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 September 30, 1994
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 1-4721
SPRINT CORPORATION
(Exact name of registrant as specified in its charter)
KANSAS 48-0457967
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
P.O. Box 11315, Kansas City, Missouri 64112
(Address of principal executive offices)
(913) 624-3000
(Registrant's telephone number, including area code)
(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
SHARES OF COMMON STOCK OUTSTANDING AT September 30, 1994 --
348,522,395
PART 1.
Item 1.
SPRINT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions)
As of As of
September December
30, 1994 31, 1993
(Unaudited)
Assets
Current assets
Cash and equivalents $ 92.6 $ 76.8
Accounts receivable, net of allowance
for doubtful accounts of $137.5
million ($121.9 million in 1993) 1,435.5 1,230.6
Investment in equity securities -- 130.2
Inventories 201.0 182.3
Deferred income taxes 68.1 81.1
Prepaid expenses 142.7 120.7
Other 145.0 156.1
Total current assets 2,084.9 1,977.8
Investments in equity securities 177.9 173.1
Property, plant and equipment
Long distance communications services 5,755.0 5,492.7
Local communications services 11,757.5 11,226.4
Cellular and wireless communications
services 721.4 569.6
Other 455.3 433.7
18,689.2 17,722.4
Less accumulated depreciation 8,118.5 7,407.6
10,570.7 10,314.8
Cellular minority partnership interests 299.4 284.9
Excess of cost over net assets acquired 712.0 739.5
Other assets 632.1 658.8
$ 14,477.0 $ 14,148.9
See accompanying condensed notes to consolidated financial
statements.
PART 1.
Item 1.
SPRINT CORPORATION
CONSOLIDATED BALANCE SHEETS (continued)
(In Millions)
As of As of
September December
30, 1994 31, 1993
(Unaudited)
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $ 278.9 $ 523.4
Accounts payable 819.0 875.2
Accrued interconnection costs 530.7 537.7
Accrued taxes 352.2 307.2
Advance billings 164.7 150.6
Other 671.3 674.5
Total current liabilities 2,816.8 3,068.6
Long-term debt 4,580.0 4,571.0
Deferred credits and other liabilities
Deferred income taxes and investment tax
credits 1,212.8 1,229.9
Postretirement and other benefit
obligations 844.8 793.1
Other 579.0 529.4
2,636.6 2,552.4
Redeemable preferred stock 37.2 38.6
Common stock and other shareholders'
equity
Common stock, par value $2.50 per share,
authorized 500.0 million shares, issued
and outstanding 348.5 million (343.4
million in 1993) 871.3 858.5
Capital in excess of par or stated value 941.9 827.4
Retained earnings 2,602.0 2,184.2
Other (8.8) 48.2
4,406.4 3,918.3
$ 14,477.0 $ 14,148.9
See accompanying condensed notes to consolidated financial
statements.
PART I.
Item 1.
SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Millions, Except Per Share Data)
Three Months Nine Months
Ended Ended
September 30, September 30,
1994 1993 1994 1993
Net operating revenues $ 3,233.8 $ 2,867.6 $ 9,417.4 $8,386.5
Operating expenses
Costs of services and
products 1,615.0 1,435.1 4,717.8 4,225.9
Selling, general and
administrative 781.7 690.8 2,258.7 2,008.5
Depreciation and amortization 366.8 338.5 1,085.5 1,013.7
Merger, integration and
restructuring costs -- 44.5 -- 292.5
Total operating expenses 2,763.5 2,508.9 8,062.0 7,540.6
Operating income 470.3 358.7 1,355.4 845.9
Interest expense (98.6) (114.2) (299.7) (345.1)
Other income (expense), net (9.3) (11.4) 10.6 (20.2)
Income from continuing
operations before income
taxes 362.4 233.1 1,066.3 480.6
Income tax provision (132.3) (96.4) (389.2) (190.1)
Income from continuing
operations 230.1 136.7 677.1 290.5
Discontinued operations, net -- -- -- (12.3)
Extraordinary losses on early
extinguishments of debt, net -- (14.5) -- (28.2)
Cumulative effect of changes
in accounting principles,
net -- -- -- (384.2)
Net income (loss) 230.1 122.2 677.1 (134.2)
Preferred stock dividends (0.6) (0.6) (2.0) (2.1)
Earnings (loss) applicable to
common stock $ 229.5 $ 121.6 $ 675.1 $(136.3)
Earnings (loss) per common
share
Continuing operations $ 0.66 $ 0.39 $ 1.94 $0.84
Discontinued operations -- -- -- (0.04)
Extraordinary item -- (0.04) -- (0.08)
Cumulative effect of changes
in accounting principles -- -- -- (1.12)
Total $ 0.66 $ 0.35 $ 1.94 $(0.40)
Weighted average number of
common shares 349.4 344.6 348.0 343.1
Dividends per common share $ 0.25 $ 0.25 $ 0.75 $ 0.75
See accompanying condensed notes to consolidated financial
statements.
PART I.
Item 1.
SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Millions)
Nine Months Ended
September 30,
1994 1993
Operating activities
Net income (loss) $ 677.1 $ (134.2)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities
Depreciation and amortization 1,085.5 1,013.7
Gain on sale of investment in equity
securities (34.7) --
Extraordinary losses on early
extinguishments of debt -- 28.0
Cumulative effect of changes in accounting
principles -- 384.2
Deferred income taxes and investment tax
credits 20.4 5.5
Changes in operating assets and liabilities
Accounts receivable, net (204.9) (129.2)
Inventories and other current assets (31.9) (4.8)
Accounts payable, accrued expenses and other
current liabilities 2.9 200.9
Noncurrent assets and liabilities, net 120.5 99.3
Other, net 51.7 70.4
Net cash provided by operating activities 1,686.6 1,533.8
Investing activities
Capital expenditures (1,327.4) (1,084.6)
Proceeds from sale of investment in equity
securities 117.7 --
Other, net (30.4) 35.4
Net cash used by investing activities (1,240.1) (1,049.2)
Financing activities
Proceeds from long-term debt 103.2 840.4
Retirements of long-term debt (447.9) (1,171.6)
Net increase (decrease) in notes payable and
commercial paper 109.2 (5.5)
Proceeds from common stock issued 41.7 59.8
Proceeds from employees stock purchase
installments 21.1 20.1
Dividends paid (261.6) (260.5)
Other, net 3.6 (15.3)
Net cash used by financing activities (430.7) (532.6)
Increase (decrease) in cash and equivalents 15.8 (48.0)
Cash and equivalents at beginning of period 76.8 128.8
Cash and equivalents at end of period $ 92.6 $ 80.8
See accompanying condensed notes to consolidated financial
statements.
PART I.
Item 1.
SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF COMMON STOCK AND
OTHER SHAREHOLDERS' EQUITY (UNAUDITED)
(In Millions)
For the Nine Months Ended September 30, 1994
Capital in
Excess of
Par or
Common Stated Retained
Stock Value Earnings Other Total
Balance as of January
1, 1994 (343.4
million shares issued
and outstanding) $858.5 $827.4 $ 2,184.2 $ 48.2 $ 3,918.3
Net income -- -- 677.1 -- 677.1
Common stock
dividends -- -- (259.6) -- (259.6)
Preferred stock
dividends -- -- (2.0) -- (2.0)
Employee stock purchase
and other
installments
received, net -- -- -- 23.1 23.1
Common stock issued 12.7 111.0 -- (53.1) 70.6
Change in unrealized
holding gains on
investments in equity
securities, net -- -- -- (27.0) (27.0)
Other, net 0.1 3.5 2.3 -- 5.9
Balance as of
September 30, 1994
(348.5 million shares
issued and
outstanding) $871.3 $941.9 $ 2,602.0 $ (8.8) $ 4,406.4
See accompanying condensed notes to consolidated financial
statements.
PART I.
Item 1.
SPRINT CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The information contained in this Form 10-Q for the three and
nine-month interim periods ended September 30, 1994 and 1993 has
been prepared in accordance with instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. In the opinion of management, all
adjustments considered necessary, consisting only of normal
recurring and certain nonrecurring accruals (see Notes 2, 3, and
5), to present fairly the consolidated financial position,
results of operations, and cash flows for such interim periods
have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with
generally accepted accounting principles (GAAP) have been
condensed or omitted. The results of operations for the nine
months ended September 30, 1994 are not necessarily indicative of
the operating results that may be expected for the year ended
December 31, 1994.
1. Accounting Policies
Basis of Consolidation
The accompanying consolidated financial statements include the
accounts of Sprint Corporation and its wholly-owned and majority-
owned subsidiaries (Sprint). Investments in less than 50 percent-
owned partnerships or joint ventures are accounted for using the
equity method.
In accordance with industry practice, revenues and related net
income of non-regulated operations attributable to transactions
with Sprint's rate-regulated telephone companies have not been
eliminated in the accompanying consolidated financial statements.
Intercompany revenues of such entities amounted to $74 million
and $63 million for the three months ended September 30, 1994 and
1993, respectively, and $224 million and $178 million for the
nine months ended September 30, 1994 and 1993, respectively.
All other significant intercompany transactions have been
eliminated.
Classification of Operations
The long distance communications services division provides
domestic voice and data communications services across certain
specified geographical boundaries, as well as international long
distance communications services. Rates charged for such
services sold to the public are subject to different levels of
state and federal regulation, but are generally not subject to
rate-base regulation.
The local communications services division consists principally
of the operations of Sprint's rate-regulated telephone companies.
These operations provide local exchange services, access by
telephone customers and other carriers to local exchange
facilities and long distance services within specified
geographical areas.
The cellular and wireless communications services division
consists of wholly-owned and majority-owned interests in
partnerships and corporations operating cellular and wireless
communications properties in various metropolitan and rural
service area markets.
The product distribution and directory publishing businesses
include the wholesale distribution of telecommunications products
and the publishing and marketing of white and yellow page
telephone directories.
Postretirement Benefits
Effective January 1, 1993, Sprint changed or modified its method
of accounting for certain postretirement benefits by adopting
Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions." The resulting nonrecurring, noncash charge of $341
million ($1.00 per share), net of related income tax benefits, is
reflected in the 1993 consolidated statement of income as a
cumulative effect of change in accounting principle.
Postemployment Benefits
Effective January 1, 1993, Sprint adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." The
resulting nonrecurring, noncash charge of $11 million ($0.03 per
share), net of related income tax benefits, is reflected in the
1993 consolidated statement of income as a cumulative effect of
change in accounting principle.
Accounting for Circuit Activity Costs
Effective January 1, 1993, Sprint's long distance communications
services division changed its method of accounting for certain
costs related to connecting new customers to its network. The
resulting nonrecurring, noncash charge of $32 million ($0.09 per
share), net of related income tax benefits, is reflected in the
1993 consolidated statement of income as a cumulative effect of
change in accounting principle.
