SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 11-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For The Fiscal Year Ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 0-6547 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Western Union International, Inc. 401(k) Plan for Collectively Bargained Employees, 201 Centennial Avenue, Piscataway, NJ 08854 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: MCI Communications Corporation, 1801 Pennsylvania Avenue, NW, Washington, DC 20006 WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 INDEX TO FINANCIAL STATEMENTS AND SCHEDULES Page(s) ------- Report of Independent Accountants 3 Statements of Net Assets Available for Benefits at December 31, 1996 and 1995 4 Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 1996 and 1995 5 Notes to Financial Statements 6-20 Additional Information: Schedule I. Schedule of Assets Held for Investment Purposes at December 31, 1996 21 Schedule II. Schedule of Reportable Transactions For the year ended December 31, 1996 22 Signature 23 Exhibits: 23. Consent of Independent Accountants 24 99. DOL Filing Confirmation 25 Page 2 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrative Committee of the Western Union International, Inc. 401(k) Plan for Collectively Bargained Employees In our opinion, the accompanying statements of net assets available for benefits, and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Western Union International, Inc. 401(k) Plan for Collectively Bargained Employees at December 31, 1996 and 1995, and the changes in net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information included in Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements but is additional information required by the Employee Retirement Income Security Act of 1974, as amended. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. PRICE WATERHOUSE LLP - -------------------- PRICE WATERHOUSE LLP Washington, D.C. June 11, 1997 Page 3 WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, -------------------------------- 1996 1995 ------------ ------------ Assets - ------ Non-interest bearing cash $ 64 $ 79,177 ------------ ------------ Contributions receivable: Employee 30,302 0 Employer 9,452 40 ------------ ------------ Total contributions receivable 39,754 40 ------------ ------------ Cash-in-transit 51,245 0 Other receivables 17 0 ------------ ------------ Total receivables 91,016 40 ------------ ------------ General investments: Participant loans 624,892 390,896 Value of interest in collective investment funds of trustee 3,090,301 1,810,640 Value of interest in registered investment companies 5,427,745 3,752,425 Value of guaranteed investment contracts 1,682,434 2,883,276 ------------ ------------ Total general investments 10,825,372 8,837,237 ------------ ------------ Employer related investments: Employer securities 6,172,278 4,168,087 ------------ ------------ Total assets 17,088,730 13,084,541 ------------ ------------ Liabilities - ----------- Operating payables (51,264) (3,392) ------------ ------------ Net assets available for benefits $ 17,037,466 $ 13,081,149 ============ ============ The accompanying notes are an integral part of these financial statements. Page 4 WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS Year Ended December 31, -------------------------------- 1996 1995 ------------ ---------- ADDITIONS - --------- Contributions: Participant $1,616,571 $1,586,820 Non-cash employer 518,284 504,446 Rollovers 33,220 173,336 ---------- ---------- Total contributions 2,168,075 2,264,602 ---------- ---------- Earnings on investments: Interest on participant loans 36,065 25,748 Interest on guaranteed investment contracts 169,330 212,599 Interest on collective investment funds of the trustee 158,183 90,752 Dividends on employer securities 8,563 7,660 Net gain from registered investment companies 686,881 949,219 Net gain on sale of employer securities 25,264 0 Unrealized appreciation of assets 1,112,566 1,059,467 ---------- ---------- Total earnings on investments 2,196,852 2,345,445 ---------- ---------- Total additions 4,364,927 4,610,047 DEDUCTIONS - ---------- Participant benefit payments (190,153) (241,341) Participant account fees (780) 0 ---------- ---------- Net increase 4,173,994 4,368,706 Transfers to: MCI Exempt 401(k) Plan (209,933) (128,838) MCI Non-Exempt 401(k) Plan (7,744) 0 Net assets available for benefits, beginning of