicable to common shareholders: Basic $ 0.23 $ 0.84 $ 0.85 [2.12) Diluted $ 0.22 $ 0.81 $ 0.83 [2.12) Shares utilized in calculation: Basic 966 1,274 1,274 1,274 Diluted 997 1,330 1,330 1,274
MCI WORLDCOM, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS BEFORE CHARGES (Unaudited. In Millions, Except Per Share Data)
Pro Forma (Excluding Embratel) --------------------------------------------------------------------------- For the Quarter Ended --------------------------------------------------------------------------- March 31, June 30, Sept. 30, Dec. 31, Year 1998 1998 1998 1998 1998 ---------- ------------- ------------- ------------- ----------- Revenues: Voice $ 4,754 $ 4,822 $ 4,907 $ 4,997 $ 19,480 Data 1,304 1,387 1,520 1,616 5,827 International 230 270 302 328 1,130 Internet 474 525 589 658 2,246 Communication services 6,762 7,004 7,318 7,599 28,683 Information technology and other 490 477 356 410 1,733 Total 7,252 7,481 7,674 8,009 30,416 Operating expenses: Line costs 3,607 3,598 3,625 3,750 14,580 Selling, general and administrative 2,011 2,078 2,114 2,188 8,391 EBITDA 1,634 1,805 1,935 2,071 7,445 Depreciation and amortization 1,029 979 944 950 3,902 Operating income 605 826 991 1,121 3,543 Other income (expense): Interest expense (276) (284) (289) (286) (1,135) Miscellaneous 32 38 4 1 75 Income before income taxes 361 580 706 836 2,483 Income tax expense 170 272 332 393 1,167 Net income 191 308 374 443 1,316 Preferred dividends and distributions on Trust 22 21 15 15 73 securities Net income applicable to common shareholders $ 169 $ 287 $ 359 $ 428 $ 1,243 Earnings per common share: Basic $ 0.10 $ 0.16 $ 0.20 $ 0.23 $ 0.69 Diluted $ 0.10 $ 0.16 $ 0.19 $ 0.23 $ 0.67 Shares outstanding: Basic 1,744 1,782 1,822 1,831 1,795 Diluted 1,829 1,858 1,880 1,894 1,865
MCI WORLDCOM, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS BEFORE CHARGES (Unaudited. In Millions, Except Per Share Data) Pro Forma (Excluding Embratel) --------------------------------------------------------------------- For the Quarter Ended --------------------------------------------------------------------- March 31, June 30, Sept. 30 Dec. 31, Year 1997 1997 1997 1997 1997 --------- --------- --------- ------------ ----------- Revenues: Voice $ 4,402 $ 4,427 $ 4,462 $ 4,641 $ 17,932 Data 1,039 1,109 1,147 1,255 4,550 International 144 176 195 211 726 Internet 271 303 343 408 1,325 Communications services 5,856 6,015 6,147 6,515 24,533 Information technology and other 518 491 477 513 1,999 Total 6,374 6,506 6,624 7,028 26,532 Operating expenses: Line costs 3,174 3,267 3,781 3,628 13,850 Selling, general and administrative 1,755 1,721 1,927 2,419 7,822 EBITDA 1,445 1,518 916 981 4,860 Depreciation and amortization 749 788 859 934 3,330 Operating income 696 730 57 47 1,530 Other income (expense): Interest expense (270) (276) (282) (289) (1,117) Miscellaneous (20) (16) (23) (38) (97) Income (loss) before income taxes 406 438 (248) (280) 316 Income tax expense 242 267 17 11 537 Net income (loss) 164 171 (265) (291) (221) Preferred dividends and distributions on Trust securities 22 21 22 22 87 Net income (loss) applicable to common $ 142 $ 150 [287) [313) [308) shareholders Earnings (loss) per common share: Basic $ 0.09 $ 0.09 [0.17) [0.18) [0.18) Diluted $ 0.08 $ 0.09 [0.17) [0.18) [0.18) Shares outstanding: Basic 1,668 1,688 1,707 1,723 1,697 Diluted 1,754 1,773 1,707 1,723 1,697
MCI WORLDCOM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited. In Millions) Reported Reported (excluding (excluding Embratel) Embratel) Reported December 31, September 30, December 31, 1998 1998 1997 ------------ ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 999 $ 311 $ 155 Accounts receivable, net 4,810 4,896 1,241 Other current assets 3,031 1,649 478 Total current assets 8,840 6,856 1,874 Property and equipment, net 19,259 17,862 6,714 Goodwill and other intangibles, net 45,468 45,371 13,882 Other assets 6,626 6,588 1,126 $ 80,193 $ 6,677 $ 23,596 LIABILITIES AND SHAREHOLDERS' INVESTMENT Current liabilities: Short-term debt and current maturities of long-term debt $ 4,628 $ 4,125 $ 11 Other current liabilities 9,886 8,565 2,063 Total current liabilities 14,514 12,690 2,074 Long-term liabilities, less current portion: Long-term debt 14,345 14,259 7,413 Note payable - Embratel 1,315 1,342 - Other liabilities 4,226 3,377 308 Total long-term liabilities 19,886 18,978 7,721 Mandatorily redeemable preferred securities 798 750 - Total shareholders' investment $ 44,995 44,259 13,801 $ 80,193 $76,677 $23,596
