MCI Case - MCI Case 401 Ben Alexander Terra Collette...

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MCI Case 401 Ben Alexander Terra Collette Natalia Martinez Eric Schneck Submitted: 10/18/10
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Sources and Uses Statement Sources Uses Sources Uses Sources Uses Sources Uses Sources Uses (6) Operating Earnings $380 $390 $590 $890 $1,125 (7) Interest Paid ($100) ($100) ($100) ($100) ($100) (8) Other Income $13 $3 $4 $4 $5 (9) Provision for Taxes ($83) ($58) ($123) ($206) ($299) (11)Deferred Taxes $65 $88 $106 $120 $140 (13) Cap Ex (new) ($890) ($1,467) ($1,881) ($2,710) ($1,357) (14) Cap Ex (replacement) $0 $0 ($50) ($50) ($100) (16) Depreciation $173 $272 $412 $601 $749 Total $631 ($1,073) $753 ($1,625) $1,112 ($2,154) $1,615 ($3,066) $2,019 ($1,856) Need for External Financing $442 $872 $1,042 $1,451 ($163) MCI FY1984 MCI FY1985 MCI FY1986 MCI FY1987 MCI FY1988 Security Type Total Issue Net Proceeds Cost Cost/Proceeds Common Stock $39,600,000 $35,235,000 $4,365,000 14.20% Preferred Stock $145,000,000 $135,610,000 $9,390,000 7.19% Subordinated Debentures $372,450,000 $362,522,500 $9,927,500 3.20% Convertible Bonds $750,000,000 $737,800,000 $12,200,000 1.70% Total $1,307,050,000 $1,271,167,500 $35,882,500 5.88% 1. What is the likely level of MCI’s needs for external financing over the next five years (1984-1988)? How confident are you in the accuracy of this forecast? Why? MCI needs external financing in order to make up the shortfall of cash they will be facing from 1984 – 1988. By looking at the above chart they will need $442 million in 1984, and a total of
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