year 13,081,149 8,841,281 ---------- ---------- Net assets available for benefits, end of year $17,037,466 $13,081,149 =========== =========== The accompanying notes are an integral part of these financial statements. Page 5 WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 NOTES TO FINANCIAL STATEMENTS ON FORM 11-K DECEMBER 31, 1996 and 1995 NOTE 1 - DESCRIPTION OF THE PLAN The following brief description of the Western Union International, Inc. 401(k) Plan for Collectively Bargained Employees (the "Plan") is provided for general information purposes only. Participants should refer to the Plan document for more complete information. The Plan is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Effective July 1, 1990, Western Union International, Inc. (the "Company") established a defined contribution, deferred savings plan called the Western Union International, Inc. 401(k) Plan for Collectively Bargained Employees. The Plan sponsor is Western Union International, Inc., a wholly owned subsidiary of MCI International, Inc., which is a wholly owned subsidiary of MCI Communications Corporation. Employees of the Company who are represented by American Communications Association Locals 9 or 111 and the Communications Trade Division affiliated with the International Brotherhood of Teamsters are generally eligible to participate in the Plan. Effective July 1, 1996, the Company amended and restated the Plan. Page 6 Contributions - ------------- Under the Plan, employees become eligible to participate upon completion of one year of service with 1,000 hours of service and attainment of age 21 (age 18 prior to July 1, 1996). Eligible employees may elect to defer up to 15% of eligible compensation on a pre-tax basis, to be contributed to the Plan by the Company on behalf of such employees ("Elective Contributions"). The first 6% of each participant's Elective Contributions is eligible for a Company matching contribution in the form of cash or MCI Communications Corporation Common Stock ("MCI Common Stock") at a rate of $.50 for each eligible dollar of Elective Contributions made to the Plan. The Company's matching contribution is made weekly and, when made in the form of MCI Communications Corporation Common Stock, is determined by the closing price of MCI Communications Corporation Common Stock on the date posted to the participants' accounts. Prior to July 1, 1996, the Company's matching contribution was made monthly and, when made in the form of MCI Communications Corporation Common Stock, was determined by the closing price of MCI Communications Corporation Common Stock on the last trading day of the month. Participants' Elective Contributions are withheld from their weekly paychecks and the Company transfers these contributions to the Plan each pay period. Participants vest in the Company's matching contributions at a rate of 20% per year of service and are always 100% vested in their Elective Contributions. Participants receive a year of service for vesting purposes for each Plan year during which they complete at least 1,000 hours of service. Participants also receive credit for years of service for each calendar year prior to July 1, 1990 during which they completed 1,000 hours of service. As of July 1, 1996, the investment funds available for Elective Contributions were increased from four to seven funds. Elective Contributions are invested in any of the seven investment funds in accordance with participants' instructions. The available investment funds are: - MCI Common Stock Fund A fund investing in MCI Communications Corporation Common Stock. These shares of stock are qualified employer securities as defined by ERISA. - EuroPacific Growth Fund A long-term growth fund invested primarily in securities of issuers domiciled in Europe and the Pacific Basin. The fund is a member of The American Funds Group and is managed by Capital Research and Management Company. - Dreyfus S&P 500 Stock Index Portfolio (formerly the Equity Index Fund) An equity index mutual fund invested in common stock that is comparable to the Standard & Poor's 500 Composite Index. All investment decisions are made by Dreyfus Corporation, an affiliate of the Plan trustee.The trustee oversees the fund in accordance with the trust agreement. Page 7 - Putnam Voyager Fund (formerly the Aggressive Equity Fund) A long-term growth fund invested in a diversified portfolio of two types of common stocks: emerging