UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

[X]  Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

        For the quarterly period ended March 31, 1997

                                       or

[ ]  Transition  Report  pursuant  to Section  13 or 15(d) of the  Securities
     Exchange Act of 1934

        For the transition period from           to

                          Commission File Number 0-6547

                         MCI COMMUNICATIONS CORPORATION

             (Exact name of registrant as specified in its charter)

              Delaware                                52-0886267
   (State or other jurisdiction of                   (IRS Employer
    incorporation or organization)                   Identification No.)

             1801 Pennsylvania Avenue, N.W., Washington, D.C. 20006
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (202) 872-1600

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                    Yes X No

As of March 31, 1997, the registrant had outstanding 135,998,932 shares of Class
A common stock and 551,068,389 shares of common stock.


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                                     PAGE 2

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q

                      For The Quarter Ended March 31, 1997



                                      INDEX


                                                                      Page No.
                                                                      --------

PART I:  FINANCIAL INFORMATION

      ITEM 1:  FINANCIAL STATEMENTS

         Income Statements for the three months ended March 31, 1997
         and 1996                                                           3

         Balance Sheets as of March 31, 1997 and December 31, 1996        4-5

         Statements of Cash Flows for the three months ended
         March 31, 1997 and 1996                                            6

         Statement of Stockholders' Equity for the three months
         ended March 31, 1997                                               7

         Notes to Interim Condensed Consolidated Financial
         Statements                                                      8-10

      ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS            11-23


PART II:  OTHER INFORMATION

      ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K                            24


SIGNATURE                                                                  25

EXHIBIT INDEX                                                              26



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                                     PAGE 3
PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                INCOME STATEMENTS
                     (In millions, except per share amounts)
                                   (unaudited)

                                                            Three Months Ended
                                                                 March 31,
                                                           --------------------
                                                             1997         1996
                                                            ------       ------
REVENUE ..............................................     $ 4,883      $ 4,491
                                                           -------      -------
OPERATING EXPENSES
  Cost of services ...................................       2,525        2,344
  Sales, operations and general ......................       1,319        1,185
  Depreciation .......................................         453          381
                                                           -------      -------
TOTAL OPERATING EXPENSES .............................       4,297        3,910
                                                           -------      -------
INCOME FROM OPERATIONS ...............................         586          581

Interest expense .....................................         (58)         (50)
Interest income ......................................           6           11
Equity in income (losses) of
  affiliated companies ...............................         (37)         (55)
Other expense, net ...................................          (3)          (3)
                                                           -------      -------
INCOME BEFORE INCOME TAXES ...........................         494          484

Income tax provision .................................         184          189

Distributions on subsidiary Trust mandatorily
   redeemable preferred securities ...................          15            -
                                                           -------      -------
NET INCOME ...........................................     $   295      $   295
                                                           =======      =======
EARNINGS PER COMMON AND
  COMMON EQUIVALENT SHARE ............................     $   .42      $   .42

Weighted average number of shares
  of common stock and common stock
  equivalents outstanding ............................         701          701

See accompanying Notes to Interim Condensed Consolidated Financial Statements.


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                                     PAGE 4

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                 BALANCE SHEETS
                                   (unaudited)

                                                         March 31, December 31,
                                                             1997         1996
                                                            -------      -------
                                                                (In millions)
ASSETS

CURRENT ASSETS
  Cash and cash equivalents ..........................      $   199      $   187
  Marketable securities ..............................           16          161
  Receivables, net of allowance for
    uncollectibles of $290 and $273 million ..........        3,617        3,480
  Other assets .......................................        1,013          888
                                                            -------      -------
   TOTAL CURRENT ASSETS ..............................        4,845        4,716
                                                            -------      -------

PROPERTY AND EQUIPMENT, net ..........................       12,493       12,174

OTHER ASSETS
  Noncurrent marketable securities ...................           27           58
  Other assets and deferred charges, net .............          880          678
  Investment in affiliates ...........................          668          690
  Investment in News Corp. ...........................        1,350        1,350
  Investment in DBS ..................................          939          893
  Goodwill, net ......................................        2,405        2,419
                                                            -------      -------
   TOTAL OTHER ASSETS ................................        6,269        6,088
                                                            -------      -------
   TOTAL ASSETS ......................................      $23,607      $22,978
                                                            =======      =======









See accompanying Notes to Interim Condensed Consolidated Financial Statements.


<PAGE>


                                     PAGE 5

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                 BALANCE SHEETS
                                   (unaudited)
                                                        March 31,  December 31,
                                                            1997         1996
                                                          --------     --------
                                                               (In millions)
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable ...................................    $    895     $    992
  Accrued telecommunications expense .................       2,101        2,045
  Other accrued liabilities ..........................       1,773        1,806
  Long-term debt due within one year .................         196          203
                                                          --------     --------
   TOTAL CURRENT LIABILITIES .........................       4,965        5,046
                                                          --------     --------
NONCURRENT LIABILITIES
  Long-term debt .....................................       4,984        4,798
  Deferred taxes and other ...........................       1,969        1,723
                                                          --------     --------
   TOTAL NONCURRENT LIABILITIES ......................       6,953        6,521
                                                          --------     --------

COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED
   SECURITIES OF SUBSIDIARY TRUST HOLDING SOLELY
   JUNIOR SUBORDINATED DEFERRABLE INTEREST
   DEBENTURES OF THE COMPANY .........................         750          750

STOCKHOLDERS' EQUITY
  Class A common stock, $.10 par value,
    authorized 500 million shares, issued
    136 million shares ...............................          14           14
  Common stock, $.10 par value, authorized
    2 billion shares, issued
    593 million shares ...............................          60           60
  Additional paid in capital .........................       6,344        6,410
  Retained earnings ..................................       5,526        5,231
  Treasury stock, at cost,
    42 and 44 million shares .........................      (1,005)      (1,054)
                                                          --------     --------
   TOTAL STOCKHOLDERS' EQUITY ........................      10,939       10,661
                                                          --------     --------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........    $ 23,607     $ 22,978
                                                          ========     ========


See accompanying Notes to Interim Condensed Consolidated Financial Statements.


