-----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, K/o7hafHQnZTBNRC5+sIc8Uk6j7wYonjhGqH7H45nFv5lG2bn2uTc82pk6pHjkAU ql1Fv+zAZlczHO2w4+NqHg== 0001047469-97-002492.txt : 19971105 0001047469-97-002492.hdr.sgml : 19971105 ACCESSION NUMBER: 0001047469-97-002492 CONFORMED SUBMISSION TYPE: DFAN14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19971104 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: 97707018 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. ) 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 /X/ Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-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: ------------------------------------------------------------------------ [WorldCom Logo] FOR IMMEDIATE RELEASE Contacts: News Media: Josh Howell Investors: Gary Brandt (601) 360-8750 (601) 360-8544 WORLDCOM REPORTS THIRD QUARTER 1997 RESULTS CORE REVENUE UP 34 PERCENT ON 38 PERCENT VOLUME GROWTH OPERATING INCOME UP 293 PERCENT TRANSACTIONS WITH COMPUSERVE/ANS AND BROOKS FIBER ON TRACK MEETINGS WITH MCI AND BT IN PROGRESS JACKSON, MS (October 30, 1997) - WorldCom, Inc. (WorldCom) today reported third quarter revenues of $1.90 billion, a 66 percent increase over third quarter 1996 revenues of $1.14 billion. Strong internal growth across all Communications Services, combined with the benefits of the MFS Communications Company (MFS) merger completed December 31, 1996, contributed to the impressive year-over-year gains. On a reported basis, long distance traffic for the third quarter increased 57 percent over the previous year. On a pro forma basis - which is indicative of internal growth - core Communications Services revenues increased 34 percent on industry leading volume growth of 38 percent. Reported earnings for the third quarter 1997 - after taking into account the increased non-cash amortization of goodwill related to the MFS merger - was $106 million or $0.12 earnings per common share compared with a pro forma loss of $60 million or $0.07 loss per share for the third quarter 1996. Reported earnings for the third quarter 1996, which does not include the purchase accounting impact of the MFS merger, was $109 million or $0.27 per share. Operating income for the third quarter 1997 was $310 million - an increase of 293 percent compared with $79 million on a pro forma basis for the third quarter of 1996. YEAR-TO-DATE HIGHLIGHTS For the nine months ended September 30, 1997, WorldCom reported revenues of $5.35 billion, up 65 percent from reported revenues of $3.25 billion for the first nine months of 1996. Net income before preferred dividends for 1997 year-to-date was $241 million, or $0.25 per share, compared with reported net income before non-recurring charges of $296 million, or $0.73 per share for the first nine months of 1996. Fully diluted earnings per common share are $0.25 compared with a pro forma loss per share of $0.25, before non-recurring charges, for the same period in 1996. Year-to-date operating income for 1997 was $720 million, as compared with $646 million on a reported basis for 1996 before non-recurring charges, and $205 million on a pro forma basis, before non-recurring charges, for the first nine months of 1996. 2 MANAGEMENT'S COMMENTS ON THE THIRD QUARTER "The strength in our third quarter financial results is cause for excitement," said Bernard J. Ebbers, president and chief executive officer of WorldCom. "Particularly strong revenue gains were evident across all of our newer business segments such as Internet, international and domestic private line, which is indicative of the trends we see in the rapidly changing marketplace. We are beginning to reap the rewards of our end-to-end facilities-based strategy as data begins to overtake voice in network capacity utilization. "Our industry-leading growth in domestic switched revenues is due in part to continued success in wholesale, competitive pricing on long distance and, increasingly, a 'one stop shopping' solution for our predominately business customers," said Ebbers. "I'm particularly pleased that we continue to demonstrate impressive growth at the same time we are engaged in important merger discussions and analyses. It is a tribute to the depth and strength of our organization, the entrepreneurial spirit of our people, and our experience and track record of managing successful transactions. We believe our results underscore our core management and employee strength which has predominately come from successful mergers over the years. In fact, most of our management team has joined us through mergers and stayed on to help build our company," said Ebbers. COMMUNICATIONS SERVICES - PRO FORMA COMPARISON WorldCom's third quarter highlights include the following year-over-year internal growth in core revenues and the impact of the sale of the operator services and broadcast divisions on total revenues.