growth stocks and opportunity stocks. The fund is managed by Putnam Investment Management, Inc. - Putnam New Opportunities Fund A growth fund invested primarily in common stock of companies in economic sectors with above-average prospects for growth. Putnam Investment Management, Inc. makes the investment decisions for the fund and is subject to the policies established by the fund's trustees. - Putnam Balanced Retirement Fund A growth and income fund invested in a diversified portfolio of equity and debt securities. Putnam Investment Management, Inc. makes the investment decisions for the fund and is subject to the policies established by the fund's trustees. - Stable Value Fund This fund was formerly known as the Long-Term Fixed Income Fund. The fund consists of investments in the Putnam Stable Value Fund and individually held guaranteed investment contracts (GICs) issued by insurance companies that offer fixed interest rates on investments. The fund seeks to maintain a constant book value of $1.00 per share. The Putnam Stable Value Fund is a collective investment trust created and maintained by Putnam Fiduciary Trust Company. The fund is invested primarily in guaranteed investment contracts or funding agreements, synthetic guaranteed investment contracts or separate accounts issued or wrapped by insurance companies, banks, or other financial institutions. Page 8 The following guaranteed investment contracts were held individually by the Plan as of December 31: Contract Value -------------- Contract 1996 1995 Rate ------- ------- ---- Allstate Life Insurance $ 735,981 $ 694,977 5.90% John Hancock Mutual Life Insurance 946,453 875,940 8.05% Metropolitan Life Insurance 835,784 8.96% Principal Mutual Life Insurance 476,576 9.10% Participant Accounts - -------------------- Each individual's investment in the funds is recorded in their participant account on a unit value basis with the exception of MCI Common Stock Fund which is recorded on a per share basis. The Plan is processed on a daily valuation basis. Prior to July 1, 1996, all investments except the MCI Common Stock Fund were valued on a dollar value basis with each fund's activity allocated to participants' accounts on a pro rata basis. Participants may transfer all or part of the balance in their Elective Contributions and related earnings from one fund to another once each calendar month. For plan years beginning on or after January 1, 1997, participants may reallocate their matching contributions balance that is 100% vested as of the prior year end once per Plan Year. Participants may change the allocation of their future contributions among the funds with unlimited frequency. Participants' allocations are affected by the last change placed prior to payroll processing. Page 9 Participant Loans - ----------------- A loan feature allows participants to borrow up to one-half of the vested account balance (or $50,000, whichever is less). The minimum loan amount is $1,000 and the minimum term of a loan is one year. The maximum term of a loan is five years for a general purpose loan and fifteen years for a primary residence loan. Only one loan of each type, general purpose and primary residence, may be outstanding at any time. Effective July 1, 1996, the Plan charges a $30 origination fee to participants for loans. Loan proceeds are disbursed pro rata from each of the participants' investment funds, and are repaid through weekly payroll deductions. Loans can be repaid in full by a cashier's or certified check. Loan repayments of principal and interest are invested based on the participants' current investment elections. Interest rates for new loans are determined monthly based on the prime rate as published on the first business day of each month in THE WALL STREET JOURNAL, plus one percentage point. The interest rate is fixed for the term of the loan. During Plan years ended December 31, 1996 and 1995, $439,910 and $157,780 in loans were disbursed and principal repayments of $171,797 and $99,684, respectively, were made. Participant Benefit Payments - ---------------------------- Distribution of the benefits in a participant's Plan account is normally made only after the participant ceases to be an employee of the Company. However, the account of a participant's Elective Contributions may be withdrawn prior to termination of employment if the participant is under age 59 1/2 and can demonstrate an economic hardship (as