Item 2. Changes in Securities and Use of Proceeds.
On August 19, 1997, in connection with its acquisition of the
outstanding shares of McCourt Fiber Network, Inc., which was the
holder of the shares of Metropolitan Fiber Systems - McCourt, Inc.
not already owned by the Company, the Company issued to shareholders
of McCourt Fiber Network, Inc. 846,154 shares of WorldCom Common
Stock which total included 812,308 shares issued to David C. McCourt,
a member of the WorldCom Board of Directors. In connection with this
transaction, the Company relied on an exemption from registration
contained in Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act") and Regulation D promulgated thereunder.
On July 1, 1997, in connection with its acquisition of the remaining
shares of Gridnet, Inc. that it did not already own, the Company
issued 466,000 shares of WorldCom Common Stock to certain minority
shareholders of Gridnet, Inc. In connection with this transaction,
the Company relied on an exemption from registration contained in
Section 4(2) of the Securities Act and Regulation D promulgated
thereunder.
Page 20
Item 3. Defaults upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits
See Exhibit Index
B. Reports on Form 8-K
(i) Current Report on Form 8-K dated August 5, 1997 (filed
August 5, 1997) reporting under Item 5, Other Events,
information related to the Company's announcement of the
amendment of the Exchange Offers and Consent Solicitations
for certain MFS Communications Company, Inc. Notes.
(ii) Current Report on Form 8-K dated August 8, 1997 (filed
August 11, 1997) reporting under Item 5, Other Events,
information relating to the Company's announcement of
the initial acceptance in Exchange Offers and Consent
Solicitations for certain MFS Communications Company,
Inc. Notes.
(iii) Current Report on Form 8-K dated August 22, 1997 (filed
August 25,1997) reporting under Item 5, Other Events,
information related to the successful completion of Exchange
Offers and Consent Solicitations for certain MFS
Communications Company, Inc. Notes.
(iv) Current Report on Form 8-K dated August 28, 1997 (filed
September 10, 1997) reporting under Item 9, Sales of
Securities Pursuant to Regulation S, information related to
the Company's issuance of a total of 988,781 shares of
WorldCom common stock pursuant to the acquisition agreement
among NLnet Holding B.V., a Netherlands corporation
("NLnet"), the shareholders of NLnet and the holders of
options to purchase shares in NLnet, and UUNET Technologies
Inc., a wholly owned subsidiary of the Company and WorldCom,
in exchange for all of the common stock and options of
NLnet, valued at approximately $33.1 million.
(v) Current Report on Form 8-K dated September 7, 1997 (filed
September 16, 1997) reporting under Item 5, Other Events,
information related to the Company's announcement that it
had entered into an Agreement and Plan of Merger to acquire
CompuServe Corporation, a Delaware corporation
("CompuServe") from H&R Block, Inc., a Missouri corporation;
and the Company's announcement that on September 7, 1997,
the Company also entered into a Purchase and Sale Agreement
(the "Agreement") with America Online, Inc. ("AOL") and ANS
Communications, Inc., a Delaware corporation and a wholly
owned subsidiary of AOL ("ANS").
Page 21
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 10-Q to be signed on its behalf
by Scott D. Sullivan, thereunto duly authorized to sign on behalf of the
registrant and as the principal financial officer thereof.
WORLDCOM, INC.
By: /s/ Scott D. Sullivan
----------------------------
Scott D. Sullivan
Chief Financial Officer
Dated: November 14, 1997
Page 22
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
1.1 Form of Underwriting Agreement Standard Provisions for Debt
Securities, with form of Terms Agreement (incorporated
herein by reference to Exhibit 1.1 to the Company's Current
Report on Form 8-K dated March 26, 1997(File No. 0-11258))
1.2 Terms Agreement dated March 26, 1997, by and among WorldCom,
Inc. and Salomon Brothers Inc, Goldman, Sachs & Co., Credit
Suisse First Boston and NationsBanc Capital Markets, Inc.