THIRD QUARTER YEAR-TO-DATE ($ MILLIONS) Actual Pro Forma Actual Pro Forma Revenues 1997 1996 Change 1997 1996 Change ---- ---- ------ ---- ---- ------ Domestic switched $1,009.4 $ 842.6 20% $2,928.1 $2,410.7 22% Domestic private line 406.3 299.4 36% 1,130.7 838.9 35% International 219.9 121.6 81% 580.7 316.3 84% Internet 147.1 69.7 111% 384.1 162.7 136% -------- -------- ---- -------- -------- ------- CORE REVENUES $1,782.7 $1,333.3 34% $5,023.6 $3,728.6 35% -------- -------- ---- -------- -------- ------- Other 118.5 121.6 (3%) 324.9 304.5 7% -------- -------- ---- -------- -------- ------- TOTAL REVENUES $1,901.2 $1,454.9 31% $5,348.5 $4,033.1 33% -------- -------- ---- -------- -------- ------- Businesses sold: Operator Services (17.4) (27.8) (37%) (69.5) (84.8) (18%) Broadcast Operations (11.5) (16.1) (28%) (40.2) (48.0) (16%) -------- -------- ---- -------- -------- ------- RECASTED REVENUES $1,872.3 $1,411.0 33% $5,238.8 $3,900.3 34% -------- -------- ---- -------- -------- -------
For both the third quarter and year-to-date, the trends in core Communications Services revenues are consistent. The Primary drivers of the mid-30 percent revenue growth are domestic private line, international and Internet growth combined with the continued strong volume growth of 38 percent. Eliminating the impact of businesses sold during the quarter, total pro forma revenue grew 33 percent for the third quarter and 34 percent year-to-date. CORE REVENUES Domestic switched services revenue increased 20 percent over the third quarter 1996. This increase was primarily due to strong volume gains in both the retail and wholesale segments. WorldCom's gap between revenue and volume growth continues to be driven by strong wholesale revenues, international settlement reduction pass throughs, third quarter 1997 access charge pass throughs, and product mix. 3 Domestic private line experienced another consistently strong quarter with revenues increasing by 36 percent over third quarter 1996. The acceleration in revenue growth for private line and frame relay continues to be driven by tremendous demand for high speed data and by Internet related growth - and further underscores WorldCom's high capacity end-to-end facilities-based strategy. International revenues - those revenues originating outside of the U.S. - were $220 million, as compared with $122 million pro forma for the prior year third quarter, an increase of 81 percent year-over-year. This strong performance is due to continuing strong traffic growth in the United Kingdom and a growing presence in Continental Europe for both switched services and increasingly high speed data services. Internet revenues for the third quarter were up by 111 percent as compared with the third quarter of 1996. The provisioning constraints experienced in the second quarter were significantly overcome in the latter part of the third quarter, and the strong demand for both dedicated and dial-up access contributed to the resumption of strong sequential gains. OTHER REVENUES Other revenues for the third quarter of 1997 were $119 million, down three percent, as compared with $122 million for the comparable period on a pro forma basis in the prior year. Other revenues include MFS Network Technologies, operator services, broadcast operations, and system sales. WorldCom completed the sale of its operator services and broadcast divisions in the third quarter. On a recast basis, excluding the results of the operator services and broadcast operations divisions in both periods, other revenues increased approximately 15 percent for the third quarter and 25 percent year-to-date, to $90 million and $215 million, respectively. PRO FORMA COMPARATIVES In order to compare year-over-year internal growth, the following table reflects pro forma amounts for third quarter 1996, before nonrecurring charges in the prior year period:
THIRD QUARTER YEAR-TO-DATE ($ in millions, except EPS and % of Actual Pro Forma Actual Pro Forma Revenue) 1997 1996 Change 1997 1996 Change ---- ---- ------ ---- ---- ------ Revenues $1,901.2 $1,454.9 31% $5,348.5 $4,033.1 33% EBITDA $ 541.5 $ 292.9 85% $1,401.9 $ 828.8 69% % of Revenue 28.5% 20.1% 26.2% 20.6% Operating Income $ 309.9 $ 78.9 293% $719.6 $ 204.9 251% % of Revenue 16.3% 5.4% 13.5% 5.1% EPS $ 0.12 $ ( 0.07) -- $0.25 $ (0.25) -- Cash EPS(1) $ 0.34 $ 0.15 127% $0.80 $ 0.29 176%
(1) Adding back MFS purchase accounting amortization ($0.09) and cash utilization of MFS tax loss carryforwards ($0.12) for third quarter, 1997. As a percent of revenue, EBITDA margin was 28.5 percent and operating income 16.3 percent as compared with 20.1 percent and 5.4 percent, respectively, for the prior year. 4 The improvement is due to the realization of synergies and the operating leverage related to the fixed quarterly level of amortization expense. The strong growth in core revenues drives further margin improvement as the company focuses on core Communications Services and other revenues become a smaller piece of the total. COMPUSERVE/ANS TRANSACTIONS On September 8, 1997, WorldCom announced a merger agreement with CompuServe and an agreement to acquire ANS Communications (ANS) from America OnLine (AOL). WorldCom will purchase CompuServe in a stock-for-stock transaction valued at $1.2 billion, and separately acquire AOL's network service company, ANS, in exchange for CompuServe's on-line services division plus $175 million in cash. WorldCom will retain the CompuServe Network Services (CNS) division. In addition, AOL will also sign a five-year contract under which WorldCom will become AOL's largest network service provider. These transactions are proceeding on track and are anticipated to close in the first quarter of 1998. "In what is emerging as the most competitive arena in the industry with more than 4,000 Internet Service Providers, focus and differentiation will be increasingly important for WorldCom," said Ebbers. "With more and more big players like AT&T and GTE entering the Internet market and the Regional Bell Operating Companies soon to follow, the skills we gain through CNS and ANS should hasten the pace of technological advancement, which will bring the benefits of competition and technology to all customers." BROOKS FIBER On October 1, 1997, WorldCom and Brooks Fiber announced that they had signed a definitive merger agreement. Brooks Fiber is the premier competitive local exchange carrier in secondary markets in the U.S. today. Through this merger, WorldCom will effectively accelerate its local network development plans in the U.S. by one to two years. Commenting on the merger and on Brooks' recent results, Ebbers said: "Brooks Fiber is a spectacular company. Not only does it continue to hold a unique leadership position in the secondary markets across the country, but it has strengthened that position with an exceptionally strong third quarter. It is approaching its merger with WorldCom by ratcheting up its performance yet another notch. The powerful fit between our companies is clear. It is also clear that Brooks Fiber is only getting better and stronger in the marketplace. We look forward to closing this transaction in early 1998. We will both be stronger as a result, and we welcome them and their entrepreneurial drive." MCI TRANSACTION On October 1, 1997, WorldCom announced an exchange offer to acquire all of the outstanding shares of MCI Communications Corporation (MCI). The company has begun direct discussions with MCI and British Telecom (BT) with the intention of coming to an agreement beneficial to all parties. Commenting on the WorldCom offer, Ebbers said, "We remain excited about the prospect of a merger with MCI. We have tremendous respect for their company and what they have accomplished." 