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Exhibit 12.1
WORLDCOM, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
(In Thousands of Dollars)
For the Three Months
Year Ended December 31, Ended March 31,
------------------------------------------------ --------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- --------- -------- --------- ---------
Earnings:
Pretax income (loss) from
continuing operations $ 65,646 $ 20,401 $198,237 $(76,108) $405,596 $ 81,525 $139,658
Fixed charges, net of capitalized
interest 38,116 38,720 58,999 87,455 300,094 73,425 62,698
-------- -------- -------- --------- -------- --------- ---------
Earnings $103,762 $ 59,121 $257,236 $ 11,347 $705,690 $154,950 $202,356
======== ======== ======== ========= ======== ========= =========
Fixed charges:
Interest cost $ 34,495 $ 33,815 $ 38,657 $ 49,203 $253,945 $ 62,308 $ 59,304
Amortization of financing costs 1,018 1,464 1,792 2,086 2,811 710 713
Interest factor of rent expense 5,503 4,833 9,967 10,300 15,030 3,468 4,454
Preferred dividend requirements -- 2,112 11,683 27,766 33,191 6,939 505
-------- -------- -------- --------- -------- --------- ---------
Fixed charges $ 41,016 $ 42,224 $ 62,099 $ 89,355 $304,977 $ 73,425 $ 64,976
======== ======== ======== ========= ======== ========= =========
Deficiency of earnings to fixed
charges $ -- $ -- $ -- $(78,008) $ -- $ -- $ --
======== ======== ======== ========= ======== ========= =========
Ratio of earnings to combined fixed
charges and preferred stock
dividends 2.53:1 1.40:1 4.14:1 0.13:1 2.31:1 2.11:1 3.11:1
======== ======== ======== ========= ======== ========= =========
<FN>
See notes to computation of ratio of earnings to combined fixed charges and preferred stock dividends.
Notes to Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends
(1) On January 5, 1995, the Company completed the acquisition of Williams
Telecommunications Group, Inc. for approximately $2.5 billion in cash which
was accounted for as a purchase.
(2) As a result of the mergers with IDB Communications Group, Inc. (the "IDB
Merger") and Advanced Telecommunications Corporation (the "ATC Merger"),
the Company initiated plans to reorganize and restructure its management
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and operational organization and facilities to eliminate duplicate
personnel, physical facilities and service capacity, to abandon certain
products and marketing activities, and to further take advantage of the
synergy available to the combined entities. Also, during the fourth
quarter of 1993, plans were approved to reduce IDB Communications Group,
Inc.'s cost structure and to improve productivity. Accordingly, in 1994,
1993 and 1992, the Company charged to operations the estimated costs of
such reorganization and restructuring activities, including employee
severance, physical facility abandonment and duplicate service capacity.
These costs totaled $43.7 million in 1994, $5.9 million in 1993 and $79.8
million in 1992.
Also, during 1994 and 1992, the Company incurred direct merger costs of
$15.0 million and $7.3 million, respectively, related to the IDB Merger (in
1994) and the ATC Merger (in 1992). These costs include professional fees,
proxy solicitation costs, travel and related expenses and certain other
direct costs attributable to these mergers.
(3) In connection with certain debt refinancing, the Company recognized in 1993
and 1992 extraordinary items of approximately $7.9 million and $5.8
million, respectively, net of income taxes, consisting of unamortized debt
discount, unamortized issuance cost and prepayment fees.
(4) In the third quarter of 1995, Metromedia Company ("Metromedia") converted
its Series 1 Preferred Stock into 21,876,976 shares of WorldCom common
stock and exercised warrants to acquire 3,106,976 shares of WorldCom common
stock and immediately sold its position of 30,849,548 shares of WorldCom
common stock in a public offering. In connection with the preferred stock
conversion, WorldCom made a one-time non-recurring payment of $15.0
million to Metromedia, representing a discount to the minimum nominal
dividends that would have been payable on the Series 1 Preferred Stock
prior to the September 15, 1996 optional call date of approximately $26.6
million (which amount includes an annual dividend requirement of $24.5
million plus accrued dividends to such call date).