<PAGE>


                                     PAGE 6

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS
                                   (unaudited)
                                                             Three Months Ended
                                                                  March 31,
                                                             ------------------
                                                              1997        1996
                                                             ------      ------
                                                                (In millions)
OPERATING ACTIVITIES
  Receipts from customers ..............................    $ 4,570     $ 4,302
  Payments to suppliers and employees ..................     (3,918)     (3,375)
  Taxes paid ...........................................        (99)       (206)
  Interest paid ........................................       (110)        (61)
  Interest received ....................................          6          10
                                                            -------     -------
       CASH FROM OPERATING ACTIVITIES ..................        449         670
                                                            -------     -------
INVESTING ACTIVITIES
  Capital expenditures for property
    and equipment ......................................       (740)       (782)
  Purchases, maturities and sales of
    marketable securities, net .........................        176         157
  Investment in Direct Broadcast Satellite .............        (69)       (139)
  Investment in affiliates .............................        (17)        (12)
  Other, net ...........................................         15          (7)
                                                            -------     -------
       CASH USED FOR INVESTING ACTIVITIES ..............       (635)       (783)
                                                            -------     -------
       NET CASH FLOW BEFORE FINANCING ACTIVITIES .......       (186)       (113)
                                                            -------     -------
FINANCING ACTIVITIES
  Payment of Senior Notes and other debt ...............       (113)       (175)
  Commercial paper and bank credit facility
    activity, net ......................................        271         214
  Issuance of common stock for employee plans ..........        133         142
  Purchase of treasury stock ...........................        (93)       (115)
                                                            -------     -------
       CASH FROM FINANCING ACTIVITIES ..................        198          66
                                                            -------     -------
Net increase (decrease) in cash and cash equivalents ...         12         (47)
Cash and cash equivalents - beginning balance ..........        187         471
                                                            -------     -------
Cash and cash equivalents - ending balance .............    $   199     $   424
                                                            =======     =======
Reconciliation of net income to cash from operating 
  activities:
Net income .............................................    $   295     $   295
Adjustments to net income:
  Depreciation and amortization ........................        467         396
  Equity in (income) losses of affiliated companies ....         37          55
  Deferred income tax provision ........................        114          37
Net change in operating activity accounts other than cash and cash equivalents:
  Receivables ..........................................       (137)       (185)
  Operating accounts payable ...........................       (233)        237
  Other operating activity accounts ....................        (94)       (165)
                                                            -------     -------
Cash from operating activities .........................    $   449     $   670
                                                            =======     =======


See accompanying Notes to Interim Condensed Consolidated Financial Statements.


<PAGE>


                                     PAGE 7

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (unaudited)



                                                            Treas.        Total
                         Class A         Addit'l            Stock,       Stock-
                         Common Common   Paid in  Retained    at        holders'
                         Stock  Stock    Capital  Earnings   Cost        Equity
                         ------ ------   -------  --------  -------     -------
                                          (In millions)
Balance at
  December 31, 1996 .....   $14   $60   $ 6,410    $5,231   $(1,054)   $ 10,661

Common stock issued
  for employee stock
  and benefit plans and
  other activity
  (4.5 million shares) ..     -     -       (66)        -       136          70

Net income ..............     -     -         -       295         -         295

Treasury stock
  purchased
  (2.5 million shares) ..     -     -         -         -       (87)        (87)
                            ---   ---   -------    ------   -------    --------
Balance at
  March 31, 1997 ........   $14   $60   $ 6,344    $5,526   $(1,005)   $ 10,939
                            ===   ===   =======    ======   =======    ========
















See accompanying Notes to Interim Condensed Consolidated Financial Statements.


<PAGE>


                                     PAGE 8

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
          NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

NOTE 1. GENERAL

The accompanying  unaudited interim condensed  consolidated financial statements
have  been  prepared  in  accordance  with  the  rules  and  regulations  of the
Securities and Exchange  Commission  (SEC). The interim  condensed  consolidated
financial  statements  include the consolidated  accounts of MCI  Communications
Corporation and its majority-owned subsidiaries (collectively, the company) with
all  significant  intercompany   transactions  eliminated.  In  the  opinion  of
management,  all adjustments  (consisting only of normal recurring  adjustments)
necessary for a fair statement of the financial position,  results of operations
and cash  flows  for the  interim  periods  presented  have been  made.  Certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance with generally accepted accounting principles (GAAP) have
been  condensed  or omitted  pursuant to such SEC rules and  regulations.  These
financial  statements  should be read in conjunction  with the company's  Annual
Report on Form 10-K for the year ended December 31, 1996.