(incorporated herein by reference to Exhibit 1.2 to the
Company's Current Report on Form 8-K dated March 26,
1997(File No. 0-11258))
2.1 Agreement and Plan of Merger, dated as of September 7, 1997,
by and among H&R Block, Inc., H&R Block Group, Inc.,
CompuServe Corporation, WorldCom, Inc., and Walnut
Acquisition Company, L.L.C. (incorporated herein by
reference to Exhibit 2.1 to the Company's Current Report on
Form 8-K dated September 7, 1997(File No. 0-11258))*
2.2 Stockholders Agreement, dated as of September 7, 1997, by
and among H&R Block, Inc., a Missouri corporation, H&R Block
Group, Inc., a Delaware corporation, and WorldCom, Inc., a
Georgia corporation. (incorporated herein by reference to
Exhibit 2.2 to the Company's Current Report on Form 8-K
dated September 7, 1997(File No. 0-11258))
2.3 Standstill Agreement dated as of September 7, 1997, by and
among H&R Block, Inc., a Missouri corporation, H&R Block
Group, Inc., a Delaware corporation, and WorldCom, Inc., a
Georgia corporation (incorporated herein by reference to
Exhibit 2.3 to the Company's Current Report on Form 8-K
dated September 7, 1997(File No. 0-11258))
2.4 Purchase and Sale Agreement by and among America Online,
Inc., ANS Communications, Inc. and WorldCom, Inc., dated as
of September 7, 1997 (incorporated herein by reference to
Exhibit 2.4 to the Company's Current Report on Form 8-K
dated September 7, 1997(File No. 0-11258))*
2.5 Agreement and Plan of Merger dated as of October 1, 1997 by
and among WorldCom, Inc., BV Acquisition, Inc. and Brooks
Fiber Properties, Inc. ("BFP") (incorporated by reference to
Exhibit 2.1 to BFP's Current Report on Form 8-K dated
October 1, 1997 (filed October 6, 1997) (File No. 0-
28036))*
2.6 Agreement and Plan of Merger dated as of November 9, 1997
among WorldCom, Inc., TC Investments Corp. and MCI
Communications Corporation (incorporated by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K
dated November 9, 1997 (filed November 12, 1997))*
2.7 Agreement dated as of November 9, 1997 among British
Telecommunications plc, WorldCom, Inc. and MCI
Communications Corporation (incorporated by reference to
Exhibit 99.1 to the Company's Current Report on Form 8-K
dated November 9, 1997 (filed November 12, 1997))*
Page 23
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
3.1 Second Amended and Restated Articles of Incorporation of
WorldCom, Inc. (including preferred stock designations) as
of December 31, 1996 (incorporated herein by reference to
Exhibit 3.1 to the Company's Current Report on Form 8-K
dated December 31, 1996 (File No. 0-11258))
3.2 Restated Bylaws of WorldCom, Inc. (incorporated by reference
to Exhibit 4.2 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996 (File No. 0-11258))
4.1 Form of 7.55% Senior Note due 2004 (incorporated herein by
reference to Exhibit 4.1 to the Company's Current Report on
Form 8-K dated March 26, 1997(File No. 0-11258))
4.2 Form of 7.75% Senior Note due 2007 (incorporated herein by
reference to Exhibit 4.2 to the Company's Current Report on
Form 8-K dated March 26, 1997(File No. 0-11258))
4.3 Form of 7.75% Senior Note due 2027 (incorporated herein by
reference to Exhibit 4.3 to the Company's Current Report on
Form 8-K dated March 26, 1997 (File No. 0-11258))
4.4 Senior Indenture dated March 1, 1997 by and between
WorldCom, Inc. and Mellon Bank, N.A., as trustee
(incorporated herein by reference to Exhibit 4.6 to the
Company's Form 10-Q for the period ended March 31, 1997
(File No. 0-11258))
4.5 First Supplemental Indenture of WorldCom to Mellon Bank,
N.A. relating to 9-3/8% Notes Due 2004 and 8-7/8% Senior
Notes Due 2006 (including form of 9-3/8% Senior Note Due
2004 attached as Exhibit A thereto and form of 8-7/8% Senior
Note Due 2006 attached as Exhibit B thereto) (incorporated
herein by reference to Exhibit 4.9 to Amendment No. 2 to the
Company's Registration Statement on Form S-4 (Registration
No. 333-27345))
10.1 Memorandum between the Company and James Q. Crowe dated June
26, 1997 (incorporated herein by reference to Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1997 (File No. 0-11258))
10.2 Facility A Revolving Credit Agreement among WorldCom, Inc.,
NationsBank of Texas, N.A. (Managing Agent and
Administrative Agent), Bank of America NT & SA, Bank of
Montreal, The Bank of New York, The Bank of Nova Scotia,
Bank of Tokyo-Mitsubishi Trust Company, Barclays Bank PLC,
Canadian Imperial Bank of Commerce, The Chase Manhattan
Bank, Citibank, N.A., Credit Lyonnais New York Branch, First
Union National Bank, Fleet National Bank, The Industrial
Bank of Japan, Limited, Atlanta Agency, Morgan Guaranty
Trust Company of New York, Royal Bank of Canada, and Toronto
Dominion (Texas), Inc. (Agents) and the Lenders named
therein (Facility A Lenders), dated as of July 3, 1997.
(Incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated June 30, 1997
(File No. 0-11258))
10.3 Facility B Revolving Credit Agreement among WorldCom, Inc.,
NationsBank of Texas, N.A. (Managing Agent and
Administrative Agent), Bank of America NT & SA, Bank of
Montreal, The Bank of New York, The Bank of Nova Scotia,
Bank of Tokyo-Mitsubishi Trust Company, Barclays Bank
Page 24
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
PLC, Canadian Imperial Bank of Commerce, The Chase Manhattan
Bank, Citibank, N.A., Credit Lyonnais New York Branch, First
Union National Bank, Fleet National Bank, The Industrial
Bank of Japan, Limited, Atlanta Agency, Morgan Guaranty
Trust Company of New York, Royal Bank of Canada, and Toronto
Dominion (Texas), Inc. (Agents) and the Lenders named
therein (Facility B Lenders), dated as of July 3, 1997.
(Incorporated herein by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K dated June 30, 1997
(File No. 0-11258))
10.4 WorldCom, Inc. Performance Bonus Plan (incorporated herein
by reference to Exhibit A to the Company's Proxy Statement
dated April 21, 1997 (File No. 0-11258))
11.1 Statement Regarding Computation of Per Share Earnings
27.1 Financial Data Schedule
*The Registrant hereby agrees to furnish supplementally a copy of any omitted
schedules to this Agreement to the Securities and Exchange Commission upon its
request.
Page 25
Exhibit 11.1
WORLDCOM, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share data)
For the Three Months Ended For the Nine Months Ended
----------------------------- -----------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
Primary:
Weighted average shares outstanding 903,356 402,881 895,688 393,869
Common stock equivalents 28,537 7,724 27,045 --
Common stock equivalents issuable upon conversion of:
Series A preferred stock 32,703 32,703 --
5% convertible notes -- 4,584 -- --
------------ ------------ ------------ ------------
964,596 415,189 955,436 393,869
============ ============ ============ ============
Net income (loss) applicable to common shareholders
before extraordinary items $ 105,839 $ 109,255 $ 220,889 $ (48,466)
Extraordinary items -- -- -- (24,434)
Add back:
Series A preferred dividend 6,364 -- 19,092 --
Interest paid on 5% convertible notes
conversions, net of taxes -- 1,489 -- --
------------ ------------ ------------ ------------
Net income (loss) applicable to common shareholders $ 112,203 $ 110,744 $ 239,981 $ (72,900)
============ ============ ============ ============
Primary earnings (loss) per share:
Applicable to common shareholders before extraordinary items $ 0.12 $ 0.27 $ 0.25 $ (0.12)
============ ============ ============ ============
Extraordinary items $ -- $ -- $ -- $ (0.06)
============ ============ ============ ============
Applicable to common shareholders $ 0.12 $ 0.27 $ 0.25 $ (0.18)
============ ============ ============ ============
Fully diluted:
Weighted average shares outstanding 903,356 402,881 895,688 393,869
Common stock equivalents 30,041 7,730 29,109 --
Common stock issuable upon conversion of:
Series A preferred stock 32,703 -- 32,703 --
Series B preferred stock 1,227 -- 1,230 --
5% convertible notes -- 4,584 -- --
------------ ------------ ------------ ------------
967,327 415,195 958,730 393,869
============ ============ ============ ============
Net income (loss) applicable to common shareholders
before extraordinary items $ 105,839 $ 109,255 $ 220,889 $ (48,466)
Extraordinary items -- -- -- (24,434)
Add back:
Series A preferred dividend 6,364 -- 19,092 --
Series B preferred dividend 242 -- 735 --
Interest on 5% convertible notes, net of taxes -- 1,489
------------ ------------ ------------ ------------
Net income (loss) applicable to common shareholders $ 112,445 $ 110,744 $ 240,716 $ (72,900)
============ ============ ============ ============
Fully diluted earnings (loss) per share:
Applicable to common shareholders before extraordinary items $ 0.12 $ 0.27 $ 0.25 $ (0.12)
============ ============ ============ ============
Extraordinary items $ -- $ -- $ -- $ (0.06)
============ ============ ============ ============
Applicable to common shareholders $ 0.12 $ 0.27 $ 0.25 $ (0.18)
============ ============ ============ ============
ARTICLE 5
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WORLDCOM,
INC.'S FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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