PAGE 1

                                  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 September 30, 1995

                                       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 Number)

             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 September 30, 1995, the registrant had outstanding  135,998,932  shares of
Class A common stock and 545,276,100 shares of common stock.


<PAGE>
                                     PAGE 2

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q

                    For The Quarter Ended September 30, 1995



                                      INDEX


                                                                        Page No.
                                                                        --------

PART I:  FINANCIAL INFORMATION

        ITEM 1:  FINANCIAL STATEMENTS

            Income Statements for the three and nine months ended
            September 30, 1995 and 1994                                        3

            Balance Sheets as of September 30, 1995 and December 31, 1994    4-5

            Statements of Cash Flows for the nine months ended
            September 30, 1995 and 1994                                        6

            Statement of Stockholders' Equity for the nine months
            ended September 30, 1995                                           7

            Notes to Interim Condensed Consolidated Financial
            Statements                                                      8-12

        ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS             13-25


PART II:  OTHER INFORMATION

        ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K                             26


SIGNATURE                                                                     27

EXHIBIT INDEX                                                                 28



<PAGE>
                                     PAGE 3
PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
                       MCI COMMUNICATIONS AND SUBSIDIARIES
                                INCOME STATEMENTS
                     (In millions, except per share amounts)
                                   (unaudited)

                                        Three months             Nine months
                                     ended September 30,     ended September 30,
                                     ------------------     -------------------
                                        1995        1994        1995       1994
                                     -------     -------    --------   --------
REVENUE                              $ 3,862     $ 3,407    $ 11,128   $  9,937
                                     -------     -------    --------   --------
OPERATING EXPENSES
  Telecommunications                   2,001       1,765       5,741      5,152
  Sales, operations and general        1,283         952       3,298      2,791
  Depreciation                           328         282         973        818
  Asset write-down                       520           -         520          -
                                     -------     -------    --------   --------
TOTAL OPERATING EXPENSES               4,132       2,999      10,532      8,761
                                     -------     -------    --------   --------
INCOME (LOSS) FROM OPERATIONS           (270)        408         596      1,176

Interest expense                         (35)        (43)       (109)      (114)
Interest income                           36           1         131          3
Other expense, net                        (2)        (12)        (23)       (30)
                                     -------     -------    --------   --------
INCOME (LOSS) BEFORE INCOME TAXES AND
  RESULTS OF AFFILIATED COMPANIES       (271)        354         595      1,035

Income tax (provision) benefit           147        (135)       (168)      (393)
                                     -------     -------    --------   --------
INCOME (LOSS) BEFORE RESULTS
  OF AFFILIATED COMPANIES               (124)        219         427        642

Equity in income (losses) of
  affiliated companies                  (116)          1        (163)         2
                                     -------     -------    --------   --------
NET INCOME (LOSS)                    $  (240)    $   220    $    264   $    644
                                     =======     =======    ========   ========
Dividends on preferred stock               -           -           -          1
                                     -------     -------    --------   --------
Earnings (loss) applicable to
  common stockholders                $  (240)    $   220    $    264   $    643
                                     =======     =======    ========   ========
EARNINGS (LOSS) PER COMMON AND
  COMMON EQUIVALENT SHARES           $  (.35)    $   .38    $    .38   $   1.11
 
Weighted average number of shares
  of common stock and common stock
  equivalents outstanding                688         579         686        578

Dividends declared per common share  $     -     $     -    $   .025   $   .025

See accompanying Notes to Interim Condensed Consolidated Financial Statements.


<PAGE>
                                     PAGE 4

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                 BALANCE SHEETS
                                   (unaudited)

                                              September 30,       December 31,
                                                 1995                1994
                                              ------------        -----------
                                                        (In millions)
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                       $  1,006           $  1,429
  Marketable securities                                229                839
  Receivables, net of allowance for
    uncollectibles of $215 and $226 million          2,722              2,266
  Other assets                                         520                354
                                                  --------           --------
   TOTAL CURRENT ASSETS                              4,477              4,888
                                                  --------           --------

COMMUNICATIONS SYSTEM, net                           9,945              9,059

OTHER ASSETS
  Noncurrent marketable securities                      73                824
  Other assets and deferred charges, net               365                293
  Investment in affiliates                             171                199
  Investment in News Corp                            1,000                  -
  Goodwill, net                                      1,284              1,103
                                                  --------           --------
   TOTAL OTHER ASSETS                                2,893              2,419
                                                  --------           --------
   TOTAL ASSETS                                   $ 17,315           $ 16,366
                                                  ========           ========









See accompanying Notes to Interim Condensed Consolidated Financial Statements.


