UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 333-06609-02
SPRINT SPECTRUM FINANCE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 43-1746537
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
4900 Main Street, Kansas City, Missouri, 64112
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(Address of principal executive offices)
(816) 559-1000
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(Registrant's telephone number, including area code)
4717 Grand Avenue, Kansas City, Missouri, 64112
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(Former name, former address and former fiscal year,
if changed since last report)
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
The Registrant meets the condition set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this form with the reduced disclosure
format.
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SPRINT SPECTRUM FINANCE CORPORATION
- --------------------------------------------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
INDEX
Page
Number
-------------
Part I - Financial Information
Item 1. Financial Statements............................... 1 - 3
Balance Sheets.......................................... 1
Note to Balance Sheet................................... 2 - 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 4
Part II - Other Information
Item 1. Legal Proceedings................................... 5
Item 2. Changes in Securities............................... 5
Item 3. Defaults On Senior Securities....................... 5
Item 4. Submission of Matters to a Vote of Security Holders 5
Item 5. Other Information................................... 5
Item 6. Exhibits and Reports on Form 8-K.................... 5
Signature.......................................................... 6
Exhibits
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<TABLE>
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PART I.
Item 1.
SPRINT SPECTRUM FINANCE CORPORATION
(A wholly-owned subsidiary of Sprint Spectrum L.P.)
BALANCE SHEETS
June 30, May 21,
1996 1996
- ---------------------------------------------------------------------- ----------------- ------------------
(Unaudited) (Inception)
ASSETS
<S> <C> <C>
Receivable from parent............................................... $ 100 $ 100
------------------ ------------------
TOTAL ASSETS......................................................... $ 100 $ 100
================== ==================
STOCKHOLDER'S EQUITY
Common stock, $1.00 par value; 1,000 shares authorized; 100 shares
issued and outstanding............................................ $ 100 $ 100
------------------ ------------------
TOTAL STOCKHOLDER'S EQUITY........................................... $ 100 $ 100
================== ==================
See accompanying notes to balance sheets.
</TABLE>
1
<PAGE>
PART I.
Item 1.
SPRINT SPECTRUM FINANCE CORPORATION
(A wholly-owned subsidiary of Sprint Spectrum L.P.)
Notes to Balance Sheets
1. General
Sprint Spectrum Finance Corporation ("FinCo"), a Delaware corporation, was
formed on May 21, 1996 and is a wholly-owned subsidiary of Sprint Spectrum L.P.
(the "Partnership").
The Partnership contributed $100 to FinCo on May 21, 1996 in exchange for 100
shares of common stock.
2. Subsequent Event
Senior Notes and Senior Discount Notes: In August, 1996, Sprint Spectrum L.P.
and FinCo (together, the "Issuers") issued $250 million aggregate principal
amount of 11% Senior Notes due 2006 ("the Senior Notes"), and $500 million
aggregate principal amount at maturity of 12 1/2% Senior Discount Notes due 2006
(the "Senior Discount Notes" and, together with the Senior Notes, the "Notes").
FinCo is the co-obligor for the Senior Notes and Senior Discount Notes.
Repayment of the Notes will be made by Sprint Spectrum L.P.
The Senior Discount Notes were issued at a discount to their aggregate principal
amount at maturity and generated proceeds of approximately $273 million. Cash
interest on the Senior Notes will accrue at a rate of 11% per annum and is
payable semi-annually in arrears on each February 15 and August 15, commencing
February 15, 1997. Cash interest will not accrue or be payable on the Senior
Discount Notes prior to August 15, 2001. Thereafter, cash interest on the Senior
Discount Notes will accrue at a rate of 12 1/2% per annum and will be payable
semi-annually in arrears on each February 15 and August 15, commencing February
15, 2002.
On August 15, 2001, the Issuers will be required to redeem an amount equal to
$384.772 per $1,000 principal amount at maturity of each Senior Discount Note
then outstanding ($192 million in aggregate principal amount at maturity,
assuming all of the Senior Discount Notes remain outstanding at such date).
The Senior Notes are redeemable at the option of the Issuers, in whole or in
part, at any time on or after August 15, 2001 at the redemption prices set forth
below, plus accrued and unpaid interest, if any, to the redemption date, if
redeemed during the 12 month period beginning on August 15 of the years
indicated below:
Year Redemption Price
-------- ----------------
2001 105.500%
2002 103.667%
2003 101.833%
2004 and thereafter 100.000%
In addition, prior to August 15, 1999, the Issuers may redeem up to 35% of the
originally issued principal amount of Senior Notes at a redemption price equal
to 111.0% of the principal amount of the Senior Notes so redeemed, plus accrued
and unpaid interest, if any, to the redemption date with the net proceeds of
one or more public equity offerings (as defined), provided that at least 65% of
the originally issued principal amount of Senior Notes would remain outstanding
immediately after giving effect to such redemption.