NOTE 2. MERGER AGREEMENT WITH BRITISH TELECOMMUNICATIONS PLC

On November 3, 1996,  the company  entered into an Agreement  and Plan of Merger
(the  Merger  Agreement)  with  British  Telecommunications  plc (BT),  a public
limited  company  organized  under the laws of England and Wales. As a result of
the proposed  merger (the Merger),  the  stockholders of the company and BT will
become the owners of a combined  company,  renamed Concert plc (Concert).  Under
the terms of the  Merger  Agreement,  each  outstanding  share of the  company's
common  stock  (other than  treasury  shares and shares  owned by BT,  including
shares of Class A common stock, all of which will be canceled upon  consummation
of the Merger)  will be  converted  into the right to receive  (i) .54  American
Depositary  Share (ADS) of Concert,  (each ADS represents ten ordinary shares of
25 pence each of Concert,  with cash being paid in lieu of fractional ADSs), and
(ii) $6.00 in cash.

In April 1997, the stockholders of the company and BT approved the Merger and on
May 14, 1997, the European  Commission  also approved the Merger.  Completion of
the Merger,  which is expected by the fall of 1997,  is still subject to certain
conditions,  including the receipt of required U.S.  regulatory  approvals.  The
Merger will be accounted for under the purchase method of accounting  under both
United States (U.S.) and United Kingdom  (U.K.)  generally  accepted  accounting
principles.





<PAGE>


                                     PAGE 9

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
          NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


NOTE 3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards No. 128, Earnings Per Share, which is effective
for fiscal years ending after December 15, 1997,  with earlier  application  not
permitted.  The new  standard  replaces  the current  primary and fully  diluted
earnings  per share  calculations  with  basic and  diluted  earnings  per share
calculations.  Upon adoption,  earnings per share will be restated for the prior
periods  presented in the  financial  statements.  Adoption of this new standard
will not have a material impact on the company's earnings per share.

NOTE 4. CONTINGENCIES

The  company,  in the  normal  course  of  business,  is a party to a number  of
lawsuits and regulatory and other proceedings. The company's management does not
expect that the results in these lawsuits and  proceedings  will have a material
adverse effect on the consolidated  financial  position or results of operations
of the company.

In December  1992, the company  petitioned the United States  District Court for
the District of Columbia for a  declaratory  ruling that certain  patents  being
asserted  against  the company by AT&T Corp.  (AT&T) were  invalid and that AT&T
should therefore,  and for other reasons,  be barred from enforcing them against
the company. AT&T counterclaimed that the company was violating certain patents.
In May 1993,  AT&T and Unitel  Communications  Inc., a Canadian  corporation  in
which AT&T has an equity  interest,  filed a companion suit in Canada,  alleging
that the company and the Stentor  Group of Canadian  telephone  companies  (with
which the company has an alliance) are  infringing in Canada four of the patents
at issue in the U.S.  litigation.  On March 6,  1997,  a  Stipulation  and Order
dismissing  the  actions in the U.S.  with  prejudice  was entered in the United
States  District  Court for the  District  of  Columbia  and  Consent  Judgement
dismissing the matter with prejudice in Canada was entered on February 28, 1997.

On  November  4, 1996 and  thereafter,  the  company  and all of its  directors,
including the two directors who are also  executive  officers of the company and
the three directors elected by BT, were named as defendants in twelve complaints
filed in the  Court of  Chancery  in the  State of  Delaware.  BT was named as a
defendant  in ten of the  complaints.  The  complaints  were  brought by alleged
shareholders  of the company,  individually  and purportedly as class actions on
behalf of all other stockholders of the company.  The complaints allege breaches
of fiduciary duty by the company's directors in connection with

<PAGE>



                                     PAGE 10

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
          NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


the Merger.  Nine of the complaints in which BT was named as a defendant  allege
that BT aided and abetted those breaches of duty. One of the complaints in which
BT was named as a defendant  alleges that BT owes fiduciary  duties to the other
stockholders of the company and that it breached those duties in connection with
the Merger. The complaints seek damages and other relief. The defendants believe
that the  complaints  are without merit and the company does not expect that the
above actions will have a material adverse effect on the consolidated  financial
position or results of operations of the company.

NOTE 5. SUBSEQUENT EVENT

On April 30, 1997,  the company  entered into a revolving  credit loan agreement
with several financial institutions, under which the company may borrow up to $4
billion.  Borrowings  under  this  agreement  mature  on April  28,  1998.  This
agreement replaces the company's September 1996 $2 billion revolving credit loan
agreement.


<PAGE>


                                     PAGE 11
PART I.
ITEM 2.
                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

GENERAL

-------

The following  discussion  and analysis  provides  information  that  management
believes is relevant to an assessment and  understanding  of MCI  Communications
Corporation and subsidiaries'  (collectively,  the company) consolidated results
of  operations  and  financial  condition.  The  discussion  should  be  read in
conjunction with the interim  condensed  consolidated  financial  statements and
notes  thereto and the  company's  Annual Report on Form 10-K for the year ended
December 31, 1996.

GLOBAL MERGER AGREEMENT
-----------------------

On November 3, 1996,  the company  entered into an Agreement  and Plan of Merger
(the  Merger  Agreement)  with  British  Telecommunications  plc (BT),  a public
limited  company  organized  under the laws of England and Wales. As a result of
the proposed  merger (the Merger),  the  stockholders of the company and BT will
become the owners of a combined company, renamed Concert plc (Concert).