<PAGE>
                                     PAGE 5

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                 BALANCE SHEETS
                                   (unaudited)

                                                September 30,     December 31,
                                                    1995              1994
                                                ------------      ------------
                                                          (In millions)
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accrued telecommunications expense              $  1,690           $  1,505
  Accounts payable                                     773                609
  Other accrued liabilities                          1,275                893
  Long-term debt due within one year                   160                130
                                                  --------           --------
   TOTAL CURRENT LIABILITIES                         3,898              3,137
                                                  --------           --------
NONCURRENT LIABILITIES
  Long-term debt                                     2,905              2,997
  Deferred taxes and other                           1,285              1,228
                                                  --------           --------
   TOTAL NONCURRENT LIABILITIES                      4,190              4,225
                                                  --------           --------
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 and 592 million shares                          60                 60
  Additional paid in capital                         6,371              6,227
  Retained earnings                                  3,796              3,548
  Treasury stock, at cost,
    48 million shares                               (1,014)              (845)
                                                  --------           --------
   TOTAL STOCKHOLDERS' EQUITY                        9,227              9,004
                                                  --------           --------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $ 17,315           $ 16,366
                                                  ========           ========






See accompanying Notes to Interim Condensed Consolidated Financial Statements.


<PAGE>
                                     PAGE 6

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS
                                  (unaudited)             Nine months ended
                                                             September 30,
                                                      ------------------------
                                                           1995        1994
                                                         ------      ------
OPERATING ACTIVITIES                                       (In millions)
  Receipts from customers                              $ 10,705    $  9,852
  Payments to suppliers and employees                    (8,476)     (7,779)
  Taxes paid                                               (261)       (321)
  Interest paid                                            (120)        (98)
  Interest received                                         151           2
                                                       --------    --------
       CASH FROM OPERATING ACTIVITIES                     1,999       1,656
                                                       --------    --------
INVESTING ACTIVITIES
  Cash outflow for communications system                 (2,261)     (2,081)
  Purchases, maturities and sales of
    marketable securities, net                            1,371        (219)
  Investment in News Corp                                (1,000)          -
  Investment in affiliates                                 (145)       (115)
  Acquisition of businesses                                (194)       (110)
  Other, net                                                 11         (59)
                                                       --------    --------
       CASH USED FOR INVESTING ACTIVITIES                (2,218)     (2,584)
                                                       --------    --------
       NET CASH FLOW BEFORE FINANCING ACTIVITIES           (219)       (928)
                                                       --------    --------
FINANCING ACTIVITIES
  Issuance of Senior Notes and other debt                     -         939
  Payments of Senior Notes and other debt                  (105)       (216)
  Commercial paper and bank credit facility
    activity, net                                             -        (239)
  Purchase of treasury stock                               (285)       (269)
  Issuance of Class A common stock                            -       3,522
  Issuance of common stock for employee plans               202         194
  Payment of dividends on common and
    preferred stock                                         (16)        (14)
                                                       --------    --------
       CASH (USED FOR) FROM FINANCING ACTIVITIES           (204)      3,917
                                                       --------    --------
Net (decrease) increase in cash and cash equivalents       (423)      2,989
Cash and cash equivalents - beginning balance             1,429         165
                                                       --------    --------
Cash and cash equivalents - ending balance             $  1,006    $  3,154
                                                       ========    ========
Reconciliation of net income to cash from
  operating activities:
Net income                                             $    264    $    644
Adjustments to net income:
  Depreciation and amortization                           1,012         849
  Asset write-down                                          520           -
  Deferred income tax provision                              51         175
Net change in operating activity accounts
  other than cash and cash equivalents:
  Receivables                                              (456)       (166)
  Payables                                                  173         132
  Other operating activity accounts                         435          22
                                                       --------    --------
Cash from operating activities                         $  1,999    $  1,656
                                                       ========    ========

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, 1994        $ 14   $ 60   $ 6,227   $ 3,548    $ (845)   $ 9,004

Common stock issued
  for employee stock
  and benefit plans
  (14 million shares)         -      -       123         -       116        239

Acquisition of business
  (.793 million shares)       -      -        16         -         -         16

Unrealized gain on
  marketable securities       -      -         5         -         -          5

Net income                    -      -         -       264         -        264

Common and Class A
  common stock dividends      -      -         -       (16)        -        (16)

Treasury stock
  purchased
  (14 million shares)         -      -         -         -      (285)      (285)
                           ----   ----   -------   -------   -------    -------
Balance at
  September 30, 1995       $ 14   $ 60   $ 6,371   $ 3,796   $(1,014)   $ 9,227
                           ====   ====   =======   =======   =======    =======









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).  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 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, 1994.


NOTE 2:  THIRD QUARTER SPECIAL CHARGES

During the third  quarter of 1995,  the  company  implemented  a  reorganization
designed to increase efficiency,  enhance marketplace  effectiveness and improve
business focus. The  reorganization  is largely in response to the rapid changes
in business scope,  technology and regulation  affecting the  telecommunications
industry.  The company has separated its core  communications  business from its
ventures and alliances and has centralized major administrative  functions.  The
core  communications  business  includes a consolidation of network  operations,
information  systems and the former Business Markets and Consumer Markets units.
In connection  with this  reorganization  and in response to other third quarter
events,  the company  recorded  special  pretax charges of $831 million which is
comprised of the following three major components.

