SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
March 7, 1996 (Date of Inception) to December 31, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from __________ to __________
Commission file number 1-14108
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
360 Communications Company Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its executive office:
360 Communications Company
8725 W. Higgins Road
Chicago, Illinois
60631-2702
<PAGE>
360 COMMUNICATIONS COMPANY
RETIREMENT SAVINGS PLAN
1996 ANNUAL REPORT
WITH
REPORT OF INDEPENDENT AUDITORS
<PAGE>
360 COMMUNICATIONS COMPANY
RETIREMENT SAVINGS PLAN
Financial Statements and Supplemental Schedules
March 7, 1996 (Date of Inception) to December 31, 1996
Contents
Report of Independent Auditors.................................................1
Financial Statements
Statement of Net Assets Available for Benefits With Fund Information...........2
Statement of Changes in Net Assets Available for Benefits With Fund
Information....................................................................3
Notes to Financial Statements..................................................4
Supplemental Schedules
Item 27a - Schedule of Assets Held for Investment Purposes....................10
Item 27d - Schedule of Reportable Transactions................................11
<PAGE>
Report of Independent Auditors
The Administrative Committee
360 Communications Company
We have audited the accompanying statement of net assets available for benefits
of the 360 Communications Company Retirement Savings Plan (the "Plan") as of
December 31, 1996, and the related statement of changes in net assets available
for benefits from March 7, 1996 (date of inception) to December 31, 1996. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1996, and the changes in net assets available for benefits from
March 7, 1996 (date of inception) to December 31, 1996, in conformity with
generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
listed in the index to financial statements are presented for purposes of
complying with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The Fund Information in
the statement of net assets available for benefits and the statements of changes
in net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and the
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Ernst & Young LLP
Chicago, Illinois
June 19, 1997
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<TABLE>
<CAPTION>
360 Communications Company Retirement Savings Plan
Statement of Net Assets Available
For Benefits With Fund Information
December 31, 1996
(Thousands of Dollars)
Company Sprint Equity Over the Managed Loan
Stock Stock Income Magellan Counter Overseas Bond Income Receivables,
Total Fund Fund Fund Fund Fund Fund Fund Fund net
--------- --------- -------- ------- -------- --------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at Fair Value:
Common Stock: Company
Stock Fund, Sprint Stock Fund $19,831 $7,087 $12,744
Equity Mutual Funds: Equity
Income Fund, Magellan Fund,
Over the Counter, Overseas
Fund 15,967 $7,489 $5,499 $1,554 $1,425
Bond Mutual Funds: Bond Fund 1,054 $1,054
Managed Income Fund 6,503 $6,503
Loan Receivables, net 2,024 $2,024
---------- --------- -------- ------- -------- --------- --------- -------- -------- -----------
Net Assets Available for
Benefits $45,379 $7,087 $12,744 $7,489 $5,499 $1,554 $1,425 $1,054 $6,503 $2,024
========== ========= ======== ======= ======== ========= ========= ======== ======== ===========
See Notes to Financial Statements
</TABLE>
2
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<TABLE>
<CAPTION>
360 Communications Company Retirement Savings Plan
Statement of Changes in Net Assets
Available for Benefits with Fund Information
March 7, 1996 (Date of Inception) to December 31, 1996
(Thousands of Dollars)
Company Sprint Equity Over the Managed Loan
Stock Stock Income Magellan Counter Overseas Bond Income Receivables,
Total Fund Fund Fund Fund Fund Fund Fund Fund net
--------- --------- --------- --------- ---------- ---------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends $ 1,793 $ - $ 333 $ 324 $ 620 $ 136 $ 82 $ 33 $ 265
Realized and Unrealized
Appreciation
(Depreciation) in the
Fair Value of Investments 1,908 162 1,436 480 (225) 18 21 16 -
--------- --------- --------- --------- ---------- ---------- -------- -------- ---------
Net Investment Income 3,701 162 1,769 804 395 154 103 49 265
Contributions - Employer, net 4,854 1,498 (73) 849 922 209 224 359 865
Contributions - Employee 4,836 1,414 1 909 1,029 256 266 198 764
Loan Repayment - principal - 207 - 97 81 15 21 14 141 $ (576)
Loan Repayment - interest 89 32 - 15 14 2 3 2 21 -
Withdrawals (1,144) (358) (268) (132) (128) (3) (32) (12) (161) (50)
Fund Transfers, net - 1,668 (1,922) 479 (215) 612 225 3 (850) -
Loan Withdrawals - (157) (288) (213) (167) (28) (34) (17) (332) 1,236
Other, net (9) (2) 3 (2) (1) (1) - (2) (5) 1
--------- --------- --------- --------- ---------- ---------- -------- -------- --------- -----------
Net Increase (Decrease) 12,327 4,464 (778) 2,806 1,930 1,216 776 594 708 611
Net Assets Available
for Benefits:
Transfer from Sprint
Retirement Savings Plan 33,052 2,623 13,522 4,683 3,569 338 649 460 5,795 1,413
--------- --------- --------- --------- ---------- ---------- -------- -------- --------- -----------
End of year $45,379 $7,087 $12,744 $7,489 $5,499 $1,554 $1,425 $1,054 $6,503 $2,024
========= ========= ========= ========= ========== ========== ======== ======== ========= ===========
See Notes to Financial Statements
</TABLE>
3
<PAGE>
360 COMMUNICATIONS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. DESCRIPTION OF THE PLAN
The following brief description of the 360 Communications Company Retirement
Savings Plan ("Plan") provides only general information. Participants should
refer to the Plan document and the summary plan description for more complete
information.