5 "Looking forward, we believe we are witnessing an opportunity that is unprecedented in the industry," Ebbers continued. "We believe, together, we can offer a more promising, exciting and rewarding future for the management, employees, customers and shareholders of MCI. We have so much in common - our entrepreneurial spirit, our impatience with monopolistic barriers and our heritage of bringing the benefits of competition to customers. When you combine their achievement, infrastructure and marketing prowess with our assets and strategic position, you create an extraordinary telecommunications company that is exceptionally well-positioned and poised for the changes sweeping the industry. We welcome the employees of MCI into what we see as an exciting future without parallel." "We are currently involved in ongoing, substantive talks with MCI and BT and are pleased with the progress. We remain hopeful that these talks will lead to an agreement between MCI, BT and WorldCom that will be in the best interests of all three companies, their employees and their shareholders," said Ebbers. OUTLOOK Commenting on the outlook for WorldCom, Ebbers said: "While investor attention of late has been focused on the MCI transaction, it is important to highlight the strength of our third quarter results, the strategic significant of the CompuServe/ANS transactions and the tactical advantages of the Brooks Fiber transaction. Each of these three events, while significant in its own right, adds tremendous value for our shareholders. In this regard, the third quarter 1997 could be looked back upon as a watershed period in our corporate history - where we further distinguish and distance ourselves from all of the traditional carriers." "As we continue our strong growth, we continue our focus on managing that growth," said Ebbers. "We remain confident that we are putting the right assets in the right place at the right time. We continue to build a different kind of communications company, one that understands what is required of a communications company in the future, one that knows what creates value for shareholders and one bold enough to take steps to accomplish that." Except for the historical information contained herein, the matters discussed in this news release are forward looking statements that involve risk and uncertainties as detailed from time to time in various regulatory filings. Actual results may vary significantly from these statements. WorldCom is a global telecommunications company. Operating in more than 50 countries, the company is a premier provider of facilities-based and fully integrated local, long distance, international and Internet services. WorldCom's subsidiary, UUNET Technologies, Inc., is an international provider of Internet services with over 1,000 Points of Presence (POPs) throughout the United States and in Canada, Europe and the Asia- Pacific region. WorldCom's World Wide Web address is http://www.wcom.com. The common and depositary shares of WorldCom trade on the Nasdaq National Market (U.S.) under the symbol WCOM and WCOMP, respectively. 6
WORLDCOM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, In Thousands, Except Per Share Data) For the Three Months Ended September 30, ----------------------------------------------------------------- 1997 1996 1996 -------------------- ------------------- -------------------- Actual % Actual % Pro Forma % ---------- ------ ---------- ------ ---------- ------- Minutes 9,704,581 6,179,962 7,025,365 Revenues $1,901,199 100.0% $1,143,428 100.0% $1,454,930 100.0% ---------- ------ ---------- ------ ---------- ------- Operating expenses: Line costs 971,894 51.1% 625,176 54.7% 805,329 55.4% Selling, general