<PAGE>
                                     PAGE 9

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

One,  there was a $520  million  charge for an asset  write-down  pertaining  to
certain of the company's  communications  systems and  administrative  assets to
reflect a decline in value  caused by changes in the business  organization  and
technology strategy. The write-down primarily relates to assets that have become
redundant or are no longer aligned with strategic product offerings.  The amount
of the  write-down  was measured in  conformity  with the Statement of Financial
Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of Long-Lived
Assets and for Long-Lived  Assets to Be Disposed Of," which the company  adopted
in the third quarter of 1995.  Under this  standard,  charges were taken for the
difference  between the current  carrying  value and the estimated fair value of
such assets at the expected disposal date. In the company's case, the fair value
of most of the assets covered by this write-down was deemed to be salvage value.
Disposal or abandonment of most of these assets will occur by December 31, 1995.

Two, the company recorded a $216 million charge in sales, operations and general
relating  primarily to  reorganization  costs.  These costs consist of severance
associated  with a workforce  reduction of  approximately  3,000  employees (the
majority of whom will be  terminated  before year end),  lease  obligations  and
penalties  associated with facilities that will be vacated,  and costs to modify
and terminate contracts associated with changes in the business organization and
strategic product offerings.  Cash expenditures for these reorganization  costs,
most of which  will be  incurred  within  the next  year,  will be  funded  from
operations. In addition, certain legal costs were included in this charge.

Three,  there was a charge of $95 million recorded in equity in income (loss) of
affiliated  companies  relating to several investees where  restructuring  plans
have been  implemented  in the third quarter of 1995 or where product  offerings
are not expected to generate  future cash flows  sufficient  to recover  current
carrying values.




<PAGE>
                                     PAGE 10

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

NOTE 3:  ACQUISITIONS

In September 1995, the company completed its acquisition of Nationwide  Cellular
Service,  Inc.  (Nationwide)  for  approximately  $190  million  in  cash.  This
acquisition  represents  part of the company's  strategy to provide  value-added
wireless  services  integrated with other company services for both consumer and
business customers.

On  September  19,  1995,  the  company  entered  into  an  agreement  with  SHL
Systemhouse  Inc.  (SHL),  a Canadian  corporation  which  provides  information
technology  services to commercial and government  enterprises.  Pursuant to the
tender offer required under the agreement,  the company  offered to purchase all
the  outstanding  shares  of SHL  common  stock  for U.S.  $13.00  per  share or
approximately U.S. $1 billion.  On November 13, 1995, the expiration date of the
tender offer,  the company took up for purchase in excess of 72.4 million shares
of SHL common stock tendered pursuant to the tender offer or in excess of 93% of
the outstanding  shares of SHL common stock. The company expects to purchase the
tendered  shares on November  16, 1995 and to acquire the shares not tendered in
accordance with the provisions of the Canada Business  Corporations  Act shortly
thereafter.

The  company  anticipates  that SHL will  provide it with the ability to design,
build  and  manage   information   solutions   that   integrate   computing  and
communications technologies for its business customers. As a result, the company
will combine its existing  professional  services  organization  with SHL, which
will operate as a separate division.

The  Nationwide  and SHL  acquisitions  will be accounted for under the purchase
method of accounting.


<PAGE>
                                     PAGE 11

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

NOTE 4:  NEWS CORP INVESTMENT

On August 2, 1995,  the  company,  after  approval by its board of  directors of
definitive  agreements with The News Corporation  Limited (News Corp),  acquired
for $1 billion (i) an aggregate of 51 preferred shares of two U.S.  subsidiaries
of News Corp (News Triangle Finance,  Inc. and News T Investments,  Inc.) with a
stated value and  liquidation  preference of $850 million and bearing a dividend
coupon  rate of  5.147%,  and  (ii) a 4 year  warrant  (purchase  price  of $150
million) to acquire up to approximately 155 million ordinary shares of News Corp
for $850 million. The exercise price of the warrant is payable, at the company's
option,  in cash or through the surrender of the preferred  shares. In addition,
the  company  has an option  for five years to invest an  additional  $1 billion
under the same terms and for the same  consideration as its initial  investment.
Under certain circumstances, News Corp shall have the right to cause the company
to make the additional $1 billion investment or a portion thereof.

Should the company  exercise its warrants  and acquire  ordinary  shares of News
Corp,  subject  to  certain  exceptions,  the  company  shall  vote in the  same
proportion as all other votes.  The company  accounts for its investment in News
Corp under the cost method.


NOTE 5:  MARKETABLE SECURITIES

As of September  30,  1995,  all of the  company's  marketable  securities  were
classified as available-for-sale and stated at fair value. These securities were
included in the accompanying balance sheets as either cash and cash equivalents,
current marketable securities or noncurrent marketable securities. The portfolio
consisted  of  certificates  of  deposit,  U.S.  Government  agency  securities,
corporate debt securities, U.S. Treasury securities and asset-backed securities.