defined in the Plan). A participant who has attained age 59 1/2 may withdraw all or any portion of his Elective Contributions account in accordance with the terms of the Plan. Upon termination of employment, a participant receives all vested assets in accounts established on his behalf under the Plan. Non-vested portions of a terminated participant's accounts are forfeited and used to offset future Company matching contributions. Effective July 1, 1996 participants who terminate employment and elect to keep their funds in the Plan are charged a $20 annual account maintenance fee. The Plan was amended effective July 1, 1996, to provide for the distribution in a lump sum of terminated participant accounts with a vested balance of less than $3,500. This distribution generally occurs no sooner than six months after the participant's termination of employment date. As of December 31, 1996 and 1995, forfeitures included in the Plan were $5,385 and $4,293, respectively. Page 10 Plan Administration - ------------------- The Plan is not a defined benefit plan and accordingly, Plan benefits are not guaranteed by the Pension Benefit Guaranty Corporation. The Company is the plan administrator and has appointed an Administrative Committee to administer the Plan. The Administrative Committee is responsible for carrying out the provisions of the Plan and may employ such experts as deemed necessary. Plan assets are held by the trustee, Mellon Bank, N.A. of Pittsburgh, Pennsylvania. The recordkeeper for the Plan is Putnam Investments, Inc. Prior to June 1, 1996, the recordkeeper for the Plan was Buck Consultants, Inc. The Company reserves its rights under the Plan to discontinue its contributions and to terminate the Plan at any time. Upon such termination, all amounts funded shall become nonforfeitable and shall be provided for and paid from the Plan's trust in accordance with the order of priority set forth in Section 4044 of ERISA. The Company has not expressed any intent to discontinue its contributions nor to terminate the Plan. The Plan's holdings of MCI Communications Corporation Common Stock, various Putnam Investments, Inc. mutual funds, a collective investment trust created and maintained by Putnam Fiduciary Trust Company, a Mellon Bank mutual fund and collective trust account, and loans to participants are party-in-interest investments. NOTE 2 - DESCRIPTION OF ACCOUNTING PRINCIPLES AND PRACTICES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of changes in net assets available for benefits during the reporting period, such as those regarding fair value. Actual results could differ from those estimates. The financial statements for the Plan are prepared on the accrual basis of accounting. Page 11 The Plan's distribution of MCI Communications Corporation Common Stock to participants is at the fair market value as of the distribution date. The difference between the fair market value on the date of distribution and the carrying value to the Plan of the distributed shares is recorded as a net gain or loss on disposition of assets. Purchases and sales of securities are recorded on the trade date. The Plan's interest in registered investment companies and employer securities are stated at fair value, measured by the quoted current market price. Units in collective trusts are valued at the net asset value as reported by such trusts at the end of each period. Funds invested in guaranteed investment contracts are stated at contract value, measured as cost plus earned interest income. During 1995, the Plan adopted American Institute of Certified Public Accountants Statement of Position 94-4, "Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and Defined Contribution Pension Plans" (SOP 94-4). SOP 94-4 states that defined contribution plans should report fully-benefit responsive investment contracts at contract value, which may or may not be equal to fair value, and all other investment contracts at fair value. All guaranteed investment contracts held by the Plan at December 31, 1996 were fully-benefit responsive, and therefore are stated at contract value. Participant loans are valued at cost, which approximates fair value. Administrative expenses of the Plan are paid by MCI Communications Corporation. Certain amounts in the 1995 financial statements have been reclassified to conform to the 1996 presentation. NOTE 3 - NET ASSETS AVAILABLE FOR BENEFITS AND CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND The net assets available for benefits and the changes in net assets among the Plan's investment funds for the years ended December 31, 1996 and 1995 are presented on the following pages. Page 12 NOTE 3 - Continued WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1996 EuroPacific Dreyfus Putnam Stable Growth S&P 500 Voyager Value Fund Stock Index Fund Fund ------- ----------- ----------- ----------- ASSETS - ------ Non-interest bearing cash $ 0 $ 0 $ 0 $ 64 ------- ----------- ----------- ----------- Contributions receivable: Participant ................. 