Reclassifications
Certain amounts previously reported for prior periods have been
reclassified to conform to the current period presentation in the
accompanying consolidated financial statements. Such
reclassifications had no effect on the results of operations or
shareholders' equity as previously reported.
2. Sprint/Centel Merger
Effective March 9, 1993, Sprint consummated its merger with
Centel Corporation (Centel), creating a diversified
telecommunications enterprise with operations in long distance,
local exchange and cellular/wireless communications services.
The merger was accounted for as a pooling of interests. The
transaction costs associated with the merger (consisting
primarily of investment banking and legal fees) and the estimated
expenses of integrating and restructuring the operations of the
two companies (consisting primarily of employee severance and
relocation expenses and costs of eliminating duplicative
facilities) were recognized upon consummation of the merger,
resulting in a nonrecurring charge of $248 million. During the
three months ended September 30, 1993, an additional charge of
$11 million was recognized in association with the continuing
integration and restructuring efforts within the local
communications services division. Such nonrecurring charges
reduced income from continuing operations by $7 million ($0.02
per share) and $172 million ($0.50 per share) for the three and
nine-month periods ended September 30, 1993, respectively.
3. Realignment and Restructuring Charge
During the three months ended September 30, 1993, Sprint
initiated a realignment and restructuring of its long distance
communications services division, including the elimination of
approximately 1,000 positions and the closure of two facilities.
These actions were designed to improve market focus, lower costs
and streamline operations within the division, and resulted in a
nonrecurring charge of $34 million, which reduced net income by
$21 million ($0.06 per share) for the three and nine-month
periods ended September 30, 1993.
4. Investments in Equity Securities
Investments in equity securities are classified as available for
sale and reported at fair value (estimated based on quoted market
prices). As of September 30, 1994 and December 31, 1993, the
cost of such investments was $119 million and $202 million,
respectively, with gross unrealized holding gains of $59 million
and $101 million, respectively, reflected as additions to other
shareholders' equity, net of related income taxes.
During the nine months ended September 30, 1994, Sprint sold an
investment in common stock, realizing a gain of $35 million,
which increased income from continuing operations by $22 million
($0.06 per share).
5. Income Taxes
The differences which cause the effective income tax rate to vary
from the statutory federal income tax rate of 35 percent for the
nine months ended September 30, 1994 and 1993, are as follows (in
millions):
Nine Months Ended
September 30,
1994 1993
Income tax provision at the statutory rate $ 373.2 $ 168.2
Effect of:
Investment tax credits included in income (16.4) (18.7)
State income taxes, net of federal income
tax effect 39.5 17.6
Merger related costs -- 14.5
Other, net (7.1) 8.5
Income tax provision, including investment
tax credits $ 389.2 $ 190.1
Effective income tax rate 36.5% 39.6%
On August 10, 1993, the Revenue Reconciliation Act of 1993 was
enacted which, among other changes, raised the federal income tax
rate for corporations to 35 percent from 34 percent, retroactive
to January 1, 1993. Accordingly, upon enactment, Sprint adjusted
its deferred income tax assets and liabilities to reflect the
revised rate. The resulting adjustment related to Sprint's non-
regulated subsidiaries increased the income tax provisions for
the three and nine-month periods ended September 30, 1993 by $13
million ($0.04 per share). Adjustments of the net deferred
income tax liabilities associated with the local communications
services division were generally recorded as reductions to
regulatory liabilities, and accordingly, had no immediate effect
on Sprint's net income.
6. Contingencies
Litigation, Claims and Assessments
Following announcement of Sprint's merger with Centel, class
action suits were filed against Centel and certain of its
officers and directors in federal and state courts. The state
suits have been dismissed, while the federal suits have been
consolidated into a single action and seek damages for alleged
violations of securities laws. These and various other suits
arising in the ordinary course of business are pending against
Sprint. Management cannot predict the ultimate outcome of these
actions but believes they will not result in a material effect on
Sprint's consolidated financial statements.
Accounts Receivable Sold with Recourse
Under an agreement available through September 1995, Sprint may
sell on a continuous basis, with recourse, up to $600 million of
undivided interests in a designated pool of its accounts
receivable. Subsequent collections of receivables sold to
investors are typically reinvested in the pool. Receivables sold
that remained uncollected as of September 30, 1994 aggregated
$600 million.
7. Supplemental Cash Flows Information
Nine Months Ended
September 30,
1994 1993
Cash paid for (in millions):
Interest $ 302.1 $ 326.5
Income taxes $ 326.7 $ 242.5
During the nine months ended September 30, 1994 and 1993, Sprint
contributed previously unissued shares of its common stock with
market values of $31 million and $27 million, respectively, to
the employee savings plans.
8. Subsequent Events
In October 1994, Sprint's Board of Directors declared a common
stock dividend of $0.25 per share payable on December 29, 1994.
On October 25, 1994, Sprint, along with Tele-Communications Inc.
(TCI), Comcast Corporation (Comcast) and Cox Cable (Cox),
announced the formation of a venture that will provide wireless
communications services and local telephone services on a broad
geographic basis within the United States. The joint venture
will be owned 40 percent by Sprint, 30 percent by TCI and 15
percent each by Comcast and Cox. The parties have signed
definitive agreements and created partnerships to bid
jointly for Personal Communications Services (PCS) licenses to be
auctioned by the Federal Communications Commission. The parties
have also entered into a joint venture formation agreement, which
provides the basis upon which they will develop definitive
agreements for their local telephone activities.
PART I.
Item 2.
SPRINT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Sprint Corporation (Sprint), incorporated in 1938 under the laws
of Kansas, is a holding company. Sprint's principal subsidiaries
provide local exchange, cellular/wireless and domestic and
international long distance telecommunications services. Other
subsidiaries are engaged in the wholesale distribution of
telecommunications products and the publishing and marketing of
white and yellow page telephone directories.
Long Distance Communications Services. The long distance
division is the nation's third largest long distance telephone
company, operating a nationwide all-digital long distance
communications network utilizing state-of-the-art fiber-optic and
electronic technology. The division provides domestic voice and
data communications services across certain specified
geographical boundaries, as well as international long distance
communications services. Rates charged by the division for its
services sold to the public are subject to different levels of
state and federal regulation, but are generally not subject to
rate-base regulation.
Local Communications Services. The local division is comprised
of rate-regulated local exchange carriers (LECs) which serve
approximately 6.4 million access lines in 19 states. The
companies in the division operate in geographical areas called
Local Access Transport Areas (LATAs) in which they provide basic
local exchange and intra-LATA toll service. The division also is
a reseller of interexchange long distance services and provides
other carriers access to Sprint's local exchange facilities.
Cellular and Wireless Communications Services. The cellular and
wireless division, which serves over 882,000 cellular
subscribers, primarily consists of Sprint Cellular Company and
its subsidiaries. The division has operating control of 87
markets in 15 states and minority interests in 64 markets for a
total population of 20.6 million, as adjusted for proportional
ownership interests.
Product Distribution and Directory Publishing. North Supply
Company (North Supply), a wholesale distributor of
telecommunications, security and alarm, and electrical products,
distributes products of more than 1,200 manufacturers to
approximately 9,500 customers. Products range from basics, such
as wire and cable, telephones and repair parts, to complete
private branch exchange (PBX) systems, transmission systems and
security and alarm equipment.
Sprint Publishing & Advertising along with Centel Directory
Company publish and market white and yellow page telephone
directories in certain of Sprint's local exchange territories, as
well as in the greater metropolitan areas of Milwaukee, Wisconsin
and Chicago, Illinois. The companies publish approximately 335
directories in 20 states with a circulation of 16.1 million
copies.
Strategic Developments
On October 25, 1994, Sprint, along with Tele-Communications Inc.
(TCI), Comcast Corporation (Comcast) and Cox Cable (Cox),
announced the formation of a venture that will provide wireless
communications services and local telephone services on a
broad geographic basis within the United States. The joint venture
will be owned 40 percent by Sprint, 30 percent by TCI and 15
percent each by Comcast and Cox. The parties have signed
definitive agreements and created partnerships to bid
jointly for Personal Communications Services (PCS) licenses to be
auctioned by the Federal Communications Commission (FCC). The
parties have also entered into a joint venture formation
agreement, which provides the basis upon which they will develop
definitive agreements for their local telephone activities.
On June 14, 1994, Sprint announced that it had entered into a
Memorandum of Understanding (the MOU) with Deutsche Telekom and
France Telecom to form a global partnership which will offer
telecommunications services to business, consumer and carrier
markets worldwide. The MOU provides that Deutsche Telekom and
France Telecom together will purchase approximately 42.9 million
shares of a new class of Sprint common stock at a price of
$47.225 per share. Deutsche Telekom and France Telecom will also
purchase approximately 42.9 million shares of the new class of
Sprint common stock at a price of $51.00 per share two years
after the initial acquisition. As part of the transaction,
Deutsche Telekom and France Telecom will be entitled to
representation on Sprint's board, such representation to be based
on their actual percentage ownership interest, with a minimum of
two directors serving on Sprint's board so long as the two
companies own at least 10 percent of the outstanding common stock
of Sprint, subject to the approval of the New York Stock
Exchange. The formation of the partnership and the acquisition
of Sprint stock are subject to conditions, including the
negotiation and execution of definitive agreements, approval by
Sprint's board of directors and its shareholders, approval by the
governing bodies of Deutsche Telekom and France Telecom and
government and regulatory approvals.
Liquidity and Capital Resources
Cash flows from operating activities, which are Sprint's primary
source of liquidity, were $1.7 billion during the first nine
months of 1994, compared to $1.5 billion during the first nine
months of 1993. This increase reflects improved operating
results in all divisions.
Sprint's investing activities used cash of $1.2 billion and $1.0
billion during the first nine months of 1994 and 1993,
respectively. Capital expenditures, which represent Sprint's
most significant investing activity, were $1.3 billion and $1.1
billion during the first nine months of 1994 and 1993,
respectively. Long distance capital expenditures totaled $425
million for the first nine months of 1994 compared to $281
million for the same period in 1993. The 1994 expenditures were
incurred primarily to enhance network capabilities for providing
new products and services and to meet increased customer demand.
Capital expenditures for the local division totaled $707 million
for the first nine months of 1994 compared to $669 million for
the same period in 1993. The 1994 expenditures were made to
accommodate access line growth, to continue the conversion to
digital technologies, and to expand the division's capabilities
for providing enhanced telecommunications services. Capital
expenditures for the cellular and wireless division totaled $164
million for the first nine months of 1994 compared to $106
million for the same period in 1993. The 1994 expenditures were
made to support the increase in the number of cellular
subscribers. Sprint anticipates total capital expenditures for
the year to be approximately $2.0 billion. Investing activities
in the first nine months of 1994 also include $118 million
received in connection with the sale of an investment in equity
securities, as well as investments made in a joint venture
established to construct a satellite-based wireless messaging
system. Investing activities in the first nine months of 1993
included cash received from the sale of certain assets.
