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MCI Reports 52% Decline in Second-Quarter Net

July 19, 1986

MCI Communications reported a 52% earnings decline for the second quarter ended June 30.

Washington-based MCI, AT&T's closest rival in long-distance service, said its earnings would have fallen a more modest 14% except for a one-time gain in the year-earlier quarter. MCI received a $30-million payment in the 1985 quarter as the cash portion of the settlement of an antitrust lawsuit against Bell Atlantic.

MCI said it earned $16.4 million, compared to $34.3 million a year earlier. Spokesman Gary Tobin said the year-earlier earnings would have been $19.1 million without the after-tax gain from the payment from Bell Atlantic, the Philadelphia-based Bell operating company.

MCI's revenue rose 57% to $942.5 million from $601.2 million a year earlier. The latest figures include combined results of MCI and Satellite Business Systems, the former long-distance arm of IBM that MCI acquired Feb. 28.

MCI said earnings were affected by the cost of integrating SBS into the operation. SBS lost money under IBM's ownership, but Tobin said it was no longer possible to distinguish it from the rest of MCI.

A gain will be reflected in the next quarter in connection with the $120-million sale of its Airsignal cellular telephone subsidiary, MCI said.

For the first half of 1986, MCI's net income was $36.2 million on revenue of $1.76 billion, compared to $74.7 million on revenue of $1.17 billion last year.

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