-------------------------------------------------------------------------------
Forward-looking  Statements  May Prove  Inaccurate  The company has made certain
forward-looking  statements  in  Management's  Discussion  and Analysis that are
subject  to  risks  and   uncertainties.   Forward-looking   statements  include
information concerning the possible future results of operations of the company,
its long  distance  telecommunication  services  business,  its  investments  in
ventures and developing markets (VDM) businesses, the possible future results of
operations of the company and Concert after the Merger and  statements  preceded
by, followed by or that include the words "believes", "expects",  "anticipates",
or similar expressions.  For those statements, the company claims the protection
of the  safe-harbor  for  forward-looking  statements  contained  in the Private
Securities  Litigation  Reform  Act of 1995.  The reader is  cautioned  that the
following  important  factors,  in  addition  to those  contained  elsewhere  in
Management's  Discussion  and Analysis  could  affect the future  results of the
company, its long distance telecommunication services and VDM businesses and the
company  and Concert  after the Merger and could  cause those  results to differ
materially from the statements and information  expressed in the forward-looking
statements,  such as: material adverse changes in the economic conditions in the
markets served by the company;  a significant  delay in the expected  closing of
the Merger;  future regulatory actions and conditions in the company's operating
areas,  including  the  ability of the  company to obtain  local  facilities  at
competitive  rates;  and competition  from others in the U.S. and  international
long  distance  markets,  including  the entry of the  regional  Bell  operating
companies (RBOCs) and other companies into the long distance markets in the U.S.
For  additional  information  about  other  important  factors  that  should  be
considered,  the reader should read the company's Annual Report on Form 10-K for
the year ended December 31, 1996.


<PAGE>



                                     PAGE 12

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

Under the terms of the Merger Agreement, each outstanding share of the company's
common  stock  (other than  treasury  shares and shares  owned by BT,  including
shares of Class A common stock, all of which will be canceled upon  consummation
of the Merger)  will be  converted  into the right to receive  (i) .54  American
Depositary  Share (ADS) of Concert,  (each ADS represents ten ordinary shares of
25 pence each of Concert,  with cash being paid in lieu of fractional ADSs), and
(ii) $6.00 in cash.

In April 1997, the stockholders of the company and BT approved the Merger and on
May 14, 1997, the European  Commission  also approved the Merger.  Completion of
the Merger,  which is expected by the fall of 1997,  is still subject to certain
conditions,  including the receipt of required U.S.  regulatory  approvals.  The
Merger will be accounted for under the purchase method of accounting  under both
U.S. and U.K.  GAAP.  The company  believes  that  Concert,  operating  with the
combined  networks,  financial  resources,  management,  personnel and technical
expertise  of the company and BT,  will be better able to  capitalize  on growth
opportunities  in  the  telecommunications   industry,   both  domestically  and
internationally. In addition, the company expects Concert will be able to derive
significant  advantages  from the more  efficient  utilization of their combined
assets,  management and personnel.  Under the terms of the Merger Agreement, the
company and BT will continue to sell and service customers using their own brand
names in their respective home countries.

GLOBAL ALLIANCES
----------------

On April 14, 1997,  the  company,  BT and  Portugal  Telecom  formed a strategic
alliance to provide  communication  services in Portugal and Latin America.  The
voice  products  of Concert  Communications  Company  (CCS) will be  exclusively
distributed by Portugal Telecom in Portugal. The company will take a 0.5% equity
stake in Portugal Telecom later in 1997.

On April 18, 1997, the company,  BT and Telefonica de Espana (Telefonica) formed
a strategic alliance to provide telecommunication services and to explore growth
opportunities  in the Americas and Europe.  Telefonica  Internacional SA (TISA),
Telefonica's  international  unit,  and the company will create an equally owned
Pan American joint venture, managed by TISA, called Telefonica Panamericana-MCI.
The  joint  venture  will  pursue  new   opportunities  in  the  Latin  American
telecommunications  market.  As part of the  alliance,  Telefonica  will have an
opportunity to invest in Avantel,  S.A. de C.V.  (Avantel) and will form a joint
venture with MCI Systemhouse (Systemhouse) to service the Latin American systems
integration market.



<PAGE>


                                     PAGE 13

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996


TELECOMMUNICATIONS  REGULATORY ENVIRONMENT
------------------------------------------

The  Telecommunications  Act of 1996 (the Act) was  enacted by  Congress to help
minimize  legal  barriers  to  local  telephone  market  entry  while  affording
residential  and  business  consumers  protection  from  unfair  competition  by
incumbent local exchange carriers  (ILECs).  A company is permitted to enter the
local market by constructing new facilities, leasing unbundled network elements,
reselling  local  network  capacity  or by  partnering  with  other  new  market
entrants.  The Act also  establishes  criteria  pursuant to which  regional Bell
operating  companies'  (RBOCs)  applications to provide  in-region long distance
service  may be  approved by the Federal  Communications  Commission  (FCC),  in
consultation  with  the  relevant  state  regulatory  agencies  as  well  as the
Department of Justice (DOJ).

In order to implement  the Act, the FCC outlined a trilogy of issues that needed
to   be   resolved   in   order   to   ensure    competition    in   the   local
market-interconnection,  universal  service and access charge reform.  On May 7,
1997, the FCC completed action on the trilogy when it rendered its access charge
and universal service reform decisions. The FCC adopted a plan that would reduce
access charges  approximately $1.7 billion on an industry-wide basis,  beginning
on July 1, 1997.  Adjustments  will be made  annually  as part of the LEC annual
access filing.  At the same time, the FCC adopted a new universal  service plan,
which  includes  current  subsidies  paid  by  long  distance  carriers  and new
obligations to fund  discounted  services for schools,  libraries,  rural health
care providers and low income  consumers,  that will become effective on January
1, 1998 and be funded by all telecommunications carriers. The company expects to
pass the savings from access  reductions on to  customers,  net of new universal
service obligations.