Background
On July 26, 1995, Sprint Corporation ("Sprint") announced that its Board of
Directors decided to pursue a tax-free spinoff of 360 Communications Company
(the "Company") to Sprint shareholders. In the Federal Communications
Commission ("FCC") auction of wireless Personal Communications Services
("PCS") licenses, Sprint Spectrum LP won the rights to several markets that
overlap service territories operated by the Company. Under FCC rules, Sprint
was required to divest or reduce its cellular holdings in certain markets to
clear conflicts with the PCS licenses awarded to Sprint Spectrum LP. For
these reasons, Sprint and its Board of Directors decided to pursue a spinoff
of the cellular operations of Sprint.
On March 7, 1996, the spinoff was consummated and the Company became a
separate, publicly traded company. Concurrent with the spinoff, a new Plan
was established by which identical investment funds were adopted and all
account balances for the Company's associates were transferred from the
Sprint Retirement Savings Plan to the Plan.
General
The Plan is a defined contribution plan established and sponsored by the
Company and is intended to qualify under Section 401(a) of the Internal
Revenue Code (the "Code").
The Plan includes a qualified cash or deferred arrangement as defined in
Section 401(k) of the Code and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
Eligibility
Elective deferrals made by associates to the Plan are voluntary. Individuals
employed by the Company for more than one year and who are not represented by
a collective bargaining unit are eligible to participate. Regular full-time
employees who have attained age 35 but not yet completed one year of service
are also eligible to participate in the Plan.
4
<PAGE>
360 COMMUNICATIONS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. DESCRIPTION OF THE PLAN (continued)
Contributions
Participants can contribute up to 16% of their eligible pay to a pre-tax
account, provided total contributions to the pre-tax account did not exceed
an annual limitation of $9,500 for the 1996 Plan year. The percentage that
can be contributed by participants who meet the definition of a highly
compensated employee as defined in the Code is periodically recomputed in
order to maintain compliance with the permitted disparity provisions of the
Code. The annual limitation on contributions to the pre-tax account is
established under the Code. Currently contributions are allowed to only the
pre-tax account. Subject to certain limitations and restrictions, the Plan
permits participants to make rollover contributions from other plans
qualified under sections 401(a) of the Code.
The Company makes a dollar for dollar matching contribution to the Plan.
Contributions in excess of 6% of each participant's pay are not included in
this calculation of the Company contribution. Contributions are made in cash
or Company stock with a market value equal to the Company contribution
requirement.
Effective December 1996, the Company introduced an age-related contribution
referred to as the age-progressive contribution in the Plan. This age-related
contribution is available for eligible participants in the Plan who have
attained age 25 and are employed by the Company as of the last pay period
each year. Employees not enrolled in the Plan that have completed one year of
service or are age 35 or older are still eligible for the age-progressive
contribution. If an investment election does not appear on file for eligible
participants at the time the age-progressive contribution is made, the
allocation is automatically invested in the PIMCO Total Return Bond Fund
("Bond Fund").
Investment Funds
Participants may direct their contributions into any of seven funds managed
by Fidelity Investments Institutional Services Company, Inc.: the Equity
Income Fund, Magellan Fund, Managed Income Fund, Over the Counter Fund, Bond
Fund, Overseas Fund and Company Stock Fund. Company contributions are
invested in the same investment funds as plan participant contributions.