<PAGE>
                                     PAGE 12

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

NOTE 6:  COMMUNICATIONS SYSTEM
                                   September 30,  December 31,
                                       1995          1994
                                     ---------    ----------
                                         (in millions)
Communications system in service     $ 10,683      $  9,766
Furniture and fixtures                  2,054         1,796
Other property and equipment              630           656
                                     --------      --------
  Total                                13,367        12,218
Accumulated depreciation               (4,925)       (4,349)
Construction in progress                1,503         1,190
                                     --------      --------
  Total communications system, net   $  9,945      $  9,059
                                     ========      ========


NOTE 7:  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
additional 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.  Although discovery has not yet
been  completed,  the company  does not expect  that  either  action will have a
material  adverse effect on the  consolidated  financial  position or results of
operations of the company.



<PAGE>
                                     PAGE 13
PART I.
ITEM 2.
                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

OVERVIEW
--------

The following  discussion and analysis  provides  information  which  management
believes  is  relevant  to an  assessment  and  understanding  of the  company's
consolidated  results of operations  and  financial  condition.  The  discussion
should be read in conjunction with the interim condensed  consolidated financial
statements and notes thereto.

The  company  operates  predominantly  in a single  industry  segment,  the long
distance  telecommunications  industry. More than 90% of the company's operating
revenues and  identifiable  assets  relate to the  company's  activities in this
industry.  Management  has embarked on a strategy that is designed to expand the
company's  business  into other  aligned  markets and  industries  (see Business
Acquisitions, Ventures and Alliances).

During the third  quarter of 1995,  the  company  implemented  a  reorganization
designed to increase efficiency,  enhance marketplace  effectiveness and improve
business focus. The  reorganization  is largely in response to the rapid changes
in business scope,  technology and regulation  affecting the  telecommunications
industry.  The company has separated its core  communications  business from its
ventures and alliances and has centralized major  administrative  functions.  In
connection  with the  reorganization  and in  response  to other  third  quarter
events,  the company recorded total special pretax charges of $831 million which
are discussed in more detail under Results of  Operations.  As a result of these
charges,  the  company  reported  a loss in the  third  quarter  of 1995 of $240
million or $.35 per share.  For the nine month period ending September 30, 1995,
earnings  were $264  million or $.38 per share.  Excluding  the  special  pretax
charges,  income from  operations  increased  14% and 13% for the three and nine
months ended  September  30,  1995,  respectively,  from the  year-ago  periods.
Earnings were $275 million,  or $.40 per share,  and $779 million,  or $1.14 per
share,  for the three and nine months ended  September  30, 1995,  respectively,
compared to the year-ago  periods of $220 million,  or $.38 per share,  and $643
million, or $1.11 per share, respectively.

<PAGE>
                                     PAGE 14

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

RESULTS OF OPERATIONS
---------------------             Increase (decrease)   Increase (decrease)
                                 for the three months   for the nine months
                                 ended September 30,    ended September 30,
(In millions, except % change)     1995 vs. 1994          1995 vs. 1994
                                  ------------------    ------------------
Revenue                           $   455      13.4%    $ 1,191      12.0%
                                  -------      ----     -------      ----
Operating expenses
  Telecommunications                  236      13.4%        589      11.4%
  Sales, operations and general       331      34.8%        507      18.2%
  Depreciation                         46      16.3%        155      18.9%
  Asset write-down                    520        NM         520        NM
                                  -------      ----     -------      ----
    Total operating expenses        1,133      37.8%      1,771      20.2%
                                  -------      ----     -------      ----
Income from operations            $  (678)       NM     $  (580)    (49.3)%
                                  =======      ====     =======      ====

Revenue
-------

Revenue grew $455 million or 13.4% to $3.9 billion in the third  quarter of 1995
versus $3.4  billion in the third  quarter of 1994.  Revenue for the nine months
ended  September 30, 1995 grew 12% to $11.1 billion  compared to $9.9 billion in
the same period last year.

                                  Three months                 Nine months
                               ended September 30,          ended September 30,
                                 1995 vs. 1994                1995 vs. 1994
                                 -------------                -------------
Increase in revenue                  13.4%                        12.0%
Increase in traffic                  19.3%                        14.4%
                                     ----                         ----
Revenue to traffic variance          (5.9)%                       (2.4)%
                                     ----                         ----


<PAGE>
                                     PAGE 15

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

The company had a negative  variance  between revenue and traffic growth of 5.9%
and  2.4%  for the  three  and nine  month  period  ended  September  30,  1995,
respectively.  The negative variance was due to increased volume and promotional
discounts  partially  offset by tariff rate  increases  and revenue  growth from
international  traffic and data  products.  Also  contributing  to the  negative
variance were lower revenue  rates  associated  with  increased  carrier  market
traffic.  The company expects the year-over-year  quarterly negative variance to
narrow  from the third  quarter  to the  fourth  quarter  of 1995 as a result of
changes in discount and promotional programs.