Financing activities used cash of $431 million in the first nine
months of 1994 and $533 million in the comparable 1993 period.
During the first nine months of 1994, Sprint reduced outstanding
debt by $236 million. This reduction was funded by cash flows
from operating activities in excess of capital expenditures and
dividends, as well as proceeds received from the sale of an
investment in equity securities. During the first nine months of
1993, a significant level of debt refinancing occurred to take
advantage of lower interest rates.
While management believes that Sprint will end 1994 having fully
funded capital expenditures and dividends with cash flows from
operating activities, some level of additional borrowings may be
required during the 1994 fourth quarter to meet such commitments.
Exclusive of cash commitments associated with the recently-
announced joint venture which are discussed below, Sprint expects
its external cash requirements for the remainder of the year to
be approximately $150 million to $250 million. This amount
includes funds which will be used to meet scheduled long-term
debt maturities. The external cash requirements will be financed
primarily with debt, the source of which will depend on
prevailing market conditions during the remainder of the year.
As discussed in "Strategic Developments," Sprint has entered into
a joint venture with certain cable companies to provide wireless
communications services on a broad geographic basis within the
United States to consumers and businesses. The joint venture will
bid on certain PCS licenses to be auctioned by the FCC beginning
in the 1994 fourth quarter. In order to fund the deposit
required by the FCC from all auction participants, Sprint will
contribute approximately $50 million to the joint venture in
November 1994. The results of the FCC's auction will likely
cause the joint venture, and ultimately its partners, to enter
into significant cash commitments. The amount of such
commitments cannot be determined until the completion of the
auction, which is anticipated to occur during the first quarter
of 1995. The formation of the joint venture is not expected to
require any additional significant cash contributions from Sprint
in the 1994 fourth quarter. However, Sprint expects cash
requirements associated with investing activities to increase
significantly in 1995 due to commitments associated with the PCS
auction and with the continued development of the infrastructure
and presence in the communications marketplace of the joint
venture, together with the planned joint venture to provide local
telephone service in competition with non-Sprint LECs. Sprint
expects to ultimately fund such increased cash requirements with
a portion of the proceeds from the purchase of a new class of
Sprint common stock by Deutsche Telekom and France Telecom.
As of September 30, 1994, Sprint had the ability to borrow $626
million under a revolving credit agreement with a syndicate of
domestic and international banks and other bank commitments.
Other available financing sources include a Medium-Term Note
program, under which Sprint may offer for sale up to $175 million
of unsecured senior debt securities. In addition, Sprint may
offer for sale approximately $1.3 billion of debt securities
pursuant to shelf registration statements filed with the
Securities and Exchange Commission.
The aggregate amount of additional borrowings which can be
incurred is ultimately limited by certain covenants contained in
existing debt agreements. As of September 30, 1994, Sprint had
borrowing capacity of approximately $4.0 billion under the most
restrictive of its debt covenants.
The most restrictive covenant applicable to dividends results
from Sprint's revolving credit agreement. Among other
restrictions, the agreement requires Sprint to maintain specified
levels of consolidated net worth, as defined. As a result of
this requirement, $1.6 billion of Sprint's $2.6 billion
consolidated retained earnings were effectively restricted from
the payment of dividends as of September 30, 1994. Sprint is in
compliance with all restrictive or financial covenants relating
to its debt arrangements at September 30, 1994.
Financial Condition
Current Assets
The increase in accounts receivable as of September 30, 1994
compared to December 31, 1993 was generally due to a 12 percent
increase in revenue and the timing of sales activities and cash
collections. The investment in equity securities classified as a
current asset as of December 31, 1993 was sold during the nine
months ended September 30, 1994 (see Note 4 of the "Condensed
Notes to Consolidated Financial Statements").
Current Liabilities
Current maturities of long-term debt as of September 30, 1994
decreased compared to December 31, 1993 due to scheduled debt
payments. The increase in accrued taxes reflects the improved
operating results.
Results Of Operations
Consolidated
Income from continuing operations of $230 million, or $0.66 per
share, for the three months ended September 30, 1994 represented
a 68 percent increase over income from continuing operations of
$137 million, or $0.39 per share, for the corresponding period in
1993. The results for the third quarter of 1993 include a $7
million ($0.02 per share) charge related to the merger with
Centel Corporation (see Note 2 of the "Condensed Notes to
Consolidated Financial Statements"), a $21 million ($0.06 per
share) charge related to the realignment and restructuring of
Sprint's long distance division (see Note 3 of the "Condensed
Notes to Consolidated Financial Statements") and a $13 million
($0.04 per share) charge associated with the enactment of the
Revenue Reconciliation Act of 1993 (see Note 5 of the "Condensed
Notes to Consolidated Financial Statements"). For the nine
months ended September 30, 1994, income from continuing
operations was $677 million, or $1.94 per share, compared with
$291 million, or $0.84 per share, for the same period in 1993.
Results for the first nine months of 1994 included a $22 million
($0.06 per share) gain related to the sale of an investment in
common stock (see Note 4 of the "Condensed Notes to Consolidated
Financial Statements"). Results for the first nine months of
1993 included a $172 million ($0.50 per share) charge related to
merger and integration costs associated with the Centel merger
and the aforementioned charges related to both the realignment
and restructuring of Sprint's long distance division and tax law
change.
Total net operating revenues for the quarter ended September 30,
1994 were $3.2 billion, a 13 percent increase over net operating
revenues of $2.9 billion for the same period in 1993. For the
year-to-date period ended September 30, 1994, total net operating
revenues increased 12 percent to $9.4 billion from $8.4 billion
for the nine months ended September 30, 1993. Such increases
primarily resulted from strong growth in the long distance and
cellular divisions.
A detailed discussion of the components of operating income by
Sprint's operating segments follows.
Long Distance Communications Services
Selected Operating Results
(In Millions)
Three Months
Ended
September 30, Variance
1994 1993 Dollar Percent
Net operating revenues $ 1,739.8 $ 1,540.5 $ 199.3 12.9%
Operating expenses
Interconnection 741.3 674.4 66.9 9.9%
Operations 242.0 218.5 23.5 10.8%
Selling, general and
administrative 451.8 394.2 57.6 14.6%
Depreciation and
amortization 139.7 127.8 11.9 9.3%
Total operating
expenses 1,574.8 1,414.9 159.9 11.3%
Operating income $ 165.0 $125.6 $ 39.4 31.4%
Operating margin 9.5% 8.2%
Selected Operating Results
(In Millions)
Nine Months
Ended
September 30, Variance
1994 1993 Dollar Percent
Net operating revenues $ 5,095.7 $ 4,541.7 $ 554.0 12.2%
Operating expenses
Interconnection 2,237.0 2,021.0 216.0 10.7%
Operations 676.8 616.9 59.9 9.7%
Selling, general and
administrative 1,305.2 1,144.3 160.9 14.1%
Depreciation and
amortization 410.4 391.9 18.5 4.7%
Total operating
expenses 4,629.4 4,174.1 455.3 10.9%
Operating income $ 466.3 $ 367.6 $ 98.7 26.9%
Operating margin 9.2% 8.1%
Net operating revenues for the third quarter and first nine
months of 1994 increased 13 percent and 12 percent, respectively,
over the comparable 1993 periods. The increases were generally
due to traffic volume growth of 13 percent and 12 percent for the
third quarter and first nine months of 1994, respectively.
Average revenue per minute received from customers was relatively
constant. The increases in net operating revenues and traffic
volumes reflect continuing growth in the business, international,
and residential markets. Growth in the business market was
primarily attributable to "800" services, reflecting the
continued opportunities generated by "800" portability, while
growth in the international and residential markets reflects
ongoing sales and marketing efforts.
Maintaining growth rates in the future for both net operating
revenues and traffic volumes may be influenced by both domestic
and international economic conditions and price levels in the
intensely competitive long distance marketplace.
Interconnection costs increased during the third quarter and
first nine months of 1994 relative to the comparable 1993 periods
primarily as a result of traffic volume growth; however, as a
percentage of net operating revenues, interconnection costs
decreased from 43.8 percent to 42.6 percent and from 44.5 percent
to 43.9 percent for the third quarter and first nine months of
1994, respectively, compared to the same periods one year ago.
Interconnection costs decreased as a percentage of related net
operating revenues due to reductions in interconnection charges
paid to local exchange companies, partially offset by increased
costs related to settlements on international revenues. The
annual interconnection rate filings of domestic local exchange
carriers, which became effective July 1, 1994, did not have a
material impact on the operations of the long distance division.
Operations expense consists of costs related to operating and
maintaining the long distance network; costs of providing various
services such as operator services, public payphones,
telecommunications services for the hearing impaired, and video
teleconferencing; and costs of data system sales. Operations
expense for the third quarter and first nine months of 1994
increased $24 million and $60 million, respectively, from the
comparable 1993 periods, primarily due to expanded service
offerings as well as providing services to new customers.
Selling, general and administrative expense for the third quarter
and first nine months of 1994 increased $58 million and $161
million, respectively, from the comparable 1993 periods,
generally as a result of sales and marketing efforts. During the
first nine months of 1994, marketing efforts, which resulted in
increased advertising expense, were primarily directed at The
Most (sm) and The Most WORLDWIDE (sm) calling plans, the voice-
activated FONCARD (sm) product, the Sprint Business Real
Solutions (sm) campaign, and the Be There Now (sm), World Cup
Soccer, and the Sprint International golf tournament corporate
imaging campaigns.
Depreciation and amortization increased $12 million and $19
million for the third quarter and first nine months of 1994,
respectively, relative to the comparable 1993 periods primarily
due to an increase in the asset base.