670 3,616 7,942 9,575 Employer .................... 0 0 0 0 ------- ----------- ----------- ----------- Total contributions receivable 670 3,616 7,942 9,575 Cash-in-transit ............... 0 12,051 21,859 11,641 Other receivables ............. 0 4 0 0 Investments, at fair value: Participant loans ........... 0 0 0 0 Employer securities ......... 0 0 0 0 Common/collective trusts .... 0 2,555 58 3,078,966* Registered investment companies .................. 46,512 1,936,795* 2,807,491* 0 Investments, at contract value: Value of guaranteed investment contracts .................. 0 0 0 1,682,434 ------- ----------- ----------- ----------- Total assets .................. 47,182 1,955,021 2,837,350 4,782,680 ------- ----------- ----------- ----------- LIABILITIES - ----------- Operating payables ............ 0 (12,051) (21,859) (11,641) ------- ----------- ----------- ----------- Net assets available for benefits ............... $47,182 $ 1,942,970 $ 2,815,491 $ 4,771,039 ======= =========== =========== =========== * Investment represents 5% or more of the Plan's net assets. Page 13 NOTE 3 - Continued WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1996 Putnam Putnam MCI New Balanced Common Participant Opportunities Retirement Stock Loans Total -------- -------- ---------- -------- ------------ ASSETS - ------ Non-interest bearing cash .. $ 0 $ 0 $ 0 $ 0 $ 64 --------- -------- ---------- -------- ------------ Contributions receivable: Participant ... 1,514 862 6,123 0 30,302 Employer ...... 0 0 9,452 0 9,452 --------- -------- ---------- -------- ------------ Total contributions receivable .. 1,514 862 15,575 0 39,754 Cash-in-transit . 5,694 0 0 0 51,245 Other receivables 0 0 13 0 17 Investments, at fair value: Participant loans ........ 0 0 0 624,892 624,892 Employer securities ... 0 0 6,172,278* 0 6,172,278 Common/ collective trusts ....... 7 0 8,715 0 3,090,301 Registered investment companies .... 381,773 255,174 0 0 5,427,745 Investments, at contract value: Value of guaranteed investment contracts .... 0 0 0 0 1,682,434 --------- -------- ---------- -------- ------------ Total assets .... 388,988 256,036 6,196,581 624,892 17,088,730 --------- -------- ---------- -------- ------------ LIABILITIES - ------------ Operating payables (5,713) 0 0 0 (51,264) --------- -------- ---------- -------- ------------ Net assets available for benefits .... $ 383,275 $256,036 $6,196,581 $624,892 $ 17,037,466 ========= ======== ========== ======== ============ * Investment represents 5% or more of the Plan's net assets. Page 14 NOTE 3 - Continued WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1995 Long-Term Putnam MCI Common Dreyfus Fixed Voyager Stock S&P Stock Income Participant Total Fund Fund Index Fund Fund Loans Funds ---------- ---------- ---------- ----------- -------- ----------- Assets - ------ Non-interest bearing cash $ 50,460 $ 1,167 $ 27,550 $ 0 $ 0 $ 79,177 Contributions receivable: Participant Employer 0 40 0 0 0 40 ---------- ---------- ---------- ----------- -------- ----------- Total contributions receivable 0 40 0 0 0 40 --------- ---------- ---------- ----------- -------- ----------- Investments, at fair value: Employer securities 0 4,168,087* 0 0 0 4,168,087 Common/ collective Trusts 806 43,792 0 1,766,042* 0 1,810,640 Registered investment companies 2,199,148* 0 1,553,277* 0 0 3,752,425 Participant loans 0 0 0 0 390,896 390,896 Investments, at contract value: Value of guaranteed investment contracts 0 0 0 2,883,276* 0 2,883,276 ---------- ---------- ---------- ----------- -------- ----------- Total assets 2,250,414 4,213,086 1,580,827 4,649,318 390,896 13,084,541 ---------- ---------- ---------- ----------- -------- ----------- Liabilities - ------------ Operating payables 0 0 0 (3,392) 0 (3,392) ---------- ---------- ---------- ----------- -------- ----------- Net assets available for benefits $2,250,414 $4,213,086 $1,580,827 $4,645,926 $390,896 $13,081,149 ========== ========== ========== =========== ======== =========== * Investment represents 5% or more of the Plan's net assets. Page 15 NOTE 3 -Continued WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1996 EuroPacific Dreyfus Putnam Stable Growth S&P 500 Voyager Value Fund Stock Index Fund Fund ADDITIONS --------- ----------- ----------- ----------- - --------- Contributions: Participant ..........