The order  rendered by the United States Court of Appeals for the Eighth Circuit
(the court)  staying  (the Stay) key pricing  provisions  of the FCC's rules for
interconnection  of local  services  with ILECs  remains in effect.  The company
still  anticipates  that the court will render its decision  sometime during the
second  quarter of this year.  Despite the  adverse  impact of the Stay on local
market  competition,  the company has  completed  most of its state  arbitration
proceedings and has received approval of  interconnection  agreements in several
states. Most of these agreements are being litigated in federal district court.
<PAGE>



                                     PAGE 14

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996



EARNINGS HIGHLIGHTS
-------------------

Income from  operations  was $586 million or 12% of revenue in the first quarter
of 1997  compared  to $581  million or 12.9% of revenue in the first  quarter of
1996.  The decrease in operating  margin over the prior year is due to increases
in sales, operations and general expenses in the ventures and developing markets
businesses  and   depreciation   expense   associated   with  additions  to  the
communications  system network in the long distance  telecommunication  services
business (core business) and local services business, which offset reductions in
telecommunications  expense, primarily in international settlements.  Net income
was $295 million or $0.42 per share in the first quarter of both 1997 and 1996.

CONSOLIDATED RESULTS OF OPERATIONS
----------------------------------

The  following  provides a discussion  of the  company's  consolidated  results,
comprised  of its core  business  and  ventures  and  developing  markets  (VDM)
businesses.  Refer to  "Enterprise  Reporting"  below for further  discussion of
these businesses.

During the first quarter of 1997, consolidated revenue increased $392 million or
approximately  9% over first  quarter of 1996 to $4,883  million.  Core business
revenue  increased  $334 million or 8.2% to $4,384  million,  while VDM revenue,
excluding  sales to the core  business,  increased  $58  million  or 13% to $499
million.  The increase in core business  revenue was due to strong volume growth
in business  markets,  despite the company's  move to  de-emphasize  the carrier
segment,   and  the  company's  continued  focus  on  enhanced  and  value-added
communication  service  offerings  to business  customers.  The  increase in VDM
revenue  was  primarily  due to  increased  revenue  in  Information  Technology
Services over the first quarter in the prior year.


<PAGE>



                                     PAGE 15

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996



Cost of  services  consists  of  telecommunications  expense  and costs of other
products   and   services    primarily    associated    with   VDM   businesses.
Telecommunications expense is primarily comprised of access facilities fees paid
to ILECs and other  domestic  service  providers,  and payments  made to foreign
telephone  companies  (international  settlements)  to  complete  calls  made to
foreign  countries  from the U.S. by the company's  customers.  In VDM, costs of
other  products  and  services  include  equipment,   software  and  information
technology  service  costs.  In the  first  quarter  of 1997,  cost of  services
increased $181 million or  approximately 8% over the first quarter of 1996. This
increase  was  fairly  consistent,  as  a  percentage,   with  the  increase  in
consolidated  revenue and reflects cost efficiencies in the core business.  As a
percentage of total revenue,  cost of services decreased from 52.2% in the first
quarter  of 1996 to 51.7% in the first  quarter of 1997.  In the core  business,
cost of  services as a  percentage  of revenue  decreased  to 50.4% in the first
quarter  of 1997  from  50.9% in the first  quarter  of 1996,  primarily  due to
decreases in international settlements and more efficient network use.

Sales, operations and general expenses increased in the first quarter of 1997 by
$134 million or 11% to $1,319  million  compared to $1,185  million in the first
quarter of 1996. In the core business,  sales,  operations and general  expenses
increased  8% over  the  first  quarter  of 1996  which is  consistent  with the
company's  core business  revenue  growth.  As a percentage  of revenue,  sales,
operations  and general  expenses  increased to 27% in the first quarter of 1997
from 26.4% in the first  quarter of the prior year.  This increase was primarily
due to VDM  sales,  operations  and  general  expenditures  associated  with the
company's  continued  development  in local  services  markets  and  Information
Technology Services and the related increases in marketing efforts and personnel
expenditures.

Depreciation  expense was $453 million in the first quarter of 1997, an increase
of $72 million or 19% over depreciation expense in the same quarter in the prior
year.  This increase was primarily  attributable to the impact of 1996 additions
to the  communications  system network to increase network capacity,  redundancy
and  reliability,  add  product  features  and  functionality  and  support  the
company's expanding local services business.


<PAGE>



                                     PAGE 16

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

Interest  expense  increased $8 million or 16% over the first quarter of 1996 to
$58 million.  This increase was due to higher average debt balances  outstanding
due to commercial paper issuances since the end of the first quarter of 1996 for
general corporate purposes.

Interest  income  was $6  million  in the first  quarter  of 1997,  a $5 million
decrease from the first quarter of 1996. This decrease in interest income is due
to lower short term  marketable  securities  balances  resulting from the use of
cash  to fund  investments  in the  local  services  market  and  other  general
corporate purposes.

Equity in income  (losses) of affiliated  companies  improved $18 million in the
first  quarter of 1997 to $(37)  million  compared to $(55) million in the first
quarter of 1996. This  improvement was attributable to the operations of CCS and
the high level of operating costs incurred in the first quarter of 1996 with the
company's on-line project with The News Corporation Limited (News Corp.), offset
by continued  operating losses of certain of its investments,  including Avantel
and ICS  Communications,  Inc. As further  discussed in  "Enterprise  Reporting"
below,  due to the  start-up  nature and  current  operations  of several of the
company's  investments  and ventures,  the company  expects  equity in losses of
affiliated companies to continue during the remainder of 1997.

Distributions on subsidiary Trust mandatorily redeemable  securities,  issued in
May 1996, totaled $15 million for the first quarter of 1997.