Local Communications Services
Selected Operating Results
(In Millions)
Three Months
Ended
September 30, Variance
1994 1993 Dollar Percent
Net operating revenues
Local service $ 445.6 $ 413.5 $ 32.1 7.8%
Network access 393.5 379.0 14.5 3.8%
Toll service 131.9 126.8 5.1 4.0%
Other 141.2 116.9 24.3 20.8%
Total net operating
revenues 1,112.2 1,036.2 76.0 7.3%
Operating expenses
Plant operations 326.6 297.6 29.0 9.7%
Depreciation and
amortization 195.2 184.6 10.6 5.7%
Customer operations 142.6 134.2 8.4 6.3%
Other 195.7 171.0 24.7 14.4%
Total operating
expenses 860.1 787.4 72.7 9.2%
Operating income $ 252.1 $ 248.8 $ 3.3 1.3%
Operating margin 22.7% 24.0%
Selected Operating Results
(In Millions)
Nine Months
Ended
September 30, Variance
1994 1993 Dollar Percent
Net operating revenues
Local service $ 1,306.1 $1,203.9 $ 102.2 8.5%
Network access 1,175.6 1,127.3 48.3 4.3%
Toll service 398.6 378.2 20.4 5.4%
Other 383.8 338.1 45.7 13.5%
Total net operating
revenues 3,264.1 3,047.5 216.6 7.1%
Operating expenses
Plant operations 955.4 904.4 51.0 5.6%
Depreciation and
amortization 580.1 547.7 32.4 5.9%
Customer operations 406.0 391.4 14.6 3.7%
Other 559.6 501.2 58.4 11.7%
Total operating
expenses 2,501.1 2,344.7 156.4 6.7%
Operating income $ 763.0 $ 702.8 $ 60.2 8.6%
Operating margin 23.4% 23.1%
The division's net operating revenues for both the third quarter
and first nine months of 1994 increased 7 percent over the
comparable 1993 periods. Growth in local service revenues
reflected continued increases in the number of access lines
served and growth in add-on services, such as custom calling
features. The number of access lines served grew 4.9 percent
during the past twelve months. Network access revenues, derived
from interexchange long distance carriers' use of the local
network to complete calls, increased as a result of increased
traffic volumes, partially offset by periodic reductions in
network access rates charged. Annual access rate filings became
effective July 1, 1994, resulting in decreased access rates;
however, the impact of such decreases on Sprint's consolidated
results was not material. Toll service revenues, related to the
provision of long distance services within specified geographical
areas and the reselling of interexchange long distance services,
increased 4 percent and 5 percent for the third quarter and first
nine months of 1994, respectively. Other revenues, including
revenues from directory publishing fees, billing and collection,
operator services, and sales of telecommunications equipment,
increased 21 percent and 14 percent for the third quarter and
first nine months of 1994, respectively, generally due to higher
equipment sales.
Plant operations expense includes network operations costs;
repair and maintenance costs of property, plant and equipment;
and other expenses associated with the cost of providing
services. The $29 million and $51 million increases in the third
quarter and first nine months of 1994, respectively, over the
comparable 1993 periods were primarily due to increases in the
costs of providing services resulting from access line growth.
Also contributing to the increases were the effects in certain
states of revised toll plans requiring payment of access charges
for calls terminating in the service areas of other local
exchange carriers. The increases in depreciation and
amortization expense for the third quarter and first nine months
of 1994 relative to the comparable 1993 periods were generally
due to plant additions. Customer operations expense includes
costs associated with business office operations and billing
services, marketing costs, and expenses related to providing
operator and directory assistance and other customer services.
The $8 million and $15 million increases in the third quarter and
first nine months of 1994, respectively, over the comparable 1993
periods were primarily due to higher business office costs.
Other operating expenses increased $25 million and $58 million in
the third quarter and first nine months of 1994, respectively,
over the comparable 1993 periods generally due to increases in
the cost of equipment sales.
Consistent with most LECs, the division accounts for the economic
effects of regulation pursuant to Statement of Financial
Accounting Standards (SFAS) No. 71, "Accounting for the Effects
of Certain Types of Regulation." The application of SFAS No. 71
requires the accounting recognition of the rate actions of
regulators where appropriate, including the recognition of
depreciation and amortization based on estimated useful lives
prescribed by regulatory commissions rather than those that might
be utilized by non-regulated enterprises. Sprint currently believes
the division's rate-regulated operations meet the criteria for the
continued application of the provisions of SFAS No. 71. However,
the division operates in an evolving environment in which the
regulatory framework is changing and the level of competition is
increasing. Accordingly, Sprint constantly monitors and evaluates
the ongoing applicability of SFAS No. 71 by assessing the likelihood
that prices which provide for the recovery of specific costs can
continue to be charged to customers. In the event Sprint determines
that the division's rate-regulated operations no longer qualify for
the application of the provisions of SFAS No. 71, Sprint would eliminate
from its financial statements the effects of any actions of regulators that
had been recognized as assets and liabilities, resulting in the recognition
of a material, extraordinary, noncash charge, the amount of which is not
known at the present time.
Cellular and Wireless Communications Services
Selected Operating Results
(In Millions)
Three Months
Ended
September 30, Variance
1994 1993 Dollar Percent
Net operating revenues $ 184.9 $ 122.4 $ 62.5 51.1%
Operating expenses
Costs of services and
products 57.5 40.1 17.4 43.4%
Selling, general and
administrative 72.4 51.4 21.0 40.9%
Depreciation and
amortization 22.6 19.1 3.5 18.3%
Total operating
expenses 152.5 110.6 41.9 37.9%
Operating income $ 32.4 $ 11.8 $ 20.6 --
Operating margin 17.5% 9.6%
Selected Operating Results
(In Millions)
Nine Months
Ended
September 30, Variance
1994 1993 Dollar Percent
Net operating revenues $ 499.8 $ 327.1 $ 172.7 52.8%
Operating expenses
Costs of services and
products 159.1 108.6 50.5 46.5%
Selling, general and
administrative 203.4 142.9 60.5 42.3%
Depreciation and
amortization 67.9 54.5 13.4 24.6%
Total operating
expenses 430.4 306.0 124.4 40.7%
Operating income $ 69.4 $ 21.1 $ 48.3 --
Operating margin 13.9% 6.5%
Net operating revenues for the third quarter and first nine
months of 1994 increased 51 percent and 53 percent, respectively,
over the comparable 1993 periods, primarily due to growth in the
number of cellular subscribers. Over the past 12 months, the
number of cellular subscribers has increased 64 percent. The
effect of growth in the number of cellular subscribers was
partially offset by a decline in service revenue per subscriber,
reflecting an industry-wide trend that has occurred as a result
of increased general consumer market penetration.
Maintaining growth rates in the future for net operating revenues
and the number of cellular subscribers may be influenced by
economic conditions and price levels in the competitive cellular
marketplace.
Excluding the costs and revenues related to equipment sales,
costs of services as a percent of net operating revenues
decreased from 26.6 percent to 24.1 percent and from 27.4 percent
to 24.4 percent for the third quarter and first nine months of
1994, respectively, compared to the same periods in 1993. These
decreases generally reflected economies of scale gained from
serving additional subscribers. Selling, general and
administrative (SG&A) costs for the third quarter and first nine
months of 1994 increased $21 million and $61 million,
respectively, over the 1993 comparable periods as a result of
increased commissions and customer service expenses due to the
growth in the number of cellular subscribers. However, SG&A
expense as a percentage of net operating revenues (excluding
revenues from equipment sales) declined to 42.0 percent and 43.9
percent for the third quarter and first nine months of 1994,
respectively, from 45.2 percent and 46.9 percent for the third
quarter and first nine months of 1993, respectively. Equipment
sales are subject to significant discounting in an effort to
obtain new customers; accordingly, revenues and costs related to
these sales have been excluded from the above calculations.
Depreciation and amortization increased 18 percent and 25 percent
for the three and nine months ended September 30, 1994,
respectively, compared to the same periods in 1993. These
increases were primarily due to the additional investment in
property, plant and equipment required to accommodate the growth
in the number of cellular subscribers.
Product Distribution and Directory Publishing Businesses
Selected Operating Results
(In Millions)
Three Months
Ended
September 30, Variance
1994 1993 Dollar Percent
Net operating revenues $ 290.5 $ 252.9 $ 37.6 14.9%
Operating expenses 269.7 235.9 33.8 14.3%
Operating income $ 20.8 $ 17.0 $ 3.8 22.4%
Operating margin 7.2% 6.7%
Selected Operating Results
(In Millions)
Nine Months
Ended
September 30, Variance
1994 1993 Dollar Percent
Net operating revenues $ 830.5 $ 707.6 $ 122.9 17.4%
Operating expenses 773.8 660.7 113.1 17.1%
Operating income $ 56.7 $ 46.9 $ 9.8 20.9%
Operating margin 6.8% 6.6%
North Supply, Sprint's product distribution subsidiary, had net
operating revenues of $221 million and $625 million for the third
quarter and first nine months of 1994, respectively, reflecting
20 percent and 23 percent increases from the comparable 1993
periods. These increases primarily reflect increased sales due
to the addition of new markets for non-affiliated sales and
increased sales to the local communications services division.
As a percentage of net operating revenues, operating expenses
declined to 94.5 percent and 95.1 percent for the third quarter
and first nine months of 1994, respectively, from 96.6 percent
and 96.7 percent for both the comparable 1993 periods,
respectively.
Sprint's directory publishing subsidiaries had net operating
revenues of $69 million and $68 million for the three months
ended September 30, 1994 and 1993, respectively, and $205 million
and $199 million for the nine months ended September 30, 1994 and
1993, respectively. As a percentage of net operating revenues,
operating expenses increased to 87.6 percent and 87.4 percent for
the third quarter and first nine months of 1994, respectively,
compared to 84.2 percent and 84.9 percent for the comparable 1993
periods, respectively.
Interest Expense
Interest expense for the third quarter and first nine months of
1994 decreased $16 million and $45 million, respectively, from
the comparable 1993 periods, generally due to a decrease in
average levels of debt outstanding and lower interest rates which
primarily reflect debt refinancings during 1993. During the nine
months ended September 30, 1994, Sprint's average debt
outstanding decreased $348 million as compared to the same period
in 1993, and the effective interest rate decreased 60 basis
points.
Other Income (Expense), Net
The components of other income (expense), net are as follows (in
millions):
Three Months Nine Months
Ended Ended
September 30, September 30,
1994 1993 1994 1993
Gain on sale of investment in
equity securities $ -- $ -- $ 34.7 $ --
Equity in earnings of
cellular minority
partnership interests 8.7 6.0 16.7 14.5
Loss on sales of accounts
receivable (7.6) (5.4) (20.1) (16.3)
Write-down of assets held for
sale -- (10.6) -- (10.6)
Minority interests (7.6) (4.6) (17.1) (7.1)
Other (2.8) 3.2 (3.6) (0.7)
Total other income (expense),
net $ (9.3) $(11.4) $ 10.6 $(20.2)
Other income (expense), net for the third quarter and first nine
months of 1994 contributed $2 million and $31 million more to
income, respectively, than in the comparable 1993 periods. For
the nine months ended September 30, 1994, a $35 million gain on
the sale of an investment in common stock during the first
quarter of 1994 was the major contributor to the increase in
other income over the comparable 1993 period.
Income Tax Provision
See Note 5 of "Condensed Notes to Consolidated Financial
Statements" for information regarding the differences which cause
the effective income tax rate to vary from the statutory federal
income tax rate.
General Hedging Policies
Sprint utilizes certain derivative instruments in an effort to
manage exposure to interest rate risk and foreign exchange risk.
Sprint's utilization of such derivative instruments related to
hedging activities is limited to interest rate swap agreements,
interest rate caps and forward contracts and options in foreign
currencies. As is customary for these types of derivative
instruments, Sprint does not require collateral or other security
from the counterparties to such agreements. However, because
Sprint controls its exposure to credit risk through credit
approvals, credit limits, and internal monitoring procedures,
Sprint believes that its credit risk exposure is limited.