In the business  market,  year-over-year  revenue and traffic  showed  continued
growth  for the  three  and nine  months  ended  September  30,  1995  driven by
increases in most  segments of the business  market,  especially  in the carrier
market.  Year-over-year  revenue  increases  for  both  periods  were  primarily
attributable  to growth in data products,  which  continued to grow in excess of
30%, 800, MCI Vision** and Vnet** products. International traffic grew more than
50% for the three months ended September 30, 1995, and approximately 50% for the
nine months ended September 30, 1995.

Consumer market revenue and traffic also showed continued  year-over-year growth
for the three and nine  months  ended  September  30,  1995 due to growth in the
company's   Friends  &   Family**   products,   its   collect-calling   product,
1-800-COLLECT** and calling card products.


Telecommunications Expense
--------------------------

Telecommunications expense as a percentage of revenue remained constant at 51.8%
for  the  third   quarters  of  1995  and  1994.   On  a   year-to-date   basis,
telecommunications expense as a percentage of revenue decreased to 51.6% in 1995
from 51.8% in 1994, due to reductions in domestic access rates and international
settlement rates and continued network optimization.

On April 14,  1995,  the  Federal  Communications  Commission  (FCC)  issued its
Revisions to Tariff  Review Plan for Price Cap  Companies  and Order,  effective
August 1, 1995.  The effect of these  revisions  was to decrease  the costs that
long  distance  companies  pay local  exchange  companies  for access.  Although
domestic  access rates have  decreased in the second half of 1995 as a result of
this  ruling,  the impact of the rate  reductions  was  offset,  on a percent of
revenue basis, by reduced revenue rates, seasonality and changes in product mix.



<PAGE>
                                     PAGE 16

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

Third Quarter Special Charges
-----------------------------

The company  recorded  special charges of $831 million which is comprised of the
following three major components.

One,  there was a $520  million  charge for an asset  write-down  pertaining  to
certain of the company's  communications  systems and  administrative  assets to
reflect a decline in value  caused by changes in the business  organization  and
technology strategy. The write-downs primarily relate to assets that have become
redundant or are no longer aligned with strategic product offerings. Disposal or
abandonment of most of these assets will occur by December 31, 1995.

Two, the company recorded a $216 million charge in sales, operations and general
relating  primarily to  reorganization  costs.  These costs consist of severance
associated  with a workforce  reduction of  approximately  3,000  employees (the
majority of whom will be  terminated  before year end),  lease  obligations  and
penalties  associated with facilities that will be vacated,  and costs to modify
and terminate contracts associated with changes in the business organization and
strategic product offerings.  Cash expenditures for these reorganization  costs,
most of which  will be  incurred  within  the next  year,  will be  funded  from
operations. In addition, certain legal costs were included in this charge.

Three,  there was a charge of $95 million recorded in equity in income (loss) of
affiliated  companies  relating to several investees where  restructuring  plans
have been  implemented  in the third quarter of 1995 or where product  offerings
are not expected to generate  future cash flows  sufficient  to recover  current
carrying values.

After applicable tax benefit,  the charge resulted in a reduction to earnings of
$518 million, or $.75 per share.

As a result of the  reorganization,  during 1996, the company expects to realize
annual savings of  approximately  $100 million in sales,  operations and general
expenses.  The  depreciation  savings from the asset  write-downs will partially
offset  increases  in  depreciation  expense  from  continuing  additions to the
communications system.


<PAGE>
                                     PAGE 17

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

Sales, Operations and General
-----------------------------

Sales,  operations and general expense increased 34.8% and 18.2%  year-over-year
for the three and nine months ended September 30, 1995, respectively.  Excluding
the  aforementioned  $216  million of special  charges,  sales,  operations  and
general expense increased 12.1% and 10.4%  year-over-year for the three and nine
months ended September 30, 1995,  respectively.  This increase was primarily due
to (i) increased  personnel  costs in sales and customer  service related to the
introduction  of new products and  services,  and  increased  sales and customer
volumes;  and, (ii) increased sales and marketing costs due to the  introduction
of the new Friends & Family,  as well as the impact of costs associated with the
company's  networkMCI  Solutions*,   networkMCI  BUSINESS***  and  1-800-COLLECT
programs.

Sales, operations and general expense as a percentage of revenue,  excluding the
aforementioned  special charges,  decreased to 27.6% and 27.7% for the three and
nine months ended September 30, 1995, respectively, from 27.9% and 28.1% for the
corresponding periods in 1994, respectively.