and administrative 387,845 20.4% 212,473 18.6% 356,674 24.5% Depreciation and amortization 231,543 12.2% 73,436 6.4% 214,057 14.7% ---------- ------ ---------- ------ ---------- ------- Total 1,591,282 83.7% 911,085 79.7% 1,376,000 94.6% ---------- ------ ---------- ------ ---------- ------- Operating income 309,917 16.3% 232,343 20.3% 78,870 5.4% Other income (expense): Interest expense (81,789) -4.3% (55,085) -4.8% (84,192) -5.8% Miscellaneous 6,133 0.3% 1,840 0.2% 22,374 1.5% ---------- ------ ---------- ------ ---------- ------- Income before income taxes and extraordinary items 234,261 12.3% 179,098 15.7% 17,052 1.2% Provision for income taxes 121,816 6.4% 69,843 6.1% 70,037 4.8% ---------- ------ ---------- ------ ---------- ------- Net income (loss) 112,445 5.9% 109,255 9.6% (52,985) -3.6% Preferred dividend requirement 6,606 0.3% - - 7,460 0.5% Net income (loss) applicable to common shareholders $ 105,839 5.6% $ 109,255 9.6% $ (60,445) $ -4.2% ========== ====== ========== ====== ========== ======= Earnings per common share: Net income (loss) applicable to common shareholders: Primary $ 0.12 $ 0.27 $ (0.07) ========== ========== ========== Fully diluted $ 0.12 $ 0.27 $ (0.07) ========== ========== ==========
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WORLDCOM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, In Thousands, Except Per Share Data) For the Nine Months Ended September 30, ----------------------------------------------------------------- 1997 1996 1996 -------------------- ------------------- -------------------- Actual % Actual % Pro Forma % ---------- ------ ---------- ------ ---------- ------- Minutes 27,150,159 17,489,208 19,832,607 Revenues $ 5,348,522 100.0% $ 3,251,026 100.0% $ 4,033,125 100.0% ----------- ------ ----------- ------ ----------- ------ Operating expenses: Line costs 2,805,807 52.5% 1,772,639 54.5% 2,204,168 54.7% Selling, general and administrative 1,140,849 21.3% 602,902 18.5% 1,000,133 24.8% Depreciation and amortization 682,219 12.8% 229,034 7.0% 623,975 15.5% Provision to reduce carrying value of certain assets - - 402,000 12.4% 402,000 10.0% ----------- ------ ----------- ------ ----------- ------ Total 4,628,875 86.5% 3,006,575 92.5% 4,230,276 104.9% ----------- ------ ----------- ------ ----------- ------ Operating income (loss) 719,647 13.5% 244,451 7.5% (197,151) -4.9% Other income (expense): Interest expense (234,949) -4.4% (168,031) -5.2% (248,400) -6.2% Miscellaneous 16,794 0.3% 5,989 0.2% 35,962 0.9% ----------- ------ ----------- ------ ----------- ------ Income (loss) before income taxes and extraordinary items 501,492 9.4% 82,409 2.5% (409,589) -10.2% Provision for income taxes 260,776 4.9% 130,015 4.0% 150,359 3.2% ----------- ------ ----------- ------ ----------- ------ Net income (loss) before extraordinary items 240,716 4.5% (47,606) -1.5% (539,948) -13.4% Extraordinary items (net of income taxes of $15,621 in 1996) - - (24,434) -0.8% (24,434) -0.6% Preferred dividend requirement 19,827 0.4% 860 0.0% 22,852 0.6% ----------- ------ ----------- ------ ----------- ------ Net income (loss) applicable to common shareholders $ 220,889 4.1% $ (72,900) -2.2% $ (587,234) -14.6% =========== ====== =========== ====== =========== ====== Earnings per common share: Net income (loss) applicable to common shareholders before extraordinary items: Primary $ 0.25 $ (0.12) $ (0.65) =========== =========== =========== Fully diluted $ 0.25 $ (0.12) $ (0.65) =========== =========== =========== Extraordinary items $ - $ (0.06) $ (0.03) =========== =========== =========== Net income (loss) applicable to common shareholders: Primary $ 0.25 $ (0.18) $ (0.68) =========== =========== =========== Fully-diluted $ 0.25 $ (0.18) $ (0.68) =========== =========== =========== Net income (loss) applicable to common shareholders before non- cash charges and extraordinary items: Primary $ 0.25 $ 0.73 $ (0.25) =========== =========== =========== Fully diluted $ 0.25 $ 0.73 $ (0.25) =========== =========== ===========