Sprint will in no circumstance take speculative positions and
create an exposure to benefit from market fluctuations. All
hedging activity is in accordance with board-approved policies.
Any potential loss or exposure related to Sprint's use of
derivative instruments is immaterial to its overall operations,
financial condition and liquidity.
Impact of Recently Issued Accounting Pronouncements
During October 1994, the Financial Accounting Standards Board
(FASB) issued SFAS No. 119, "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments."
SFAS No. 119 requires disclosures about amounts, nature, and
terms of derivative financial instruments. A derivative
financial instrument is defined as a futures, forward, swap, or
option contract, or other financial instrument with similar
characteristics. Such instruments generally derive their value
or contractually required cash flows from the prices of some
other security or from an index. SFAS No. 119 requires that a
distinction be made between financial instruments held or issued
for trading purposes (including dealing and other trading
activities measured at fair value with gains and losses
recognized in earnings) and financial instruments held or issued
for purposes other than trading. SFAS No. 119 is effective for
financial statements issued for fiscal years ending after
December 15, 1994. Management does not anticipate that the
disclosures required by SFAS No. 119 will have a significant
impact on Sprint's financial statements for the year ending
December 31, 1994.
The American Institute of Certified Public Accountants (AICPA)
has issued Statement of Position (SOP) 93-7, "Reporting on
Advertising Costs." SOP 93-7 provides guidance on financial
reporting of advertising costs in annual financial statements.
In general, the SOP requires reporting the costs of all
advertising as expenses in the periods in which the costs are
incurred, or the first time the advertising takes place. There
is an exception for reporting the costs of direct-response
advertising, the primary purpose of which is to elicit sales to
customers who could be shown to have responded specifically to
the advertising and which results in probable future benefits.
Such direct-response advertising costs should be recorded as
assets and amortized over the estimated period of the benefits.
SOP 93-7 is effective for financial statements for years
beginning after June 15, 1994. Management does not anticipate
that it will have a material impact on Sprint's operations.
PART II.
Other Information
Item 1. Legal Proceedings
There were no reportable events during the quarter ended
September 30, 1994.
Item 2. Changes in Securities
There were no reportable events during the quarter ended
September 30, 1994.
Item 3. Defaults Upon Senior Securities
There were no reportable events during the quarter ended
September 30, 1994.
Item 4. Submission of Matters to a Vote of Security Holders
There were no reportable events during the quarter ended
September 30, 1994.
Item 5. Other Information
Sprint's ratios of earnings to fixed charges were 3.76 and
2.58 for the three months ended and 3.71 and 2.07 for the
nine months ended September 30, 1994 and 1993, respectively.
These ratios have been computed by dividing fixed charges
into the sum of (a) income from continuing operations less
capitalized interest included in income, (b) income taxes,
and (c) fixed charges. Fixed charges consist of interest on
all indebtedness (including amortization of debt issuance
expenses), the interest factor of operating rents and the
pre-tax cost of preferred stock dividends of subsidiaries.
In the absence of the nonrecurring merger, integration and
restructuring costs of $44.5 million and $292.5 million
recorded during the three and nine months ended September
30, 1993, respectively, the ratios of earnings to fixed
charges for those periods would have been 2.88 and 2.73,
respectively.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
(10) Material Agreements
(a) Memorandum of Understanding between
Sprint Corporation and France Telecom and Deutsche
Bundespost Telekom dated June 14, 1994 (filed as
Exhibit 10(a) to Sprint Corporation Quarterly Report
on Form 10-Q for the Quarter ended June 30, 1994,
and incorporated herein by reference).
(10) Material Agreements - Executive Compensation Plans and
Arrangements:
(b) Executive Deferred Compensation Plan, as amended.
(c) Summary of Sprint Supplemental Executive Retirement
Plan.
(d) Agreements regarding Special
Compensation and Post Employment Restrictive
Covenants between Sprint Corporation and four of its
executive officers.
(e) Description of agreement regarding
Supplemental Pension Benefits between Sprint
Corporation and one of its executive officers.
(11) Computation of earnings per common share.
(12) Computation of ratio of earnings to fixed charges.
(27) Financial data schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
September 30, 1994.
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 CORPORATION
(Registrant)
By /s/ John P. Meyer
John P. Meyer
Senior Vice President --
Controller
Principal Accounting
Officer
Dated: November 14, 1994
EXHIBIT INDEX
EXHIBIT
NUMBER
(10) Material Agreements
(a) Memorandum of Understanding between Sprint
Corporation and France Telecom and Deutsche Bundespost
Telekom dated June 14, 1994 (filed as Exhibit 10(a) to
Sprint Corporation Quarterly Report on Form 10-Q for the
Quarter ended June 30, 1994, and incorporated herein by
reference).
(10) Material Agreements - Executive Compensation Plans and
Arrangements:
(b) Executive Deferred Compensation Plan, as
amended.
(c) Summary of Sprint Supplemental Executive
Retirement Plan.
(d) Agreements regarding Special Compensation and Post
Employment Restrictive Covenants between Sprint
Corporation and four of its executive officers.
(e) Description of agreement regarding Supplemental
Pension Benefits between Sprint Corporation and one of
its executive officers.
(11) Computation of earnings per common share.
(12) Computation of ratio of earnings to fixed charges.
(27) Financial data schedule.
<PAGE>
Exhibit 10(b)
Executive Deferred Compensation Plan
ARTICLE I
PURPOSE
The purpose of the Sprint Corporation Executive
Deferred Compensation Plan (hereinafter referred to as
the "Plan") is to provide funds for retirement or death
for executive employees (and their beneficiaries) of
Sprint Corporation and its subsidiaries. It is intended
that the Plan will aid in retaining and attracting
employees of exceptional ability by providing such
employees with a means to supplement their standard of
living at retirement.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following words and
phrases shall have the meanings indicated, unless the
context clearly indicates otherwise:
2.1 Account Transfer Request. "Account Transfer
Request" means a written notice, in a form prescribed by
the Company, by a Participant to transfer all or any
portion of one Deferred Benefit Account to another Deferred
Benefit Account as provided for in paragraph 6.7.
2.2 Beneficiary. "Beneficiary" means the person,
persons or entity designated by the Participant, or as
provided in Article VIII, to receive any benefits
payable under the Plan. Any Participant Beneficiary
Designation shall be made in a written instrument filed
with the Company and shall become effective only when
received, accepted and acknowledged in writing by the
Company.
2.3 Board. "Board" means the Board of Directors of the
Company.
2.4 Committee. "Committee" means Deferred Compensation
Committee appointed to review the Plan decisions
pursuant to Article III.
2.5 Company. "Company" means Sprint Corporation, or
any successor thereto.
2.6 Compensation. "Compensation" means the Base Salary
and Incentive Compensation payable to a Participant
during a Plan Year other than a distribution under this
plan.
(a) Base Salary. "Base Salary" means all regular
cash remuneration for services, other than such items
as Incentive Compensation, payable by the Employer to
a Participant in cash during a Plan Year, but before
reduction for amounts deferred pursuant to this Plan
or any other Plan of the Employer.
(b) Incentive Compensation. "Incentive
Compensation" means any annual cash incentive compensation
payable by the Employer to a Participant in a
Plan Year.
2.7 Deferral Benefit. "Deferral Benefit" means the
benefit payable to a Participant on his retirement,
death, disability, or termination of employment as
calculated in Article VII hereof.
2.8 Deferred Benefit Account. "Deferred Benefit
Account" means the accounts maintained on the books of
account of the Employer for each Participant pursuant to
Article VI. Separate Deferred Benefit Accounts shall be
maintained for each Participant. More than one Deferred
Benefit Account shall be maintained for each Participant
to reflect (a) Termination and Retirement Interest
Yields, (b) separate deferral elections, and (c) Account
A, Account B, Account AA, and Account BB elections. For
Account AA two sub-accounts (a Retirement Deferred
Benefit Account and a Termination Deferred Benefit
Account) shall be maintained to reflect the difference
in Interest Yields as provided in Article VI, paragraph
6.4. For Account BB two sub-accounts (a Retirement
Deferred Benefit Account and a Termination Deferred
Benefit Account) shall be maintained to reflect, in the
event of a transfer from Account AA to Account BB
pursuant to paragraph 6.7, the difference in values of
the two sub-accounts of Account AA transferred to Account
BB. A Participant's Deferred Benefit Accounts shall be
utilized solely as a device for the measurement and
determination of the amounts to be paid to the
Participant pursuant to this Plan. A Participant's
Deferred Benefit Account shall not constitute or be
treated as a trust fund of any kind. Unless the context
requires otherwise, "Deferred Benefit Account" shall
mean the aggregate balance of all accounts of a Participant.
2.9 Determination Date. "Determination Date" means the
date on which the amount of a Participant's Deferred
Benefit Account is determined as provided in Article VI
hereof. The last day of each calendar month shall be a
Determination Date.
2.10 Disability. "Disability" or "Disabled
Participant" means a physical or mental condition of a
Participant resulting in a determination of disability
for purposes of receiving benefits under the Employer
Long-Term Disability Insurance Plan.
2.11 Early Retirement Date. "Early Retirement Date"
means the date on which the Participant actually terminates
employment following the first day of the month
coincidental with or next following a Participant's
attainment of age fifty-five (55), but prior to his
Normal Retirement Date.
2.12 Employer. "Employer" means Sprint Corporation,
any successor to the business thereof or any affiliate
or subsidiary designated by the Board.
2.13 Internal Revenue Code. "Internal Revenue Code"
means Internal Revenue Code of 1986, as amended or
supplemented from time to time. References to any
section of the Internal Revenue Code shall be to that
section as it is renumbered, amended, supplemented or
re-enacted.
2.14 Interest Yield. "Interest Yield" means with
respect to any calendar month the Termination Interest
Yield or the Retirement Interest Yield as defined below:
(a) Termination Interest Yield. The "Termination
Interest Yield" means (1)in the case of balances in
Account AA, the composite yield on Moody's Seasoned
Corporate Bond Yield Index for the preceding calendar
month as determined from Moody's Bond Record published
by Moody's Investors Services, Inc. (or any successor
thereto), or, if such monthly yield is no longer
published, a substantially similar average selected by
the Company, and (2) in the case of balances in
Account A, the greater of (i) the prime rate in effect
at Citibank, N.A. at the opening of business on the
first business day of the month, or if said bank, for
any reason, no longer publishes its prime rate, the
prime rate similarly determined of another major bank
selected by the Company and (ii) six percent per
annum.
(b) Retirement Interest Yield. The "Retirement
Interest Yield" means (1) in the case of balances
in Account AA, three percentage points over the
Termination Interest Yield, and (2) in the case of
balances in Account A, the Termination Interest Yield.