$ 12,178 $ 247,943 $ 530,588 $ 587,841 Non-cash employer .... 0 0 0 0 Rollovers ............ 0 3,149 23,448 163 ------- ----------- ----------- ----------- Total contributions 12,178 251,092 554,036 588,004 ------- ----------- ----------- ----------- Earnings on investments Interest on participant loans ............... 0 0 0 0 Interest on guaranteed investment contracts 0 0 0 169,330 Interest on common/ collective trusts ... 0 322 635 157,226 Dividends on employer securities .......... 0 0 0 0 Net gain(loss) from registered investment companies 3,251 380,301 295,392 0 Net gain on sale of employer securities . 0 0 0 0 Unrealized appreciation of assets ........... 0 0 0 0 ------ ----------- ----------- ----------- Total earnings on investments ....... 3,251 380,623 296,027 326,556 ------- ----------- ----------- ----------- Total additions ........ 15,429 631,715 850,063 914,560 ------- ----------- ----------- ----------- DEDUCTIONS - ---------- Participant benefit payments 0 (5,546) (5,194) (67,977) Participant account fees (7) (129) (175) (360) ------- ----------- ----------- ----------- Net increase ........... 15,422 626,040 844,694 846,223 ------- ----------- ----------- ----------- Transfers (to)/from: Other trust accounts . 31,640 (194,089) (209,100) (567,150) Net loans ............ 335 (31,282) (29,392) (111,891) MCI Exempt 401(k) Plan (164) (36,136) (38,925) (41,454) MCI Non-Exempt 401(k) Plan ................ (51) (2,390) (2,200) (615) Net assets available for benefits, beginning of year ............... 0 1,580,827 2,250,414 4,645,926 -------- ----------- ----------- ----------- Net assets available for benefits, end of year . $ 47,182 $ 1,942,970 $ 2,815,491 $ 4,771,039 ======== =========== =========== =========== Page 16 NOTE 3 - Continued WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1996 Putnam Putnam MCI New Balanced Common Participant Opportunities Retirement Stock Loans Total ---------- ---------- ----------- ---------- ------------ ADDITIONS - --------- Contributions: Participant $ 32,491 $ 8,885 $ 196,645 $ 0 $ 1,616,571 Non-cash employer 0 0 518,284 0 518,284 Rollovers 6,297 0 163 0 33,220 --------- --------- ----------- --------- ------------ Total contributions 38,788 8,885 715,092 0 2,168,075 Earnings on investments Interest on participant loans 0 0 0 36,065 36,065 Interest on guaranteed investment contracts 0 0 0 0 169,330 Interest on common/collective trusts 0 0 0 0 158,183 Dividends on employer securities 0 0 8,563 0 8,563 Net gain/(loss) from registered investment companies (3,536) 11,473 0 0 686,881 Net gain on sale of employer securities 0 0 25,264 0 25,264 Unrealized appreciation of assets 0 0 1,112,566 0 1,112,566 --------- --------- ----------- --------- ------------ Total earnings on investments (3,536) 11,473 1,146,393 36,065 2,196,852 --------- --------- ----------- --------- ------------ Total additions 35,252 20,358 1,861,485 36,065 4,364,927 --------- --------- ----------- --------- ------------ DEDUCTIONS - ---------- Participant benefit payments 0 0 (88,134) (23,302) (190,153) Participant account fees 0 0 (109) 0 (780) --------- --------- ----------- --------- ------------ Net increase 35,252 20,358 1,773,242 12,763 4,173,994 --------- --------- ----------- --------- ------------ Transfers (to)/from: Other trust accounts 350,773 234,752 353,174 0 0 Net loans (2,662) 955 (58,082) 232,019 0 MCI Exempt 401(k) Plan 0 0 (82,468) (10,786) (209,933) MCI Non-Exempt 401(k) Plan (88) (29) (2,371) 0 (7,744) Net assets available for benefits, beginning of year 0 0 4,213,086 390,896 13,081,149 --------- --------- ----------- --------- ------------ Net assets available for benefits, end of year $ 383,275 $ 256,036 $ 6,196,581 $ 624,892 $ 17,037,466 ========= ========= =========== ========= ============ Page 17 NOTE 3 - Continued WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION FOR THE YEAR ENDED: DECEMBER 31, 1995 Putnam Dreyfus Long-Term Voyager