Depreciation Expense
--------------------

Depreciation expense increased  year-over-year 16.3% and 18.9% for the three and
nine months ended September 30, 1995, respectively. Depreciation as a percent of
revenue  was 8.5% and 8.7% for the three and nine  months  ended  September  30,
1995,  respectively,  compared  to 8.3% and 8.2% for the same  periods  in 1994,
respectively.  This  increase  was  primarily  a  result  of  additions  to  the
communications  network which were made in order to increase  network  capacity,
redundancy and reliability.


Interest Expense
----------------

Interest  expense for the third quarter of 1995 decreased by $8 million from the
year-ago  period,  primarily  as a result of a decrease in the average  level of
debt  outstanding  and an increase in  capitalized  interest.  On a year-to-date
basis,  interest  expense  decreased  by $5  million  due  to  the  increase  in
capitalized interest.


<PAGE>
                                     PAGE 18

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

Interest Income
---------------

Interest  income  increased  significantly  in the three and nine month  periods
ended  September  30,  1995  versus  the  same  periods  a  year-ago  due to the
investment  of the funds  received from British  Telecommunications  plc (BT) in
September  1994.  Interest income declined in the third quarter of 1995 and this
decline will continue in the fourth  quarter of 1995 as cash is used to fund the
company's business acquisitions, ventures and alliances.


Equity in Income (Losses) of Affiliated Companies
-------------------------------------------------

The company's  equity in losses from its investment in affiliates,  exclusive of
the  aforementioned   $95  million  for  reorganization   costs  and  impairment
recognition, was $21 million and $68 million for the three and nine months ended
September  30, 1995,  respectively.  Most of these losses were  attributable  to
Concert Communications Company and In-Flight Phone Corporation.


Weighted Average Shares
-----------------------

Weighted average shares increased approximately 19% year-over-year for the three
and nine months ended  September  30, 1995 due to the issuance on September  30,
1994 of 108.5 million  shares of the total 136 million  shares of Class A common
stock issued to BT.



<PAGE>
                                     PAGE 19

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994


BUSINESS ACQUISITIONS, VENTURES AND ALLIANCES
---------------------------------------------

The  company's  investments  fall  into  three  categories:  fully  consolidated
subsidiaries,  equity  investees  and  investment in News Corp.  Investments  in
equity investees are presented on the balance sheet as investment in affiliates,
and the company's  related share of investee income (losses) is presented on the
income  statement  as equity in income  (losses) of  affiliated  companies.  The
company's  investment in News Corp is accounted for under the cost method and is
separately presented on the balance sheet.

The  following  section  provides  a  discussion  of  the  company's   strategic
initiatives  in the  professional  services,  multimedia,  local,  wireless  and
international markets.


SHL Systemhouse Inc.
--------------------

On  September  19,  1995,  the  company  entered  into  an  agreement  with  SHL
Systemhouse  Inc.  (SHL),  a Canadian  corporation  which  provides  information
technology  services to commercial and government  enterprises.  Pursuant to the
tender offer required under the agreement,  the company  offered to purchase all
the  outstanding  shares  of SHL  common  stock  for U.S.  $13.00  per  share or
approximately U.S. $1 billion.  On November 13, 1995, the expiration date of the
tender offer,  the company took up for purchase in excess of 72.4 million shares
of SHL common stock tendered pursuant to the tender offer or in excess of 93% of
the outstanding  shares of SHL common stock. The company expects to purchase the
tendered  shares on November  16, 1995 and to acquire the shares not tendered in
accordance with the provisions of the Canada Business  Corporations  Act shortly
thereafter.

The  company  anticipates  that SHL will  provide it with the ability to design,
build  and  manage   information   solutions   that   integrate   computing  and
communications technologies for its business customers. As a result, the company
will combine its existing  professional  services  organization  with SHL, which
will operate as a separate division.


<PAGE>
                                     PAGE 20

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

News Corp
---------

On August 2, 1995,  the  company,  after  approval by its board of  directors of
definitive  agreements with The News Corporation  Limited (News Corp),  acquired
for $1 billion (i) an aggregate of 51 preferred shares of two U.S.  subsidiaries
of News Corp (News Triangle Finance,  Inc. and News T Investments,  Inc.) with a
stated value and  liquidation  preference of $850 million and bearing a dividend
coupon  rate of  5.147%,  and  (ii) a 4 year  warrant  (purchase  price  of $150
million) to acquire up to approximately 155 million ordinary shares of News Corp
for $850 million. The exercise price of the warrant is payable, at the company's
option,  in cash or through the surrender of the preferred  shares. In addition,
the  company  has an option  for five years to invest an  additional  $1 billion
under the same terms and for the same  consideration as its initial  investment.
Under certain circumstances, News Corp shall have the right to cause the company
to make the additional $1 billion investment or a portion thereof.