ENTERPRISE REPORTING
--------------------

This section  segregates the performance of the company's core business from its
VDM businesses and investments.  Core business services comprise a wide spectrum
of domestic and international  voice and data services,  including long distance
telephone,  data  communication,   teleconferencing,   Internet  and  electronic
messaging  services.  The company has invested in VDM businesses  outside of its
core business through acquisitions, alliances and other strategic initiatives in
the  local,  information  technology,  wireless,  international  and  multimedia
markets.  Investments  in these VDM  businesses  are  included in the  company's
financial  statements  as  consolidated   subsidiaries,   unconsolidated  equity
investments, or cost method investments such as News Corp.


<PAGE>



                                     PAGE 17

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

The  following  information  was  prepared  using all  amounts  included  in the
company's  interim  condensed  consolidated  financial  statements  and reflects
estimates and allocations that management believes provide a reasonable basis on
which to present such information.

The following table summarizes the financial highlights of these enterprises.

SUPPLEMENTAL ENTERPRISE REPORTING DATA

                                            Core Business        VDM Businesses
Quarter ended March 31,                    1997        1996      1997      1996
--------------------------------------------------------------------------------
(In millions)
Revenue ............................    $ 4,384     $ 4,050     $ 579     $ 476
Income (loss) from
  operations .......................        653         614       (62)      (33)
Equity in income (losses)
  of affiliated companies ..........          -           -       (37)      (55)
Net income (loss) ..................        403         378      (103)      (83)
Depreciation .......................        412         348        41        33
Net interest, income taxes
  and other expense ................       (250)       (236)       (4)        5
EBITDA* ............................      1,065         962       (21)        -

* EBITDA,  as defined by  management,  includes  earnings,  excluding  equity in
income (losses) of affiliates, other income (expense), net, and distributions on
subsidiary Trust mandatorily  redeemable preferred securities,  before interest,
income taxes, depreciation and amortization.  EBITDA represents a measure of the
company's  ability to generate  cash flows and does not  represent net income or
cash flows from  operating,  investing  and  financing  activities as defined by
GAAP.  EBITDA should be considered in addition to, but not as a substitute  for,
or superior to,  measures of financial  performance  reported in accordance with
GAAP.  EBITDA is often used by analysts when  evaluating  the  performance  of a
company.  Readers are cautioned that the company's  definition of EBITDA may not
be comparable to similar titled measures used by other companies or analysts.

The  following  discussion  focuses on  significant  financial  and  operational
results of the company's core business and VDM businesses.




<PAGE>



                                     PAGE 18

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

CORE BUSINESS
-------------

Core  business  revenue in the first quarter of 1997  increased  $334 million or
8.2% over first  quarter  of 1996 to $4,384  million.  Traffic  grew 4% from the
first  quarter of 1996,  resulting in a revenue to traffic  variance of 4.2% for
the first quarter of 1997. The  improvement  in the revenue to traffic  variance
was primarily due to the continued  improved mix of higher margin  product sales
in the business and consumer markets,  such as data,  virtual data, and Personal
800  products.   This  improvement  was  offset  by  increased   provisions  for
uncollectibles  during  the  first  quarter  of 1997 as a  result  of  continued
tightened credit and collection policies.

Increases in business  market revenue  continued to drive the company's  overall
revenue growth, with network,  data and inbound product revenue accounting for a
majority  of the  revenue  increase  over the first  quarter  of 1996.  Emerging
products,  such as virtual data,  Internet and prepaid card  services,  all with
greater than 100% growth,  also  contributed to the improvements in the business
market.  Revenue growth in mass markets slowed due to competitive  pressures and
the company's  continued focus on the more  profitable  segments of the consumer
market.  The company has selectively  targeted high value customers  through its
integrated package offering of inbound, outbound, wireless and Internet services
and has curtailed the use of customer  acquisition  promotions.  While  customer
churn increased  slightly in the first quarter of 1997 over the first quarter of
1996, churn rates have dropped  sequentially  over the last several quarters due
to further focus on multiple sales of higher margin  products and  profitability
per  customer.  The company  expects that through the next few  quarters,  total
growth  trends in mass  markets  will  continue  to be  impacted  as the company
migrates the volatile,  price-shopping customers from its base and builds a more
loyal customer base.

VENTURES AND DEVELOPING MARKETS BUSINESS
----------------------------------------

In the first quarter of 1997, the company  continued to make  investments in its
VDM businesses and strategic  initiatives and expand its business  opportunities
in these  markets.  The  company  invested  approximately  $65  million in local
services,  $46 million in direct broadcast satellite (DBS) development costs and
$26 million in affiliated  companies,  including  CCS. The company's  results of
operations in these businesses and strategic initiatives are provided below.



<PAGE>


                                     PAGE 19

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

LOCAL
-----

The company  provides  switched local services to both business and  residential
customers, and local fiber-optic capacity and competitive access services to the
company's core business and other  businesses.  The company  intends to become a
single-source   provider  of  comprehensive  local  wireline   telecommunication
services and to compete in the local  services  market,  while also reducing the
company's access and interconnection  rates.  Despite the stay of key provisions
of the FCC  Interconnection  Order,  the company will continue to pursue revenue
and profit growth while  expanding local service  capabilities.  As of March 31,
1997, the company had been granted  authority to offer local exchange service in
30 states and had applications for such services pending in 8 other states.