MCI Common S&P 500 Fixed Participant Fund Stock Stock Index Income Loans Total ---------- ---------- --------- --------- --------- --------- ADDITIONS - --------- Contributions: Non-cash employer $ 0 $ 504,446 $ 0 $ 0 $ 0 $ 504,446 Participants 432,232 269,860 238,867 645,861 0 1,586,820 Rollovers 30,000 0 0 143,336 0 173,336 ---------- ---------- --------- --------- --------- --------- Total contributions 462,232 774,306 238,867 789,197 0 2,264,602 ---------- ---------- --------- --------- --------- --------- Earnings on investments: Interest on guaranteed investment contracts 0 0 0 212,599 0 212,599 Interest on participant loans 0 0 0 0 25,748 25,748 Dividends on employer securities 0 7,660 0 0 0 7,660 Unrealized appreciation 0 1,059,467 0 0 0 1,059,467 Net investment gain from collective investment funds of trustee 116 2,333 4,695 83,608 0 90,752 Net investment gain from registered investment company 568,779 0 380,440 0 0 949,219 ---------- ---------- --------- --------- --------- --------- Total earnings on investments 568,895 1,069,460 385,135 296,207 25,748 2,345,445 ---------- ---------- --------- --------- --------- --------- Total additions 1,031,127 1,843,766 624,002 1,085,404 25,748 4,610,047 DEDUCTIONS - ---------- Participant Benefit Payments (29,470) (74,946) ( 21,261) (115,664) 0 (241,341) ---------- ---------- --------- --------- --------- --------- Net Increase 1,001,657 1,768,820 602,741 969,740 25,748 4,368,706 Transfers (to) from: MCI Retirement Savings Plan (31,562) (39,706) ( 7,922) ( 40,298) ( 9,350) (128,838) Other trust accounts 64,453 27,138 31,746 (123,337) 0 0 Net loans ( 9,137) ( 11,574) ( 9,574) ( 2,062) 32,347 0 Net assets available for benefits, beginning of year 1,225,003 2,468,408 963,836 3,841,883 342,151 8,841,281 ---------- ---------- ---------- ---------- --------- ----------- Net assets available for benefits, end of year $2,250,414 $4,213,086 $1,580,827 $4,645,926 $ 390,896 $13,081,149 ========== ========== ========== ========== ========= =========== Page 18 NOTE 4 - PARTICIPANTS' ACCOUNTS As of December 31, 1996 and 1995, the Plan held 188,824 and 159,544 shares, respectively, of MCI Communications Corporation Common Stock at fair market values of $6,172,278 and $4,168,087, respectively. Of these shares, 18,484 and 22,163 were contributed by the Company during the Plan years ended December 31, 1996 and 1995, respectively, as the Company's matching contributions. During the Plan years ended December 31, 1996 and 1995, 3,060 and 4,045 shares, respectively, of MCI Communications Corporation Common Stock were distributed to participants. As of December 31, 1996 and 1995, the Plan's benefit claims payable was $565,907 and $571,858, which includes 5,782 and 7,230 shares of MCI Communications Corporation Common Stock at fair market values of $188,999 and $188,884, respectively. Net assets include account balances of participants who have terminated from the Company and have not received a distribution as of year end. NOTE 5 - TRANSFER OF ASSETS (FROM) THE PLAN During the year ended December 31, 1996 and 1995, certain participants transferred between the Plan and the MCI Communications Corporation 401(k) Plan for Exempt Employees (formerly the MCI Communications Corporation Retirement Savings Plan). During the years ended December 31, 1996 and 1995, assets valued at $209,933 and $128,838, respectively, including 3,012 and 2,101 shares of MCI Communications Corporation Common Stock at a fair value of $82,468 and $39,706, respectively, were transferred from the Plan. During the year ended December 31, 1996, certain participants transferred between the Plan and the MCI Communications Corporation 401(k) Plan for Non-Exempt Employees (formerly the MCI Communications Corporation Consumer Markets 401(k) Plan). During the year ended December 31, 1996, assets valued at $7,744, including 85 shares of MCI Communications Corporation Common Stock at a fair value of $2,371 were transferred from the Plan. Page 19 NOTE 6 - FEDERAL INCOME TAX STATUS The Plan Administrator has received a favorable determination letter, dated September 3, 1992, from the Internal Revenue Service covering the Plan as amended through February 1, 1990 stating that the Plan, as designed is a qualified plan in accordance with Section 401(a) of the Internal Revenue Code ("Code"), and its corresponding trust is exempt from taxation under Section 501(a) of the Code. The Plan has been