The Bond Fund has been invested in the PIMCO Total Return Investment Fund,
Inc. The Company Stock Fund invests in 360 Communications Company common
stock. The Managed Income Fund is managed by Fidelity Management Trust
Company and is invested in a pool of investment contracts issued by various
insurance companies and banks. Since the spinoff, Company associates
participating in the Plan cannot elect to invest money into the Sprint Stock
Fund. The Company is discontinuing the Fund after March 31, 1998.
Participants may redirect the funds in which their current contributions are
invested each pay period. In addition, participants may also transfer
existing balances between funds on any week day, except holidays when the New
York Stock Exchange is closed. However, certain limitations do apply in that
at no time can transfers be made directly or indirectly (within 90 days) from
the Managed Income Fund to the Bond Fund.
5
<PAGE>
360 COMMUNICATIONS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. DESCRIPTION OF THE PLAN (continued)
The following represents the number of Plan participants in each investment
fund at December 31, 1996.
Magellan Fund 1,267
Equity Income Fund 1,326
Managed Income Fund 1,130
Bond Fund 1,164
Overseas Fund 626
Company Stock Fund 2,122
Over the Counter Fund 545
Sprint Stock Fund 1,707
Vesting
Participants are 100% vested in their participant contribution accounts at
all times.
Participants have an immediate 100% vested right to their Company
contributions upon 5 or more years of continuous service with the Company.
Earlier vesting may occur, if while an employee of the Company, a
participant: (1) attains age 65, (2) incurs a permanent and total disability,
(3) dies, or (4) receives approval of the Company's Board of Directors under
certain circumstances.
Terminating participants who do not meet these vesting guidelines forfeit the
non-vested portion of the Company contribution. Such amounts are used to
offset future Company contribution requirements.
Withdrawals
Participants may withdraw the vested value of their account when they retire,
terminate employment with the Company, reach age 59 1/2, meet "hardship"
requirements defined in the Code, or become permanently and totally disabled.
Withdrawals may also be made from the after-tax portion of their account and
the vested portion of their Company contribution account that has been held
by the Plan for two full calendar years following the year of contribution.
These withdrawals may not be made more often than twice per year. The minimum
withdrawal is the lesser of $1,000 or 50% of the amount that may be
withdrawn.
Participant Loans
Participants may borrow the lower of (1) one-half of the total value of their
vested account balance, (2) $50,000 reduced by the highest outstanding
balance of the participant's loan from the Plan during the one year period
ending on the date the loan is made, or (3) the total value of their pre-tax
account. The minimum loan is $1,000. Participants may have no more than two
loans outstanding from the Plan at a time. Amounts borrowed by participants
must be repaid within 5 years and no sooner than 6 months. In the event that
the proceeds of the loan are used to acquire a participant's principal
residence, the maximum repayment period may be as much as 25 years. The
interest rate charged on loans is set by an administrative committee.
6
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360 COMMUNICATIONS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. DESCRIPTION OF THE PLAN (continued)
Participant Accounts
A separate account is maintained for each participant in the Plan. Each
participant's account is adjusted for (a) Company contributions made on
behalf of the participant, (b) the participant's own contributions made to
the Plan, including rollover contributions, (c) the participant's share of
any investment income (losses), (d) withdrawals, (e) loans, (f) forfeitures
of Company contributions due to the participant's withdrawal and (g)
transfers directed by the participant from one investment fund to another.
Administration and Plan Expenses
The Plan is administered by the Administrative Committee ("Committee")
established pursuant to the Plan. Administrative expenses are paid for by the
Company. Mutual funds offered under the Plan incur fees related to their
daily operations. These expenses are paid out of the Plan's mutual fund
assets and are reflected in their share price or dividends; they are neither
billed directly to participants nor deducted from their accounts. Certain
administrative charges for employee loans are charged to participants with
outstanding loans.
Termination
Although the Company has not expressed an intention to terminate the Plan, it
reserves the right to amend or terminate the Plan at any time. Should the
Plan terminate, the accounts of all participants will become non-forfeitable
as of the date of termination.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the
Plan:
Valuation of Investments
Investments of the Plan are generally valued at fair market value. The fair
market value of the common stock, equity mutual funds, and the bond mutual
funds is based on the value of the last reported sale on the last business
day of the year. Loans to participants are valued at their principal balance.
Interest
Income from the investments is recorded as earned on an accrual basis.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, increases and
decreases included in the financial statements. Actual results could differ
from these estimates.
7
<PAGE>
360 COMMUNICATIONS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Tax Status
The Internal Revenue Service ("IRS") previously informed Sprint that its
plans met the requirements of the Code and, therefore, qualified for
favorable tax treatment. The Company has applied for a determination letter
from the IRS as to whether the restated Plan continues to meet the
requirements for qualified tax status. Though the Company has not received a
response from the IRS, it believes the Plan will continue to constitute a
qualified plan under the Code. As a result, no provision for income taxes is
included in these financial statements.