2.15 Normal Retirement Age. "Normal Retirement Age"
means the time at which a Participant attains age sixty-
five (65).
2.16 Normal Retirement Date. "Normal Retirement Date"
means the first day of the month coincidental with or
next following a Participant's Normal Retirement Age.
2.17 Participant. "Participant" means any individual
who is designated by the Company in accordance with paragraph 4.1
to participate in this Plan and who elects to participate by filing
a Participation Agreement as provided in Article IV.
2.18 Participation Agreement. "Participation
Agreement" means the agreement, in a form prescribed by
the Company, filed by a Participant prior to the
beginning of the first period in which the Participant's
Compensation is to be deferred pursuant to the Plan and
the Participation Agreement. A new Participation
Agreement shall be filed by the Participant for each
separate Base Salary deferral election and for each
Incentive Compensation deferral election not
accompanying a Base Salary deferral election.
2.19 Pension Make-Up Benefit. "Pension Make-Up Benefit
means the benefit provided under paragraph 5.2(b).
2.20 Pension Make-Up Compensation. "Pension Make-Up
Compensation" means the sum of (a) compensation as determined
under the Retirement Plan and (b) Base Salary which are actually
deferred under this Plan.
2.21 Plan. "Plan" means the Sprint Corporation
Executive Deferred Compensation Plan as set forth in
this document. This Plan is the successor to, and
comprises an amendment and revision of, the United
Telecommunications, Inc. 1985 Executive Deferred
Compensation Plan adopted February 12, 1985.
2.22 Plan Administrator. "Plan Administrator" means
the person appointed by the Company to represent the
Company in the administration of this Plan.
2.23 Plan Year. "Plan Year" means a twelve month period
commencing May 1st and ending the following April 30th.
The first Plan Year shall commence on May 1, 1985.
2.24 Retirement Plan. "Retirement Plan" means the
Sprint Retirement Pension Plan, as amended from time to
time.
2.25 Share Unit. "Share Unit" means a measure of
participation under the Plan having a value based on the
market value of a share of common stock of the Company.
2.26 Spouse. "Spouse" means a Participant's wife or
husband who was lawfully married to the Participant upon
the Participant's retirement, death or severance from
service.
2.27 Transition Date. "Transition Date" means May 1,
1990.
ARTICLE III
ADMINISTRATION
3.1 Plan Administrator; Company and Committee; Duties.
This Plan shall be administered by the Committee. The
Committee shall consist of not more than five persons
appointed by the Board. The Committee may be a
consolidated Committee administering other benefit plans
of the Company in addition to this Plan. The Committee
shall have the authority to make, amend, interpret, and
enforce all appropriate rules and regulations for the
administration of this Plan and decide or resolve any
and all questions including interpretations of this
Plan, as may arise in connection with the Plan. The
Committee may appoint a Benefit Administrative Committee
and a Plan Administrator. The Committee may delegate its
duties for the day-to-day operations of the Plan to the
Plan Administrator and other duties to the Benefit
Administrative Committee. Members of the Committee, the
Benefit Administrative Committee and the Plan
Administrator may be Participants under this Plan.
3.2 Claim for Benefits. Any claim for benefits under
this Plan shall be made in writing to the Plan Administrator.
If a claim for benefits is wholly or partially denied,
the Plan Administrator shall so notify the Participant or
Beneficiary within 90 days after receipt of the claim. The
notice of denial shall be written in a manner calculated
to be understood by the Participant or Beneficiary and
shall contain (a) the specific reason or reasons for denial of
the claim, (b) specific references to the pertinent Plan
provisions upon which the denial is based, (c) a description of
any additional material or information necessary to perfect the
claim together with an explanation of why such material or
information is necessary and (d) an explanation of the claims
review procedure. The decision or action of the Plan
Administrator shall be final, conclusive and binding on all
persons having any interest in the Plan, unless a written appeal
is filed as provided in Section 3.3 hereof.
3.3 Review of Claim. Within 60 days after the receipt by the
Participant or Beneficiary of notice of denial of a claim, the
Participant or Beneficiary may (a) file a request with the
Benefit Administrative Committee that it conduct a full and fair
review of the denial of the claim, (b) review pertinent documents
and (c) submit questions and comments to the Committee in writing.
3.4 Decision After Review. Within 60 days after the receipt of a
request for review under Section 3.3, the Committee shall deliver to
the Participant or Beneficiary a written decision with respect to
the claim, except that if there are special circumstances (such
as the need to hold a hearing) which require more time for processing,
the 60-day period shall be extended to 120 days upon notice to the
Participant or Beneficiary to that effect. The decision shall be written
in a manner calculated to be understood by the Participant or Beneficiary
and shall (a) include the specific reason or reasons for the decision
and (b) contain a specific reference to the pertinent Plan provisions
upon which the decision is based.
ARTICLE IV
PARTICIPATION
4.1 Participation. Participation in the Plan shall be
limited to executives having a job grade level of E14 or
above who elect to participate in the Plan by filing a
Participation Agreement with the Company. Except as provided
below, a Participation Agreement must be filed prior to the
April 15th immediately preceding the Plan Year in which the
Participant's participation under the agreement will
commence, and the election to participate shall be
effective on the first day of the Plan Year following
receipt by the Company of a properly completed and
executed Participation Agreement. A Participant in the
Plan, who is also a participant in the Employer's 1975
Executive Deferred Compensation Plan, may elect to
transfer to this Plan all, and not less than all, of the
dollar value of his Account A and the dollar value of
his Account B under the 1975 Plan. Such election shall
be made by delivering to the Company a properly executed
Participation Agreement; such an election must be made
when the Participant is first eligible for the 1985
Plan.
4.2 Minimum and Maximum Deferral and Length of
Participation. A Participant may elect in any
Participation Agreement to defer a portion of his Base
Salary and Incentive Compensation. However, a Participant
may not defer his Incentive Compensation unless the
Participant also defers a portion of his Base Salary.
The minimum and maximum amounts that may be deferred
under any single Participation Agreement shall be in
$100 units and shall be as follows:
<TABLE>
<CAPTION>
Minimum Deferral Maximum Deferral
<S> <C> <C>
With respect to initial
Base Salary Deferrals $300 per month 50% of Base Salary
Subsequent Base Salary
Deferrals $100 per month 50% of Base Salary
With respect to
Incentive Compensation 25% of Incentive 100% of Incentive
Compensation Compensation
</TABLE>
(a) With respect to Base Salary deferrals, the dollar
amount of deferral elected in each Participation Agreement
shall be the amount of Base Salary that will be
deferred in each month subject to the Participation
Agreement. Each Participation Agreement shall apply to
the Participant's Base Salary payable over a period (1)
for Participation Agreements first effective before the
Transition Date, of either four or eight Plan Years, or
(2) for Participation Agreements first effective on or
after the Transition Date, one Plan Year (or, in either
case, until the Participant's retirement, whichever
occurs first), commencing with the Plan Year immediately
following the Plan Year in which the respective
Participation Agreement is filed. The fixed dollar
amount of Base Salary deferral applicable over a
deferral period shall not be changed by virtue of a
change in Base Salary alone.
(b) With respect to Incentive Compensation deferrals,
the deferral percentage selected in each Participation
Agreement shall apply only to the Participant's
Incentive Compensation earned in the Plan Year
immediately following receipt of the respective
Participation Agreement.
(c) From time to time, the Company may increase or
decrease the minimum and maximum deferrals set forth
above as well as the period for which the deferrals are
effective by giving reasonable written notice to the
affected Participants. Such changes shall be effective
for all Participation Agreements filed thereafter.
(d) A Participant's election to defer Compensation shall be
irrevocable upon the filing of the respective Participation
Agreement; provided, however, that the deferral of
Compensation under any Participation Agreement may be
suspended or amended as provided in paragraphs 7.5 or 9.1.
4.3 Additional Participation Agreements. A Participant
may enter into additional Participation Agreements by
filing a Participation Agreement with the Company prior
to April 15th of any calendar year, stating the amount
that the Participant elects to have deferred. Such
additional agreements shall be effective as to
Compensation paid in Plan Years beginning after the last
day of the Plan Year in which the respective agreement
is filed with the Company. Each additional Participation
Agreement is subject to all of the provisions and
requirements set forth in paragraph 4.2, including
without limitation, the provisions relating to minimum
and maximum deferral amounts and duration of the
agreements; provided, that the minimum Base Salary
deferral for each additional Participation Agreement
shall be $1,200 per year. In addition, the aggregate
amount of Base Salary that a Participant may have
deferred under this Plan out of his Base Salary for any
single Plan Year under all applicable Participation
Agreements shall not exceed 50% of his Base Salary,
excluding Incentive Compensation. In the event a Participant
elects to defer Compensation for a new period, the
new election shall be treated as an arrangement for which
a separate Deferred Benefit Account shall be maintained
and separate Deferred Benefits shall be payable.
ARTICLE V
DEFERRED COMPENSATION
5.1 Elective Deferred Compensation. The amount of
Compensation that a Participant elects to defer in the
Participation Agreement executed by the Participant,
with respect to each Plan Year of participation in the
Plan, shall be credited by the Company to the
Participant's Deferred Benefit Account throughout each
Plan Year as the Participant is paid the non-deferred
portion of Compensation for such Plan Year. The amount
credited to a Participant's Deferred Benefit Account
shall equal the amount deferred. To the extent that the
Employer is required to withhold any taxes or other
amounts from the employees' deferred wages pursuant to
any state, federal or local law, such amounts shall be
taken out of the portion of the Participant's
Compensation which is not deferred under this Plan.
5.2 Additional Amounts Under Savings Plan and
Retirement Plan.
(a) Savings Plan. Except for Participants who are
officers of the Company subject to Section 16 of the
Securities Exchange Act of 1934, to the extent a
Participant's deferral of Compensation under this Plan
causes a reduction in the Company's contribution for
the Participant under the Sprint Retirement Savings
Plan, the Company shall credit the amount of any such
reduction to the Participant's Deferred Benefit
Account B. For such officers, such reduction shall be
credited to Account A.
(b) Retirement Plan. A Participant shall receive a
Pension Make-Up Benefit if his deferral of compensation
under this Plan causes a reduction in his
benefit under the Retirement Plan.
(1) For purposes of determining a Participant's
Pension Make-Up Benefit, the benefit which would be
payable under the Retirement Plan had the
Participant's Pension Make-Up Compensation been his
compensation under the Retirement Plan shall be
calculated as follows:
(A) The participant's Pension Make-Up
Compensation shall be determined.
(B) The benefit computed under Section
5.2(b)(1) shall be determined taking into account
the limitations of Sections 401(a)(17) and 415 of
the Internal Revenue Code.