Local services revenue, substantially all of which was derived from sales to the
company's  core  business,  increased  $25  million or 63% to $65 million in the
first  quarter  of 1997  from the same  quarter  in the  prior  year.  Loss from
operations  in the first  quarter of 1997 was $(72)  million  compared  to $(13)
million in the same  quarter in the prior year.  Net loss was $(50)  million and
$(10) million,  respectively, for the same periods. EBITDA was $(58) million and
$(8)  million  for the  first  quarters  of 1997 and 1996,  respectively.  These
increases in losses and decrease in EBITDA were due to increased operating costs
associated with the company's increased  investment in the local market.  During
the first quarter of 1997, the company added 5 local city networks, bringing the
total number of operational local city networks to 67 in 35 cities,  compared to
43 operational networks in 28 cities at the end of the first quarter of 1996. In
addition,  rights of way miles  increased  6% from the first  quarter of 1996 to
4,145 miles while route miles increased 18% from the end of the first quarter of
1996 to 2,989 miles. Currently,  the company provides switched local services in
21 markets and intends to have  service  operational  in 30 cities by the end of
1997.

INFORMATION TECHNOLOGY SERVICES
-------------------------------

Information Technology Services include the results of operations of Systemhouse
and Call Center  Services.  Revenue in the first  quarter of 1997  increased $92
million to $433  million or 27% over the first  quarter in the prior year.  This
increase  was  due  to  increases  in  Systemhouse's   outsourcing  and  systems
integration  services  and Call  Center  Services'  automation  and  outsourcing
services. Income from operations remained the same at $15 million

<PAGE>



                                     PAGE 20

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

for the first  quarters of 1997 and 1996.  Net loss in the first quarter of 1997
increased $4 million to $(15) million from $(11) million in the first quarter of
1996 and EBITDA  improved to $37  million in the first  quarter of 1997 from $34
million in the first quarter of the prior year.

Backlog, which includes amounts committed under executed contracts or letters of
intent,  at March 31,  1997 and 1996,  was  approximately  $2  billion  and $1.5
billion,  respectively,  the majority from Systemhouse's largest customers.  The
company expects that  approximately  25% of the backlog will be delivered in the
remainder of 1997. Since revenue depends on actual usage under service contracts
which may be subject to termination under certain circumstances,  actual revenue
for a  particular  contract  may be higher or lower than the amount  included in
backlog for such contract.

WIRELESS
--------

Wireless services  primarily  include the operations of MCI Wireless,  Inc., the
company's cellular provider, and the company's paging services. Wireless revenue
decreased $13 million from the first quarter of 1996 to $75 million in the first
quarter of 1997.  This  decrease  was  primarily  due to the  decrease in paging
subscribers  from  548,000 in the first  quarter of 1996 to 223,000 in the first
quarter of 1997 as the company  continued  to  de-emphasize  stand-alone  paging
services to revise the cost and  infrastructure of its paging service offerings.
These  efforts  coincide with the  company's  efforts in the consumer  market to
focus on  profitability  per  customer.  As of March  31,  1997,  the  number of
cellular subscribers  increased 14% to 425,000 from the end of the first quarter
of 1996.  This  increase is due to the company's  focus on increased  integrated
product  offerings and expansion into new markets during the last three quarters
of 1996 and the first quarter of 1997. Loss from operations was $(9) million and
$(11)  million  and net loss was $(9)  million  and $(10)  million for the first
quarters  of 1997 and  1996,  respectively.  EBITDA  was $(3)  million  and $(4)
million for the same periods.


<PAGE>



                                     PAGE 21

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996


INTERNATIONAL SERVICES
----------------------

CCS is a 24.9% owned  international  services  venture  with BT that  provides a
broad portfolio of advanced global  communication  services,  including  virtual
network,  frame relay,  managed bandwidth and packet services,  to multinational
business customers  worldwide.  CCS' distributor  revenues were $165 million and
$105 million in the first quarters of 1997 and 1996, respectively.  CCS' virtual
network service continues to have over 90 sites active or operational around the
world.  The company's share of CCS' losses reported in accordance with U.S. GAAP
was $(6) million for the first  quarter of 1997, an  improvement  over the $(10)
million  for the same  quarter in the prior  year.  During the first  quarter of
1997, the company invested approximately $20 million in CCS. Since its launch in
July 1994,  the company has  invested a total of  approximately  $190 million in
CCS.

Avantel  is the  company's  44.5%  owned  Mexican  business  venture.  Since its
November 1995  inception,  Avantel built Mexico's first all digital  fiber-optic
network,  became the first company to provide  alternative long distance service
in the Mexican  telecommunication  market competing against Telefonos de Mexico,
and launched the first branded  Mexico-to-United States collect calling products
targeted to consumers and businesses.  In addition,  on January 1, 1997, Avantel
began  offering a full range of competitive  switched long distance  services to
residential  and  business  customers  and  now  has  in-place  arrangements  to
terminate  traffic in every  country in the world.  During the first  quarter of
1997,  Avantel  continued  the  development  of  its  communication   system  in
preparation  for the  opening  of  Mexico  City and an  additional  38 cities to
competition in the second quarter of 1997. During the first quarter of 1997, the
company's  share of  Avantel's  losses  reported in  accordance  with U.S.  GAAP
increased $13 million over the same quarter in the prior year to $(21)  million.
The company expects to incur increasing  losses on its investment during 1997 as
Avantel moves forward with its entry into the Mexican  telecommunications market
and expands its service and customer bases.

MULTIMEDIA SERVICES
-------------------

The  company's  investments  in News  Corp.  and a  direct  broadcast  satellite
comprise  Multimedia  Services.  Dividend income on the company's $1,350 million
investment in News Corp. was  approximately  $15 million and $11 million for the
first quarters of 1997 and 1996, respectively.