MCImetro*
---------

MCImetro, Inc. (MCImetro), the company's wholly-owned local services subsidiary,
is a provider of local fiber-optic  capacity and competitive  access services to
the company and other long distance  carriers,  large  businesses and government
users of telecommunications services. MCImetro intends to become a single source
provider  of   comprehensive   local   wireline   telecommunications   services,
encompassing  voice,  data and enhanced  services in key markets  throughout the
U.S.  as  regulatory  authorities  permit.  During  the third  quarter  of 1995,
MCImetro was granted  authority to offer local phone  service in an additional 5
states,  bringing  the  total to 13  states  in which  such  authority  has been
granted. As of September 30, 1995, MCImetro had applications  pending in 4 other
states.  MCImetro has  installed  Class 5 switches in 7 major cities and by year
end 1995,  intends to offer  switched  local phone  services in 10 major cities,
pending local regulatory approval.



<PAGE>
                                     PAGE 21

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

MCImetro, which currently owns or operates conduit and fiber cable facilities in
more than 200 U.S. cities,  increased its total route mileage to 2,234 miles and
rights-of-way mileage to more than 3,500 miles during the third quarter of 1995.
By the end of the third quarter, MCImetro had 24 operational local city networks
located  in  17  major  cities.  Detroit,  Newark,  Chicago,   Philadelphia  and
Pittsburgh  were added to the list of cities where Local Choice Direct*  service
is offered. This family of access services provides businesses with high quality
dedicated  access  connections  to a long  distance  carrier  or  other  service
provider. In addition, Local Choice Custom* provides complete network design and
implementation for customized network solutions.


Wireless
--------

In September 1995, the company completed its acquisition of Nationwide  Cellular
Service,  Inc.  (Nationwide)  for  approximately  $190  million  in  cash.  This
acquisition  represents  part of the company's  strategy to provide  value-added
wireless  services  integrated with other company services for both consumer and
business  customers.  During the third quarter of 1995, the company also entered
into  agreements  with GTE Mobilnet,  BellSouth,  McCaw,  Frontier and NewPar (a
joint venture of Airtouch Communications and Cellular  Communications,  Inc.) to
purchase wireless services for resale. These agreements,  including arrangements
that Nationwide has with other cellular carriers,  gives the company the ability
to market wireless services in the top 100 U.S. markets.


AVANTEL
-------

The company plans to increase its  investment in AVANTEL,  S.A.  (AVANTEL),  the
company's   45%  owned   business   venture   formed   with   Grupo   Financiero
Banamex-Accival, to approximately $250 million in November 1995. This investment
represents  approximately half of the company's total anticipated  investment in
AVANTEL;  the remainder is expected to be invested in 1996.  In September  1995,
AVANTEL  received  a  license  from  the  Secretariat  of   Communications   and
Transportation    to   construct   and   operate   a   nationwide    fiber-optic
telecommunications   network  in  Mexico.  AVANTEL  plans  to  provide  business
customers  with certain  competitive  domestic and  international  long distance
telecommunications  services in Mexico when the market opens for  competition in
August 1996, although certain value added, private line and data services may be
offered  primarily  to business  customers  prior to that time.  A full range of
competitive switched long distance services is expected to be offered by AVANTEL
beginning in January 1997.

<PAGE>
                                     PAGE 22

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

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

Working Capital
---------------

The  company  had  positive   working  capital   (current  assets  less  current
liabilities) of approximately  $0.6 billion and $1.8 billion as of September 30,
1995 and December 31, 1994,  respectively.  The decrease in working  capital was
primarily  due to  the  investments  in  News  Corp  and  Nationwide.  Increased
investment  in the  company's  communications  system also  contributed  to this
working capital decline.


Communications System
---------------------

The company continued to invest in its communications system in order to enhance
network intelligence and increase network capacity and capability. Cash outflows
for its  communications  system were $2,261  million and $2,081  million for the
nine months ended  September 30, 1995 and 1994,  respectively.  The company also
proceeded with its plans to deploy advanced  network  technologies  for improved
reliability and delivery of advanced  services.  In addition to the construction
of  MCImetro's  network,  the company  completed its  deployment of  Synchronous
Optical  Network  (SONET)  rings around  Denver and Kansas City during the third
quarter of 1995.  By year end 1995,  the  company  expects to have a total of 15
SONET rings operational, including two international rings.



<PAGE>
                                     PAGE 23

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

Funding of Alliances, Investments and Initiatives
-------------------------------------------------

The company  believes  that it will be able to meet its  current  and  long-term
liquidity and capital requirements, including its planned investment in AVANTEL,
acquisition  of SHL, and  investment  in  MCImetro,  through its cash flows from
operating  activities,   existing  cash  and  cash  equivalents  and  marketable
securities,  its bank credit facility and access to the public markets. Cash and
cash equivalents and marketable securities totaled approximately $1.3 billion as
of  September  30,  1995.  The  company has  available a $2 billion  bank credit
facility,  expiring in July 1999, which supports the company's  commercial paper
program and may be used in conjunction with the commercial paper program to fund
short-term   fluctuations  in  working  capital  and  other  general   corporate
requirements.  In addition,  the company has a $1 billion shelf  registration in
effect  covering debt  securities  with a range of maturities at either fixed or
variable  rates.  As of September  30, 1995,  there were no amounts  outstanding
under  the  bank  credit  facility,   commercial  paper  program  or  the  shelf
registration.