(2) The Pension Make-Up Benefit shall be equal to
the excess, if any, of (I) the benefit computed
under Section 5.2(b)(1) over (II) the benefit
payable under the Retirement Plan. For purposes of
this Section 5.2(b)(2), it shall be assumed that
the benefit computed under Section 5.2(b)(1) and
the benefit under the Retirement Plan shall be paid
in the form of a single life annuity commencing at
the Participant's normal retirement date under the
Retirement Plan.
(3) Distribution of a Participant's Pension Make-Up
Benefit shall commence on the first day of the
month following a Participant's termination of
employment which occurs on or after attaining age
fifty-five with ten years of service, or upon a
termination of employment on or after his Normal
Retirement Date. If a Participant becomes disabled
and is paid a disability pension under the
Retirement Plan, distributions under this Plan (A)
shall commence within sixty days after the
commencement of disability payments under the
Retirement Plan, (B) shall cease when disability
benefits cease under the Retirement Plan and (C) if
ceased, shall recommence at a later date if the
Participant is otherwise entitled to receive
benefits hereunder. If distribution under this Plan
commences before a Participant's normal retirement
date under the Retirement Plan, his Pension Make-up
Benefit shall be reduced in accordance with the
early retirement reduction factors that would apply
to him under the Retirement Plan at the time such
distribution commences.
(4) Subject to paragraph 5.2(b)(5), retirement
benefits under this Plan shall be payable to
Participants who are married at the time payment
commences in the form of a joint and 50% survivor
annuity and to Participants who are not married at
that time in the form of a straight life annuity.
The joint and 50% survivor annuity and life annuity
referred to in this paragraph 5.2(b)(4) shall be
actuarially equivalent in value to the
Participant's Pension Make-Up Benefit.
(5) In the event that the Committee determines
that, under the Federal gift tax law in effect at
the time payment of a married Participant's
retirement benefit under this plan commences, his
receipt of a joint and survivor annuity as provided
in paragraph 5.2(b)(4) would result in a gift to
his spouse which does not qualify in full for the
gift tax marital deduction, his retirement benefit
under this law shall not be payable as a joint and
50% survivor annuity. Instead, his retirement
benefit under this plan shall be payable in monthly
installments over his life expectancy, determined
on the date distribution of benefits commences,
where the value of those installments are
actuarially equivalent to the Pension Make-Up
Benefit. In such case, if the Participant dies
after distribution of the Pension Make-Up Benefit
has commenced and before all of the installments
are paid, his spouse shall receive the remaining
installments. Thereafter, if his spouse dies after
installments have commenced, the spouse's estate
shall receive the remaining installments. If his
spouse is not then alive, his designated
beneficiary, as provided in paragraph 8.1, shall
receive the remaining installments.
(6) If a married Participant (A) dies in the
service of the Company and before distribution of
benefits under this Plan commences and (B) is
vested under the Retirement Plan, his spouse shall
receive a survivor benefit payable at the earliest
date that the Participant could have received
benefits under paragraph 5.2(b)(3) had he lived.
The survivor benefit shall be the survivor annuity
for his spouse's life payable under a joint and 50%
survivor annuity where the joint and survivor
annuity is actuarially equivalent in value to the
Pension Make-Up Benefit under paragraph 5.2(b)(2).
5.3 Additional Payments. The Company also intends that
supplemental payments shall be made at death, disability
or termination of employment, as the case may be, for
any reduction in benefits due to deferrals of Compensation
under this Plan in respect of any of the
Employer's life insurance or disability plans or
Employee Stock Purchase Plan now in existence or adopted
after the effective date of this Plan.
5.4 Vesting of Deferred Benefit Account. A Participant
shall be 100% vested in his/her Deferred Benefit Account.
ARTICLE VI
DEFERRED BENEFIT ACCOUNT
6.1 Determination of Account. Each Participant's
Deferred Benefit Account, as of each Determination Date,
shall consist of the balance of the Participant's
Deferred Benefit Account as of the immediately preceding
Determination Date, plus the Participant's elective
deferred compensation withheld since the immediately
preceding Determination Date pursuant to paragraph 5.1
and plus amounts credited to the Participant's Deferred
Benefit Account pursuant to paragraphs 6.4 and 6.5. The
Deferred Benefit Account of each Participant shall be
reduced by the amount of all distributions, if any, made
from such Deferred Benefit Account since the preceding
Determination Date.
6.2 Type of Deferral. A Participant may elect to have
any portion of the amount deferred credited to either
Account A (fixed income return) or to Account B (Share
Units). The initial election shall be made by a properly
executed Participation Agreement. With respect to a
Participation Agreement first effective before the
Transition Date, an election to defer any amount to
Account A shall be treated as an election to defer to
Account AA, except as set forth below. A separate
Deferred Benefit Account shall be maintained for a
Participant's Account A, B, AA, and BB.
An election to change the apportionment of deferred
amounts between Accounts A and B may be made by a
Participant filing with the Plan Administrator a revised
Participation Agreement indicating such change on or
before April 15th of each calendar year. The revised
Participation Agreement shall be deemed a continuation
of the initial Participation Agreement to which it
relates for purposes of complying with the provisions of
paragraphs 4.2 and 4.3 relating to the minimum and
maximum deferrals and duration of the Participation
Agreement. The revised Participation Agreement shall be
effective for Plan Years beginning after the date it is
filed.
Deferrals in such Plan Years shall be credited in
accordance with the election of the revised
Participation Agreement, provided, however, that an
election to allocate a portion of deferrals to Account A
in excess of the portion allocated in the Participation
Agreement to be deferred into the fixed income account
as of May 1, 1989, shall be deemed to be an election by
the Participant to allocate to Account AA a portion
of deferrals equal to the portion so allocated to the
fixed income account on May 1, 1989, and to allocate to
Account A the portion in excess of such portion.
6.3 Accounts AA and BB. As of the start of business on
the Transition Date, all amounts standing to the credit
of each Participant in Account A shall be transferred to
an Account AA. As of the start of business on the
Transition Date, amounts standing to the credit of each
Participant in Account B that are attributable to prior
transfers from Account A into Account B shall be
transferred to an Account BB. The amount of such
transfers shall be an amount equal to the sum of the
dollar amount of all transfers from Account A to Account
B during the period beginning on the effective date of
the Participation Agreement and ending on the Transition
Date. For all purposes of this Plan, except as otherwise
noted in this Plan, Account AA shall be treated in the
same manner as Account A, and Account BB shall be
treated in the same manner as Account B. Compensation
earned by employees on or after the Transition Date
subject to deferral under a Participation Agreement
first effective before the Transition Date shall be
credited to Accounts AA and B (in accordance with the
Participant's election to allocate such deferrals to
Accounts A or B, respectively, in such Participation
Agreements) for such Participation Agreement.
6.4 Accounts A and AA. As of each Determination Date,
the Participant's Deferred Benefit Accounts A and AA
shall be increased by the amount of interest earned
since the preceding Determination Date. Interest on Accounts
A and AA shall be based upon the Interest Yield
defined in paragraph 2.14. For Account AA, a Retirement
Deferred Benefit Account shall be maintained and
increased at the rate specified by the Retirement
Interest Yield and a Termination Deferred Benefit
Account shall be maintained and increased at the rate
specified by the Termination Interest Yield. Interest
shall be credited on the mean average of the balances of
the Deferred Benefit Account on the Determination Date
(before crediting the interest) and on the last
preceding Determination Date, but after the Deferred
Benefit Account has been adjusted for any contributions
or distributions to be credited or deducted for each
such day.
6.5 Accounts B and BB. The monthly amount to be
credited to the Participant's Deferred Benefit Account B
or BB shall be converted into Share units, or fractions
thereof, by dividing the amount to be credited by the
market value of a share of the Employer's common stock
on the Determination Date. Two sub-accounts shall be
maintained for Account BB: a Retirement Deferred Benefit
Account shall include the transfer from Account B into
Account BB described in paragraph 6.3 plus amounts
transferred from the Account AA Retirement Deferred
Benefit Account, if any, plus additions pursuant to
subparagraphs (a) and (b) of this paragraph; a
Termination Deferred Benefit Account shall include the
transfer from Account B into Account BB described in
paragraph 6.3 plus amounts transferred from the Account
AA Termination Deferred Benefit Account, if any, plus
additions pursuant to subparagraphs (a) and (b) of this
paragraph. The market value of a share of the Company's
common stock for purposes other than distributions from
Accounts B and BB shall be the closing price for such
stock as reported by the New York Stock Exchange on the
Determination Date. If no common shares were traded on
that date, the immediately preceding day on which
trading occurred shall be used.
(a) For all Participants except Participants
subject to liability under Section 16 of the
Securities Exchange Act of 1934, when a dividend is
declared and paid by the Company on its common stock,
an amount shall be credited to the Participant's
Accounts B and BB as though the same dividend had been
paid on the Share Units in such accounts as of the
Determination Date immediately preceding the
declaration of the dividend, and such amount shall be
converted to Share Units. Such amount shall be valued
as of the Determination Date immediately preceding the
declaration of the dividend.
(b) For Participants subject to liability under
Section 16 of the Securities Exchange Act of 1934,
subparagraph (a) of this paragraph 6.5 shall apply to
balances in Accounts B and BB as of April 30, 1991.
With respect to Share Units resulting from deferrals
or transfers from Account A or Account AA into Account
B or Account BB on or after May 1, 1991 ("Post May 1,
1991 Share Units"), when a cash dividend is declared
and paid by the Company on its common stock, an amount
shall be credited to the Participant's Account A or
Account AA, as appropriate, as though the same
dividend had been paid on the Post May 1, 1991 Share
Units as of the Determination Date immediately
preceding the declaration of the dividend.
(c) In the event of a stock dividend, stock split
or other corporate reorganization involving the
Employer's common stock, the Company shall make
equitable adjustment to the number of Share units
credited to a Participant's Accounts B and BB as may
be necessary to give effect to such change in the
Employer's capital structure.
(d) Share Units in Accounts B and BB shall be
converted to an equivalent dollar amount prior to any
distribution thereof to a Participant pursuant to
Article VII. For purposes of distribution, the value
of a Share Unit shall be based upon the average market
value of a share of the Company's common stock. Such
average market value shall be based upon the closing
price of the Company's common stock on the New York
Stock Exchange on the last day (or, if no share traded
on such day, the immediately preceding day on which
shares traded) for each of the twelve calendar months
preceding the date of distribution. If a Participant
elects payment in other than a lump sum, Share Units
shall be converted to a dollar amount only with
respect to each distribution. During the period of
distribution, dividends and other equitable
adjustments shall be credited to the Participant's
Accounts B and BB in accordance with paragraphs
6.5(a). 6.5(b) and 6.5(c). For such purposes, a
Participant subject to liability under Section 16 of
the Securities Exchange Act of 1934 immediately prior
to the event that entitles the Participant to
distribution shall be deemed subject to such liability
during the period of distribution.