EX-99.(A)(18) 3 EDS PRESS RELEASE Exhibit (a)(18) HEADLINE: EDS and MCI WorldCom Align to Capitalize on Global Electronic Business, Communications and Data Services Markets Companies Agree to Significant Outsourcing Agreements; EDS Purchases MCI Systemhouse for $1.65 Billion DATELINE: PLANO, Texas and JACKSON, Miss., Feb. 11 BODY: In one of the largest agreements of its kind, EDS and MCI WorldCom today announced a framework that positions the companies to seize opportunities in the converging global communications and computing markets. Each company and its customers will be better positioned to capitalize on the rapid growth in electronic business and global communications services. There are four key elements of the agreement: -- In a 10-year agreement, MCI WorldCom will outsource major portions of its information technology services to EDS. EDS will assume responsibility for significant applications development and maintenance services and virtually all of MCI WorldCom's infrastructure services. When finalized, this will represent the largest IT outsourcing agreement in the telecommunications industry to date, with revenues to EDS expected to range from $5-$7 billion over the life of the contract. -- EDS will outsource the bulk of its global network to MCI WorldCom, with MCI WorldCom handling end-to-end management of voice and data communications services on a preferred basis for EDS and its customers. This agreement is expected to approximate $6-$8.5 billion in revenues to MCI WorldCom over the next 10 years. -- EDS will acquire MCI Systemhouse for $1.65 billion in cash. The acquisition of Systemhouse, an IT services provider that delivered $1.7 billion in revenue in 1998, will enhance EDS' applications consulting and systems integration capabilities and rank the company among the largest information technology services providers in Canada. EDS believes it will achieve substantial synergies by integrating Systemhouse into its existing infrastructure. -- MCI WorldCom and EDS will capitalize on the fast-growing market for global communications and data services, including electronic business applications. The companies intend to develop networking solutions to business and government entities worldwide utilizing the global capabilities of both companies. The expanded services will complement MCI WorldCom's existing array of network services now offered to large corporate and government users. "Aligning with MCI WorldCom and its global telecommunications capabilities will enhance EDS' ability to serve our customers as they move into the digital world of electronic business," said Dick Brown, EDS chairman and CEO. "This relationship assures that both EDS and those we serve are positioned to capitalize on the cresting wave of global data and voice network services. "We are also enthusiastic about working with the people who will be joining EDS from MCI WorldCom and Systemhouse," Brown continued. "To us, today's announcement offers the best of all worlds -- new business, new capabilities, new customers, new markets, and new highly skilled and talented professionals." More than 12,000 employees primarily located in the U.S. and Canada are expected to transition into employment with EDS from MCI WorldCom and from Systemhouse. Approximately 1,000 EDS network employees from offices around the world will be offered employment with MCI WorldCom. "This agreement is a classic win-win," said John Sidgmore, MCI WorldCom vice chairman. "It allows both companies to grow their core businesses while creating synergies as each expands its global offerings. EDS offers MCI WorldCom proven IT and integration expertise, which will be key to our ability to maintain our technology