CASH FLOWS
----------                                 Nine months ended
(in millions)                                September 30,
                                         1995             1994         Change
                                        -----           ------        -------
Cash from operating
 activities                            $1,999           $1,656        $   343

Cash used for
 investing activities                  (2,218)          (2,584)           366

Cash (used for) from
 financing activities                    (204)           3,917         (4,121)
                                       ------           ------        -------
Net (decrease) increase in
 cash and cash equivalents             $ (423)          $2,989        $(3,412)
                                       ======           ======        =======





<PAGE>
                                     PAGE 24

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

EBITDA
------

EBITDA  (earnings  before  interest,   taxes,  depreciation  and  amortization),
excluding the special charges, increased approximately 16% to $2,305 million for
the nine months ended  September  30, 1995 from $1,994  million for the year-ago
period.  EBITDA,  a measure of the  company's  ability to  generate  cash flows,
should be  considered  in addition to, but not as a substitute  for, or superior
to,  other  measures  of  financial  performance  reported  in  accordance  with
generally accepted accounting  principles.  EBITDA, also known as operating cash
flow,   is  often  used  by   analysts   when   evaluating   companies   in  the
telecommunications industry.


Cash from Operating Activities
------------------------------

Cash from  operating  activities  for the nine months ended  September  30, 1995
increased  year-over-year due to an increase in cash received from the growth in
revenue,  which  was  only  partially  offset  by an  increase  in cash  paid to
suppliers and  employers.  Additionally,  interest  earned on the  investment of
funds  received from BT in September  1994  contributed  to the increase in cash
from operating activities.


Cash used for Investing Activities
----------------------------------

Cash used for investing activities  decreased  year-over-year as a result of the
proceeds  from  the  net  investment  activity  associated  with  the  company's
marketable  securities  portfolio  acquired  with BT funds.  This  decrease  was
partially  offset by the company's  investment in News Corp and Nationwide,  and
the increase in capital  expenditures  for the nine months ended  September  30,
1995, as a result of the continued investment in the company's network.


Cash (used for) from Financing Activities
-----------------------------------------

Cash (used for) from financing activities decreased significantly year-over-year
due to the final  issuance of Class A common stock to BT on  September  30, 1994
and the March 1994 issuance of Senior Notes and  debentures  which was partially
offset by the repayment of commercial paper.



<PAGE>
                                     PAGE 25

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994


CURRENT LEGISLATION
-------------------

Congress is considering  comprehensive legislation which affects every sector of
the telecommunications industry, including opening up local telephone markets to
competition  and providing for Bell Operating  Company (BOC) entry into the long
distance telecommunications market. The Senate acted on June 15, 1995 passing S.
652,  and the House  approved  H.R.  1555,  its  version  of  telecommunications
legislation,   on  August  4,  1995.   In  October   1995,   Congress   selected
representatives to a House-Senate  conference committee to reconcile differences
between the House and Senate versions of the legislation.  It is not possible to
determine which form of the legislation, if any, will ultimately be enacted into
law or its impact on the company.

-----------------------------------------------
* MCImetro,  Local Choice Direct,  Local Choice Custom and networkMCI  Solutions
are service marks of MCI Communications Corporation.
** 1-800-COLLECT,  Vnet, MCI Vision and Friends & Family are registered  service
marks of MCI Communications Corporation.
*** networkMCI BUSINESS is a trademark of MCI Communications Corporation.


<PAGE>
                                     PAGE 26

                 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
-----------                -----------

         11                Computation of Earnings per Common Share.

         12                Computation of Ratio of Earnings to Fixed Charges.

         27                Financial Data Schedule as of September 30, 1995.

         99(a)             Capitalization Schedule as of September 30, 1995.


b)Reports on Form 8-K

The company filed a current  report on Form 8-K on September 28, 1995 related to
the announcement of the transaction with SHL Systemhouse Inc.







<PAGE>
                                     PAGE 27

                 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:  November 14, 1995          Signed:  /s/ Douglas L. Maine
                                          ---------------------
                                          Douglas L. Maine

                                          Executive Vice President
                                          and Chief Financial Officer

                                  Signed:  /s/ James M. Schneider
                                          -----------------------
                                          James M. Schneider

                                          Senior Vice President, Finance
                                          and Chief Accounting Officer




<PAGE>
                                     PAGE 28


                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                                  EXHIBIT INDEX





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

         11                   Computation of Earnings per Common Share.

         12                   Computation of Ratio of Earnings to Fixed Charges.

         27                   Financial Data Schedule as of September 30, 1995.

         99(a)                Capitalization Schedule as of September 30, 1995.