2
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The Senior Discount Notes are redeemable at the option of the Issuers, in whole
or in part, at any time on or after August 15, 2001, at the redemption prices
set forth below, plus accrued and unpaid interest, if any, to the redemption
date, if redeemed during the 12 month period beginning on August 15 of the year
indicated below:
Year Redemption Price
-------- ----------------
2001 110.000%
2002 106.500%
2003 103.250%
2004 and thereafter 100.000%
In addition, prior to August 15, 1999, the Issuers may redeem up to 35% of the
originally issued principal amount at maturity of Senior Discount Notes at a
redemption price equal to 112.5% of the accreted value at the redemption date of
the Senior Discount Notes so redeemed with the net proceeds of one or more
public equity offerings (as defined), provided that at least 65% of the
originally issued principal amount at maturity of the Senior Discount Notes
would remain outstanding immediately after giving effect to such redemption.
The Notes contain certain restrictive covenants, including (among other
requirements) limitations on additional indebtedness, limitations on restricted
payments, limitations on liens, and limitations on dividends and other payment
restrictions affecting restricted subsidiaries (as defined).
3
<PAGE>
PART I.
Item 2.
SPRINT SPECTRUM FINANCE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
FinCo was formed on May 21, 1996 for the purpose of serving as co-obligor for
the Senior Notes and Senior Discount Notes discussed below. There has been no
operating activity since inception of the Company.
Liquidity and Capital Resources
In August, 1996 the Issuers issued $250 million aggregate principal amount of
the Senior Notes, and $500 million aggregate principal amount at maturity of 12
1/2% Senior Discount Notes. FinCo is co-obligor for the Notes. Repayment of the
Notes will be made by Sprint Spectrum L.P.
The Senior Discount Notes were issued at a discount to their aggregate principal
amount at maturity and generated proceeds of approximately $273 million. Cash
interest on the Senior Notes will accrue at a rate of 11% per annum and is
payable semi-annually in arrears on each February 15 and August 15, commencing
February 15, 1997. Cash interest will not accrue or be payable on the Senior
Discount Notes prior to August 15, 2001. Thereafter, cash interest on the Senior
Discount Notes will accrue at a rate of 12 1/2% per annum and will be payable
semi-annually in arrears on each February 15 and August 15, commencing February
15, 2002. On August 15, 2001, the Issuers will be required to redeem an amount
equal to $384.772 per $1,000 principal amount at maturity of each Senior
Discount Note then outstanding ($192 million in aggregate principal amount at
maturity, assuming all of the Senior Discount Notes remain outstanding at such
date). The proceeds of approximately $509 million from the issuance of the Notes
(net of approximately $14 million of underwriting discounts, commissions, and
offering expenses) will be used by Sprint Spectrum L.P. to fund capital
expenditures, including the buildout of the nationwide PCS network, to fund
working capital as required, to fund operating losses and for other partnership
purposes.
4
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PART II.
Other Information
Item 1. Legal Proceedings
There were no reportable events during the quarter ended June 30, 1996.
Item 2. Changes in Securities
There were no reportable events during the quarter ended June 30, 1996.
Item 3. Defaults On Senior Securities
There were no reportable events during the quarter ended June 30, 1996.
Item 4. Submission of Matters to Votes of Security Holders
There were no reportable events during the quarter ended June 30, 1996.
Item 5. Other Information
The Company has changed the address of its principal executive offices
to:
4900 Main Street
Kansas City, Missouri 64112
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
3.1 Certificate of Incorporation of Sprint Spectrum Finance
Corporation (incorporated by reference to Form S-1
Registration Statement, Registration No. 333-06609, filed on
June 21, 1996).
3.2 By-laws of Sprint Spectrum Finance Corporation (incorporated
by reference to Form S-1 Registration Statement, Registration
No. 333-06609, filed on June 21, 1996).
4.1 Senior Note Indenture, dated August 23, 1996, between Sprint
Spectrum L.P., Sprint Spectrum Finance Corporation, and The
Bank of New York, as Trustee (incorporated by reference to
Form S-1 Registration Statement, Registration No. 333-06609,
the form of which was filed on July 30, 1996).
4.2 Form of Senior Note (included in Exhibit 4.1).
4.3 Senior Discount Note Indenture, dated August 23, 1996, between
Sprint Spectrum L.P., Sprint Spectrum Finance Corporation, and
The Bank of New York, as Trustee (incorporated by reference to
Form S-1 Registration Statement, Registration No. 333-06609,
the form of which was filed on July 30, 1996).
4.4 Form of Senior Discount Note (included in Exhibit 4.3).
27 Financial data schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30,
1996.
5
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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.
SPRINT SPECTRUM FINANCE CORPORATION
(Registrant)
By /s/ John W. Meyer
John W. Meyer
Vice President and Controller
Dated: September 26, 1996
6
<PAGE>
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