leadership position as we continue to aggressively deploy facilities and expand globally." The MCI WorldCom IT outsourcing agreement names EDS as the company's preferred supplier of IT services. EDS will have responsibility for business process management for selected billing functions, defined applications development and maintenance, mainframe operations, desktop and help desk services and LAN support. The network agreement provides for MCI WorldCom to outsource EDS' network and establishes MCI WorldCom as EDS' preferred supplier of communications and network integration services. MCI WorldCom will have responsibility for voice, data and video transport, and other network services for EDS and many of the company's network customers. According to Brown, "network capabilities are increasingly important to companies that want to emerge as the business leaders of the 21st century. Our customers in all industries and in every geography are placing growing emphasis on advanced network capabilities and the development of electronic business applications. We intend to be there for them -- and our relationship with MCI WorldCom will play a major role in seeing that happen." The marketing relationship with EDS strengthens MCI WorldCom's existing wide area network outsourcing, design, implementation and management services. MCI WorldCom currently manages hundreds of networks for leading multinational companies and organizations worldwide such as the United States Postal Service, Nasdaq Stock Market, Inc. and the Independent System Operator and the Power Exchange. "This partnership brings together the leading players in communications and information technology, greatly enhancing our marketing muscle and allowing us access to new markets," noted Sidgmore. About MCI WorldCom MCI WorldCom is a global communications company with revenue of more than $30 billion and established operations in over 65 countries encompassing the Americas, Europe and the Asia-Pacific regions. MCI WorldCom is a premier provider of facilities-based and fully integrated local, long distance, international and Internet services. MCI WorldCom's global networks, including its state-of-the-art pan-European network and transoceanic cable systems, provide end-to-end high-capacity connectivity to more than 40,000 buildings worldwide. For more information on MCI WorldCom, visit the World Wide Web at http://www.mciworldcom.com. About Systemhouse MCI Systemhouse, the Network Enterprise Company(SM), is a global information technology services company. MCI Systemhouse is one of the industry's only single-source providers of convergence products and services to enable businesses' total networking, communications, and consulting and outsourcing needs. The company has 120 offices and approximately 9,000 professionals worldwide. With a comprehensive suite of network enabled IT solutions and services for the new millennium, MCI Systemhouse serves major corporate, mid-sized and public sector clients throughout North and South America, Europe and Asia. About EDS EDS has been a leader in the global information services industry for more than 35 years. The company delivers systems and technology expertise, management consulting, business process management and electronic business leadership. EDS, which reported revenues of $16.9 billion in 1998, offers solutions to improve the performance of more than 9,000 business and government clients in about 50 countries. The company's stock is traded on the New York Stock Exchange (NYSE: EDS) and the London Stock Exchange. Visit EDS via the Internet at http://www.eds.com. SOURCE MCI WorldCom Thursday, February 11, 1999. Reporters wishing to participate should call 1-888-469-1756 or 312-470-7212 by 8:20 AM EST. The pass code for the call is "global." Replay of the conference call will be available after 10:30 AM EST by calling 1-800-839-4171. CONTACT: Media: Jamie DePeau of MCI Worldcom, 202-887-3224 or 800-644-NEWS; or Virginia Brooks of EDS, or 972-605-6779, or virginia.brooksfeds.com; or Investors: Gary Brandt of MCI WorldCom, 601-360-8544 -----END PRIVACY-ENHANCED MESSAGE-----