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WORLDCOM, INC. AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share data) For the Three Months Ended ---------------------------- September 30, ---------------------------- 1997 1996 ------------ ------------ Primary: Weighted average shares outstanding 903,356 402,881 Common stock equivalents 28,537 7,724 Common stock equivalents issuable upon conversion of Series A preferred stock 32,703 - 5% convertible notes - 4,584 -------- -------- 964,596 415,189 ======== ======== Net income applicable to common shareholders $105,839 $109,255 Add back: Dividend on series A preferred stock 6,364 - Interest paid on 5% convertibles notes conversions, net of taxes - 1,489 -------- -------- Net income applicable to common shareholders $112,203 $110,744 ======== ======== Primary earnings per share: Applicable to common shareholders before extraordinary items $0.12 $0.27 ======== ======== Fully diluted: Weighted average shares outstanding 903,356 402,881 Common stock equivalents 30,041 7,730 Common stock issuable upon conversion of: Series A preferred stock 32,703 - Series B preferred stock 1,227 - 5% convertible notes - 4,584 -------- -------- 967,327 415,195 ======== ======== Net income applicable to common shareholders $105,839 $109,255 Add back: Series A preferred dividend 6,364 - Series B preferred dividend 242 - Interest on 5% convertible notes, net of taxes Net income applicable to common shareholders - 1,489 -------- -------- $112,445 $110,744 ======== ======== Fully diluted earnings (loss) per share: Applicable to common shareholders $ 0.12 $ 0.27 ======== ========
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WORLDCOM, INC AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share data) For the Nine Months Ended -------------------------------------- September 30, 1996 ----------------------- Before After Sept 30, Non-Cash Non-Cash 1997 Charges Charges -------- -------- -------- Primary: Weighted average shares outstanding 895,688 393,869 393,869 Common stock equivalents 27,045 7,744 - Common stock equivalents issuable upon conversion of: Series A preferred stock 32,703 - - Series 2 preferred stock - 2,976 - 5% convertible notes - 8,357 - -------- -------- -------- 955,436 412,946 393,869 ======== ======== ======== Net income (loss) applicable to common shareholders before extraordinary items $220,889 $295,114 $(48,466) Extraordinary items - - (24,434) Add back: Dividend on series A preferred stock 19,092 - - Dividend paid on series 2 preferred stock conversions - 860 - Interest paid on 5% convertibles notes conversions, net of taxes - 4,470 - -------- -------- -------- Net income (loss) applicable to common shareholders $239,981 $300,444 $(72,900) ======== ======== ======== Primary earnings (loss) per share: Applicable to common shareholders before extraordinary items $ 0.25 $ 0.73 $ (0.12) ======== ======== ======== Extraordinary items $ - $ - $ (0.06) ======== ======== ======== Applicable to common shareholders $ 0.25 $ 0.73 $ (0.18) ======== ======== ======== Fully diluted: Weighted average shares outstanding 895,688 393,869 393,869 Common stock equivalents 29,109 8,343 - Common stock issuable upon conversion of: Series A preferred stock 32,703 - - Series B preferred stock 1,230 - - 5% convertible notes - 8,357 - Series 2 preferred stock - 2,976 - -------- -------- -------- 958,730 413,545 393,869 ======== ======== ======== Net income (loss) applicable to common shareholders before extraordinary items $220,889 $295,114 $(48.466) Extraordinary items - - (24,434) Add back: Series A preferred dividend 19,092 - - Series B preferred dividend 735 - - Interest on 5% convertible notes, net of taxes - 4,470 - Series 2 preferred dividend requirement - 860 - -------- -------- -------- Net income (loss) applicable to common shareholders $240,716 $300,444 $(72,900) ======== ======== ======== Fully diluted earnings (loss) per share: Applicable to common shareholders before extraordinary items $ 0.25 $ 0.73 $ (0.12) ======== ======== ======== Extraordinary items $ - $ - $ (0.06) ======== ======== ======== Applicable to common shareholders $ 0.25 $ 0.73 $ (0.18) ======== ======== ========
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WORLDCOM, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS Before 1996 Non-Recurring Charges (Unaudited. In Thousands of Dollars, Except Per Share Data) September 30, 1996 December 31, 1996 March 31, 1997 June 30, 1997 September 30, 1997 ------------------ ----------------- ------------------ ---------------- ------------------ $ % $ % $ % $ % $ % ---------- ------- ---------- ------ ---------- ------- --------- ------ ---------- ------- Revenues: Domestic switched $ 842,545 57.9% $ 912,647 57.0% $ 951,892 56.8% $ 966,780 54.7% $1,009,407 53.1% Domestic private line 299,422 20.6% 328,092 20.5% 352,700 21.0% 371,731 21.0% 406,239 21.4% International 121,637 8.3% 152,901 9.5% 163,777 9.8% 197,034 11.1% 219,920 11.6% Internet 69,693 4.8% 90,466 5.6% 111,226 6.6% 125,756 7.1% 147,137 7.7% ---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------ Core revenues 1,333,297 91.6% 1,484,106 92.6% 1,579,595 94.2% 1,661,301 93.9% 1,782,703 93.8% Other 121,633 8.4% 117,992 7.4% 97,644 5.8% 108,783 6.1% 118,496 6.2% ---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------ Total Revenues $1,454,930 100.0% $1,602,098 100.0% $1,677,239 100.0% $1,770,084 100.0% $1,901,199 100.0% ========== ======= ========== ===== ========== ====== ========== ===== ========== ====== Operating expenses: Line costs 805,329 55.4% 917,113 57.2% 911,469 54.3% 922,444 52.1% 971,894 51.1% Selling, general and administrative 356,674 24.5% 365,989 22.9% 372,347 22.2% 380,657 21.5% 387,845 20.4% ---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------ EBITDA 292,927 20.1% 318,996 19.9% 393,423 23.5% 466,983 26.4% 541,460 28.5% ---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------ Depreciation and amortization 214,057 14.7% 214,389 13.4% 222,903 13.3% 227,773 12.9% 231,543 12.2% ---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------ Operating income 78,870 5.4% 104,607 6.5% 170,520 10.2% 239,210 13.5% 309,917 16.3% Other income (expense): Interest expense (84,192) -5.8% (85,267) -5.3% (75,455) -4.5% (77,705) -4.4% (81,789) -4.3% Miscellaneous 22,374 1.5% 16,992 1.1% 8,401 0.5% 2,260 0.1% 6,133 0.3% ---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------ Income (loss) before income taxes 17,052 1.2% 36,332 2.3% 103,466 6.2% 163,765 9.3% 234,261 12.3% Income tax expense 70,037 4.8% 76,781 4.8% 53,802 3.2% 85,158 4.8% 121,816 6.4% ---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------ Net income (loss) (52,985) -3.6% (40,449) -2.5% 49,664 3.0% 78,607 4.4% 112,445 5.9% Preferred dividend requirement 7,460 0.5% 7,437 0.5% 6,610 0.4% 6,611 0.4% 6,606 0.3% ---------- ------- ---------- ----- ---------- ------ ---------- ----- ---------- ------ Net income (loss) applicable to common shareholders $ (60,445) -4.2% $ (47,886) -3.0% $ 43,054 2.6% $ 71,996 4.1% $ 105,839 5.6% ========== ======= ========== ===== ========== ====== ========== ===== ========== ====== Earnings (loss) per common share: Primary $ (0.07) $ (0.05) $ 0.05 $ 0.08 $ 0.12 ========== ========== ========== ========== ========== Fully diluted $ (0.07) $ (0.05) $ 0.05 $ 0.08 $ 0.12 ========== ========== ========== ========== ========== Shares outstanding: Primary 874,395 881,467 948,979 952,732 964,596 ========== ========== ========== ========== ========== Fully Diluted 874,395 881,467 950,216 958,655 967,327 ========== ========== ========== ========== ==========