amended and restated; however, the Plan Administrator believes the Plan is being operated in a manner designed to maintain its tax-qualified status. In addition, the Company will apply for a new determination letter covering the Plan, as restated, and expects to receive a favorable determination. NOTE 7 - MERGER AGREEMENT Effective November 3, 1996, MCI Communications Corporation ("MCI") and British Telecommunications, plc ("BT") entered into an Agreement and Plan of Merger ("the Merger"). As a result of the proposed merger, the stockholders of MCI and BT will become the owners of a combined company, renamed Concert plc (Concert). Under the terms of the Merger, each outstanding share of the MCI's common stock (other than treasury shares and shares owned by BT including the shares of Class A common stock) will be converted into the right to receive (i) .54 American Depository Share (ADS) of Concert, each ADS representing ten ordinary shares of 25 pence each of Concert (with cash being paid in lieu of fractional ADSs), and (ii) $6.00 in cash. The shareholders of the respective companies approved the Merger at meetings held on April 2, 1997 and April 15, 1997, respectively. Completion of the Merger is subject to certain conditions, including the receipt of required regulatory approvals. MCI expects to complete the Merger in the fall of 1997. Page 20 SCHEDULE I WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1996 NUMBER CURRENT OF VALUE AT SHARES COST 12/31/96 -------- ------ ---------- DESCRIPTION/ISSUER - ------------------- LOANS TO PARTICIPANTS *Participant loan accounts (rates range 7%-10%) (maturities range 1997-2011) $ 0 $ 624,892 ----------- INTEREST IN COLLECTIVE INVESTMENT FUNDS *Putnam Stable Value Fund 3,078,966 3,078,966 *Mellon Bank Temporary Investment Fund 11,335 $ 11,335 ----------- Total interest in collective investment funds $ 3,090,301 ----------- INTEREST IN REGISTERED INVESTMENT COMPANIES EuroPacific Growth Fund 1,786 44,614 46,512 Dreyfus S&P 500 Stock Index 121,734 1,368,591 1,936,795 *Putnam Voyager Fund 174,161 2,230,029 2,807,491 *Putnam New Opportunities Fund 9,396 388,417 381,773 *Putnam Balanced Retirement Fund 24,678 255,671 255,174 ----------- Total interest in registered investment companies 5,427,745 ----------- GUARANTEED INVESTMENT CONTRACTS** Allstate Life Insurance (5.90% matures 7/1/98) 735,981 735,981 John Hancock Mutual Life (8.05% matures 6/30/99) 946,453 946,453 ----------- Total guaranteed investment contracts 1,682,434 ----------- COMMON STOCK * MCI Communications Corporation 188,824 3,958,885 6,172,278 ----------- TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $16,997,650 =========== * Denotes a party-in-interest ** Current value is considered to be contract value Page 21 SCHEDULE II WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES EIN: 13-1989550 ITEM 27d SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1996 Transaction or series of transactions exceeding 5% of beginning fair value of plan assets for the plan year January 1, 1996 to December 31, 1996 are considered reportable transactions. Fair value at January 1, 1996 is $13,084,541. Five percent (5%) of fair value is $654,227. Current Identity Expense Value Of of Description Incurred Asset on Party Of Purchase Selling Lease With Cost of Transaction Net Involved Asset Price Price Rental Transaction Asset Date Gain/(Loss) - -------- ----- ----- ----- ------ ----- ----- ---- ----------- *Mellon Trust EB Temporary $2,234,850 $2,269,331 $4,504,181 $4,504,181 Investment Fund 486 Purchases 188 Sales Metropolitan Life GIC Contract 0 872,258 872,258 872,258 GAC #12529-169 0 Purchases 3 Sales *Putnam 773,139 438,615 1,089,832 1,211,754 $ 121,922 Voyager Fund 64 Purchases 28 Sales *Putnam Stable 2,050,663 890,446 2,941,109 2,941,109 Value Fund 62 Purchases 54 Sales *MCI Communications Corporation 964,020 220,923 1,183,531 1,184,943 1,412 Common Stock 53 Purchases 26 Sales <FN> *Denotes a Party-in-Interest </FN> Page 22 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan sponsor of the Western Union International, Inc. 401(k) Plan for Collectively Bargained Employees has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. WESTERN UNION INTERNATIONAL, INC. 401(k) PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES Date: June 27, 1997 By: Frank R. Conrad --------------------------------- Frank R. Conrad Controller Western Union International, Inc. Page 23