During 1997, the company  invested an additional $46 million in DBS construction
costs,  bringing its total  investment  to $939 million,  which  consists of the
$682.5 million license fee and  approximately  $257 million in related satellite
construction and other costs.



<PAGE>



                                     PAGE 22

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996


  

On May 6, 1997,  the company  renegotiated  its  investment  agreement with News
Corp.  which  included the  termination  of the company's  remaining  investment
obligation of $650 million. In addition,  the company and News Corp. have formed
a joint venture,  ASkyB,  which will provide digital satellite services to homes
and  businesses.  The company will own 19.9% of ASkyB and will initially  retain
ownership  of  its  rights  to  the  spectrum  of  direct  broadcast   satellite
frequencies  (the DBS license) for which the company paid $682.5  million.  Upon
FCC approval,  the DBS license will be  transferred to ASkyB at which time ASkyB
will  pay  the  company  a  license  fee  of  $682.5   million  plus   interest.
Concurrently,  the company will make an investment in a subsidiary of News Corp.
for an amount equal to the license fee.  This  investment  will be repaid on the
sixth anniversary or upon certain  circumstances on the third anniversary of the
agreement.  News Corp. is in discussions to combine the operations of ASkyB with
certain  third  parties  that  could  further  reduce  the  company's  ownership
percentage and/or interest.


FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
----------------------------------------------------

CASH FLOWS
----------

Cash from  operating  activities  decreased in the first quarter of 1997 to $449
million  from the first  quarter of 1996.  This  decrease  is  primarily  due to
increased  payments to suppliers and employees offset by an increase in receipts
from customers attributable to the increase in consolidated revenues.

Cash used for investing  activities in the first quarter of 1997  decreased $148
million from the first quarter of 1996.  This decrease in cash used is primarily
attributable to decreases in the investment in DBS and capital expenditures over
the first quarter of the prior year and increases in net proceeds from sales and
maturities of marketable securities.

Cash from  financing  activities  in the first  quarter of 1997  increased  $132
million to $198 million from the first quarter of 1996.  This increase is due to
an increase in commercial  paper  issuances for general  corporate  purposes and
decreases in maturities  and  repayments of Senior Notes and other debt.  During
the first quarter of 1997,  the company  issued $2,525 million and repaid $2,254
million  of  commercial  paper  borrowings,   leaving  $1,693  million  of  such
borrowings outstanding at March 31, 1997.

CAPITAL RESOURCES AND LIQUIDITY
-------------------------------

The company  believes  that it will be able to meet its  current and  forseeable
liquidity and capital requirements, including continued investments in its local
services  and  other VDM  businesses,  through  its cash  flows  from  operating
activities and existing debt facilities.  On April 30, 1997, the company entered
into a new $4 billion credit  facility that expires on April 28, 1998.  This new
facility replaces a similar $2 billion credit facility.


<PAGE>



                                     PAGE 23

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

EBITDA
------

Consolidated  EBITDA  increased to $1,039  million or 8% in the first quarter of
1997 from $962 million in the first  quarter of 1996.  The increase in EBITDA is
the result of the increase in  consolidated  revenue and the improvement in cost
of services as a  percentage  of  consolidated  revenue.  EBITDA,  as defined by
management,   includes   earnings,   excluding  equity  in  income  (losses)  of
affiliates,  other income (expense),  net, and distributions on subsidiary Trust
mandatorily  redeemable  preferred  securities,  before interest,  income taxes,
depreciation  and  amortization.  EBITDA  represents a measure of the  company's
ability to generate  cash flows and does not  represent net income or cash flows
from operating,  investing and financing  activities as defined by GAAP.  EBITDA
should be  considered  in addition to, but not as a substitute  for, or superior
to, measures of financial  performance  reported in accordance with GAAP. EBITDA
is often used by  analysts  when  evaluating  the  performance  of the  company.
Readers  are  cautioned  that the  company's  definition  of  EBITDA  may not be
comparable to similar titled measures used by other companies or analysts.






<PAGE>


                                     PAGE 24

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q


PART II. OTHER INFORMATION

ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K

a)Exhibits

Exhibit No.                Description
-----------                -----------

         10(a)             Revolving Credit Agreement.

         11                Computation of Earnings per Common Share.

         12                Computation of Ratio of Earnings to Fixed Charges.

         27                Financial Data Schedule as of March 31, 1997.

         99(a)             Capitalization Schedule as of March 31, 1997.


b)Reports on Form 8-K

The company  filed a Current  Report on Form 8-K on  February  10,  1997,  which
reported pursuant to Item 7.









<PAGE>


                                     PAGE 25

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q



                                    SIGNATURE
                                    ---------



Pursuant to the requirements of the Securities Exchange Act of 1934, the

registrant has duly caused this report to be signed on its behalf by the

undersigned thereunto duly authorized.




                         MCI COMMUNICATIONS CORPORATION







Date:  May 15, 1997                      Signed:  /s/ David M. Case
                                                  -----------------------
                                                  David M. Case

                                                  Vice President and Controller

















<PAGE>


                                     PAGE 26


                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                                  EXHIBIT INDEX





 Exhibit No.                 Description
 -----------                 -----------

         10(a)               Revolving Credit Agreement.

         11                  Computation of Earnings per Common Share.

         12                  Computation of Ratio of Earnings to Fixed Charges.

         27                  Financial Data Schedule as of March 31, 1997.

         99(a)               Capitalization Schedule as of March 31, 1997.