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WORLDCOM, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS After 1996 Non-Recurring Charges (Unaudited. In Thousands of Dollars, Except Per Share Data) September 30, 1996 December 31, 1996 March 31, 1997 June 30, 1997 September 30, 1997 ------------------ -------------------- ------------------ ------------------ ------------------ $ % $ % $ % $ % $ % ---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------ Revenues: Domestic switched $842,545 57.9% $ 912,647 57.0% $ 951,892 56.8% $ 966,780 54.7% $1,009,407 53.1% Domestic private line 299,422 20.6% 328,092 20.5% 352,700 21.0% 371,731 21.0% 406,239 21.4% International 121,637 8.3% 152,901 9.5% 163,777 9.8% 197,034 11.1% 219,920 11.6% Internet 69,693 4.8% 90,466 5.6% 111,226 6.6% 125,756 7.1% 147,137 7.7% ---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------ Core revenues 1,333,297 91.6% 1,484,106 92.6% 1,579,595 94.2% 1,661,301 93.9% 1,782,703 93.8% Other 121,633 8.4% 117,992 7.4% 97,644 5.8% 108,783 6.1% 118,496 6.2% ---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------ Total Revenues $1,454,930 100.0% $ 1,602,098 100.0% $1,677,239 100.0% $1,770,084 100.0% $1,901,199 100.0% ========== ====== =========== ======= ========== ====== ========== ====== ========== ====== Operating expenses: Line costs 805,329 55.4% 917,113 57.2% 911,469 54.3% 922,444 52.1% 971,894 51.1% Selling, general and administrative 356,674 24.5% 365,989 22.9% 372,347 22.2% 380,657 21.5% 387,845 20.4% ---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------ EBITDA 292,927 20.1% 318,996 19.9% 393,423 23.5% 466,983 26.4% 541,460 28.5% ---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------ Depreciation and amortization 214,057 14.7% 214,389 13.4% 222,903 13.3% 227,773 12.9% 231,543 12.2% Other charges - - 198,148 12.4% - - - - - - Charge for in-process research and development - - 2,140,000 133.6% - - - - - - ---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------ Operating income (loss) 78,870 5.4% (2,233,541) -139.4% 170,520 10.2% 239,210 13.5% 309,917 16.3% Other income (expense): Interest expense (84,192) -5.8% (85,267) -5.3% (75,455) -4.5% (77,705) -4.4% (81,789) -4.3% Miscellaneous 22,374 1.5% 16,992 1.1% 8,401 0.5% 2,260 0.1% 6,133 0.3% ---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------ Income (loss) before income taxes 17,052 1.2% (2,301,816) -143.7% 103,466 6.2% 163,765 9.3% 234,261 12.3% Income tax expense (benefit) 70,037 4.8% (287) 0.0% 53,802 3.2% 85,158 4.8% 121,816 6.4% ---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------ Net income (loss) (52,985) -3.6% (2,301,529) -143.7% 49,664 3.0% 78,607 4.4% 112,445 5.9% Preferred dividend requirement 7,460 0.5% 7,437 0.5% 6,610 0.4% 6,611 0.4% 6,606 0.3% ---------- ------ ----------- ------- ---------- ------ ---------- ------ ---------- ------ Net income (loss) applicable to common shareholders $ (60,445) -4.2% $(2,308,966) -144.1% $ 43,054 2.6% $ 71,996 4.1% $ 105,839 5.6% ========== ====== =========== ======= ========== ====== ========== ====== ========== ====== Earnings (loss) per common share: Primary $ (0.07) $ (2.62) $ 0.05 $ 0.08 $ 0.12 ========== =========== ========== ========== ========== Fully diluted $ (0.07) $ (2.62) $ 0.05 $ 0.08 $ 0.12 ========== =========== ========== ========== ========== Shares outstanding: Primary 874,395 881,467 948,979 952,732 964,596 ========== =========== ========== ========== ========== Fully diluted 874,395 881,467 950,216 958,655 967,327 ========== =========== ========== ========== ==========
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