In the event the IRS determines that the revised Plan does not qualify, the
Plan will be further amended in order to obtain a favorable determination as
to its qualified status. The Company does not expect that such additional
amendments, if any, would have a material effect on the net assets available
for benefits or changes in net assets available for benefits.
The Plan is required to be administered in accordance with the Plan document
and the Code. The Company is not aware of any series of events or
circumstances that would adversely impact the Plan's qualified status.
Withdrawals
Withdrawals, other than cash, are recorded at the fair market value of the
assets on the date of distribution.
3. INVESTMENTS
The following table presents the cost and fair value of Plan investments that
represent 5% or more of the Plan's net assets available for benefits (in
thousands):
December 31, 1996
------------------------------------
Cost Fair Value
----------------- ------------------
Investments at Fair Value as
Determined by Quoted Market Price:
Common Stock:
Company Stock Fund $ 7,007 $ 7,087
Sprint Stock Fund 11,598 12,744
Fidelity Equity Mutual Funds:
Magellan Fund 5,643 5,499
Equity Income Fund 7,021 7,489
Managed Income Fund 6,503 6,503
Investments at Estimated Fair Value:
Loan Receivables, net 2,024 2,024
8
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SUPPLEMENTAL SCHEDULES
9
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360 COMMUNICATIONS COMPANY
RETIREMENT SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996
(Thousands of Dollars)
Description of Assets Shares Cost Fair Value
- ------------------------- ------------- --------------- ---------------
Bond Fund 100,381 $ 1,038 $ 1,054
Company Stock Fund 696,151 7,007 7,087
Magellan Fund 68,181 5,643 5,499
Equity Income Fund 174,847 7,021 7,489
Over the Counter Fund 47,516 1,539 1,554
Overseas Fund 46,197 1,405 1,425
Managed Income Fund 6,502,533 6,503 6,503
Sprint Stock Fund 1,157,492 11,598 12,744
Loan Receivables, net 2,024 2,024
-------------- --------------- ----------------
8,793,298 $ 43,778 $ 45,379
============== =============== ================
10
<PAGE>
360 COMMUNICATIONS COMPANY
RETIREMENT SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions
March 7, 1996 (Date of Inception) to December 31, 1996
(Thousands of Dollars)
Fair
Type of Number of Market Realized
Description of Assets Transaction Transactions Cost Value Gain/(Loss)
- --------------------- ----------- ------------- --------- -------- ------------
Category (iii) = A series of transactions in excess of 5% of plan assets
Bond Fund Purchases 114 $ 1,111 $ 1,111 $ -
Sales 81 73 74 1
Company Stock Fund Purchases 176 8,626 8,626 -
Sales 152 1,700 1,787 87
Magellan Fund Purchases 166 6,644 6,644 -
Sales 141 921 816 (105)
Equity Income Fund Purchases 171 7,545 7,545 -
Sales 135 536 552 16
Over the Counter Fund Purchases 130 1,631 1,631 -
Sales 53 95 98 3
Overseas Fund Purchases 136 1,559 1,559 -
Sales 87 155 156 1
Managed Income Fund Purchases 156 9,165 9,165 -
Sales 156 2,662 2,662 -
Sprint Stock Fund Purchases 153 13,861 13,861 -
Sales 152 2,553 3,500 947
There were no category (i), (ii) or (iv) transactions during the year.
11
<PAGE>
SIGNATURE
The Plan. Pursuant to the requirements of the Securities and Exchange Act of
1934, the Administrative Committee, which administers the Plan, has duly caused
this annual report to be signed on its behalf by the undersigned thereunto duly
authorized.
360 COMMUNICATIONS COMPANY
RETIREMENT SAVINGS PLAN
By: /s/ Gary L. Burge
Gary L. Burge
Investment Committee Member
Date: June 24, 1997
12
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EXHIBIT INDEX
Exhibit
Number Description of Exhibits
- ------ -----------------------
23 Consent of Ernst & Young LLP.
13
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-1378) pertaining to the 360 Communications Company Retirement
Savings Plan of our report dated June 19, 1997, with respect to the financial
statements and schedules of the 360 Communications Company Retirement Savings
Plan included in this Annual Report (Form 11-K) for the period from March 7,
1996 (date of inception) to December 31, 1996.
Ernst & Young LLP
Chicago, Illinois
June 25, 1997
14