6.6 Statement of Accounts. The Company shall submit to
each Participant, within 120 days after the close of
each Plan Year, a statement in such form as the Company
deems desirable, setting forth the balance to the credit
of such Participant in his Deferred Benefit Accounts A
and B and in his Deferred Benefit Accounts AA and BB
(showing separate calculations for each Interest Yield),
and in each case, as of the last day of the preceding
Plan Year.
6.7 Transfer Between Accounts. Within the limitations
of this paragraph 6.7, a Participant may elect, by
executing an Account Transfer Request: (1) to transfer
all or any portion of his Account A to Account B, (2) to
transfer all or any portion of his Account B to Account
A, (3) to transfer all or any portion of his Account AA
to Account BB, and (4) to transfer all or any portion of
his Account BB to Account AA. Such election shall be
effective on the last day of the calendar month in which
the Plan Administrator timely receives the Participant's
executed Account Transfer Request.
(a) Participants subject to liability under Section
16 of the Securities Exchange Act of 1934 may request
any combination of the foregoing transfers no more
than twice in any Plan Year, provided, however, that
no such transfer may be made unless a period of at
least six months shall have elapsed from the effective
date of the most recent such transfer (whether it
occurred in the current Plan Year or not) to the
effective date of the current transfer.
(b) Participants not described in paragraph 6.7(a)
may make any combination of the foregoing transfers no
more than four times in any Plan Year provided,
however, that no such transfer may be made unless a
period of at least three months shall have elapsed
from the effective date of the most recent such
transfer (whether it occurred in the current Plan Year
or not) to the effective date of the current transfer.
ARTICLE VII
BENEFITS
7.1 Benefit for Normal or Early Retirement and
Termination After Age 55. Subject to paragraph 7.6
below, upon a Participant's (i) retirement after
reaching the Normal Retirement Date, or (ii) retirement
after reaching the Early Retirement Date, or (iii)
termination of employment after attaining age 55, he
shall be entitled to a Deferral Benefit equal to the
amount of his Retirement Deferred Benefit Account
determined under paragraph 6.1 hereof as of the
Determination Date coincidental with or immediately
following such event.
7.2 Termination of Employment Before Age 55. Upon any
termination of service of the Participant before age 55
for reasons other than death or Disability, the Employer
shall pay to the Participant, as compensation earned for
services rendered prior to his termination of service, a
Deferral Benefit equal to the amount of his Termination
Deferred Benefit Account determined under paragraph 6.1
hereof. The Termination Deferred Benefit Account of a
Participant whose employment has terminated shall be
paid in a single sum to the terminated Participant
within 30 days following termination of employment, if
the aggregate balance of the Deferred Benefit Account(s) of
such Participant is $20,000 or less. If such aggregate balance
of a Participant's Deferred Benefit Account(s) is more than $20,000,
payment shall commence pursuant to the Participant's election in the
Participation Agreement.
7.3 Death. If a Participant dies after the commencement
of payments of his Deferral Benefit, his Beneficiary
shall continue to receive the remaining installments of
his Deferred Benefit Account in accordance with the Participant's
election pursuant to paragraph 7.6.
If a Participant dies while employed, prior to any
payments of a Deferral Benefit, the aggregate amounts
deferred under all Participation Agreements shall be
determined as follows:
(a) In the case of deferrals pursuant to a
Participation Agreement first effective before the
Transition Date:
(1) Deferrals of Incentive Compensation shall be
the Retirement Deferred Benefit Account value
thereof.
(2) Deferrals of Base Salary pursuant to Participation
Agreements requiring a total deferral of less than
$15,000 per year allocated to Accounts A and AA pursuant
to the Participation Agreement as revised on the date of
the Participant's death shall be the greater of (i)
the Retirement Deferred Benefit Account value
thereof or (ii) ten times the amount of the elected
annual Base Salary deferral.
(3) Deferrals of Base Salary pursuant to
Participation Agreements requiring a total deferral
of $15,000 or more per year allocated to Accounts A
and AA pursuant to the Participation Agreement as
revised on the date of the Participant's death
shall be determined as follows: (i) that portion of
the deferral which totals $15,000 per year shall be
the greater of (x) the Retirement Deferred Benefit
Account value thereof and (y) ten times the amount
of the elected annual Base Salary deferral, and
(ii) the portion of such deferral which is in
excess of $15,000 per year shall be the Retirement
Deferred Benefit Account value of such excess.
(4) Deferrals allocated to Accounts B and BB
shall be the Retirement Deferred Benefit Account
value thereof.
(b) In the case of deferrals pursuant to a
Participation Agreement first effective on or after
the Transition Date, the aggregate amount of all
deferrals shall be the Retirement Deferred Benefit
Account value of Accounts A and B.
The Deferral Benefit shall be payable as provided
for in paragraph 7.6.
The Deferral Benefit provided above shall be in
lieu of all other benefits under this Plan.
7.4 Disability. In the event of Disability, as defined
in paragraph 2.10, while employed by the Employer, prior
to the completion of all deferrals provided for under a
Participation Agreement, the Employer shall credit to
the disabled Participant's Deferred Benefit Account an
amount equal to the amount of the Participant's
Agreement to defer during such period of Disability, but
not beyond the period elected.
In the event of Disability prior to termination of
employment or the Normal Retirement Date, the disabled
Participant, unless he otherwise elects under this
paragraph, shall be entitled to the amount in his
Retirement Deferred Benefit Account (rather than his
Termination Deferred Benefit Account) determined under
paragraph 6.1 as of the Determination Date next
following such Disability, with payments to commence
upon attainment of the Participant's Normal Retirement
Date in the form specified in paragraph 7.6(a)(2) and/or
7.6(a)(3) over a 15 year period. Before payments
commence under the preceding sentence, a Disabled
Participant may elect, subject to Committee approval
upon good cause shown: (i) to accelerate commencement of
the payments to any earlier date, but not sooner than 60
days after the onset of Disability and/or (ii) to change
the form of payment permitted under paragraph 7.6(a).
7.5 Suspension of Participation/Failure to Continue
Participation. The Committee, in its sole discretion,
may suspend the deferral of a Participant's Compensation
upon the advanced written request of a Participant on
account of financial hardship suffered by that
Participant. A Participant must file any request for
such suspension on or before the 15th day preceding the
regular payment date on which the suspension is to take
effect. The Committee, in its sole discretion, shall
determine the amount, if any, that will not be deferred
by the Participant as a result of the financial
hardship.
The suspension of any deferrals under this paragraph
shall not affect amounts deferred with respect to
periods prior to the effective date of the suspension. A
Participant whose deferrals are suspended may not
execute a subsequent Participation Agreement that would
take effect prior to the beginning of the third Plan
Year following the close of the Plan Year in which the
suspension first took effect.
In the event the Participant ceases to remain a member
of the class of employees who are eligible to
participate in this Plan, the Participant may elect to
suspend the amount of any remaining deferral commitment
in the same manner as described for other suspensions in
this paragraph, except that Committee approval shall not
be required.
7.6 Form of Benefit Payment
(a) Upon the happening of an event described in
paragraphs 7.1, 7.2, 7.3 or 7.4 above, the Employer
shall pay to the Participant or his Beneficiary the
amount specified therein in one of the following forms
as elected by the Participant in the Participation
Agreement filed by the Participant:
(1) A lump sum payment at a time designated in
the Participation Agreement but no later than the
Participant's Normal Retirement Date.
(2) With respect to balances in Accounts A and
AA, an annual payment of a fixed amount which shall
amortize the Deferred Benefit Account balance in
equal annual payments of principal and interest
over a period from 2 to 20 years. For purposes of
determining the amount of the annual payment, the
assumed rate of interest on Accounts A and AA shall
be the average of the applicable Interest Yield as
of each Determination Date for the 60 months
preceding the initial annual installment payment.
(3) With respect to balances in Accounts B and
BB, an annual payment over a period from 2 to 20
years. Each payment shall be the value (as
determined pursuant to paragraph 6.5 [d]) of the
number of Share Units equal to (i) the number of
Share Units in the accounts on the Determination
Date immediately following the event described in
paragraph 7.1, 7.2, 7.3 or 7.4, divided by (ii) the
number of annual installments elected.
(4) A Participant may change the form in which
his benefits shall be paid by filing a revised
Participation Agreement indicating such change
prior to attaining age 60 and at least 13 months
prior to the date upon which the payments to be
made are determined. Such revised Participation
Agreement shall be deemed a continuation of the
initial Participation Agreement to which it relates
for purposes of complying with the provisions of
paragraphs 4.2 and 4.3 relating to the minimum and
maximum deferrals and duration of Participation
Agreements. No such revised Participation Agreement
shall change the amount elected to be deferred in
the original Participation Agreement, nor the time
elected for commencement of benefit payments.
(b) In the absence of a Participant's election
under subparagraph 7.6(a), benefits shall be paid in
the form specified in subparagraph 7.6(a)(2) and/or
7.6(a)(3) over a 15 year period, except as provided in
paragraph 7.2. In the event of a Disabled Participant,
payment shall be in the form described in paragraph
7.4.
7.7 Withholding; Payroll Taxes. To the extent required
by the law in effect at the time payments are made, the
Employer shall withhold from payments made hereunder any
taxes required to be withheld from an employee's wages
for the federal or any state or local government.
7.8 Commencement of Payments. Unless otherwise provided,
payments under this Plan shall begin within 60 days
following receipt of notice by the Plan Administrator of
an event which entitles a Participant (or a Beneficiary)
to payments under this Plan, or at such earlier date as
may be determined by the Company pursuant to the terms
of the plan. All payments shall be made as of the first
day of the month.
ARTICLE VIII
BENEFICIARY DESIGNATION
8.1 Beneficiary Designation. Each Participant
shall have the right, at any time, to designate any
person or persons as his Beneficiary or Beneficiaries
(both principal as well as contingent) to whom payment
under this Plan shall be paid in the event of his death
prior to complete distribution to the Participant of the
benefits due him under the Plan.
8.2 Amendments. Any Beneficiary Designation may be
changed by a participant by the written filing of such
change on a form prescribed by the Company. The filing
of a new Beneficiary Designation form will cancel all
Beneficiary Designations previously filed.
8.3 No Beneficiary Designation. If a Participant fails
to designate a Beneficiary as provided above, or if all
designated Beneficiaries predecease the Participant,
then the Participant's designated Beneficiary shall be
deemed to be the person or persons surviving him in the
first of the following classes in which there is a
survivor, share and share alike:
(a) The surviving Spouse;
(b) The Participant's children, except that if
any of the children predecease the Participant but
leave issue surviving, then such issue shall take
by right of representation the share their parent
would have taken if living;
(c) The Participant's personal representative
(executor or administrator).
8.4 Effect of Payment. The payment to the deemed
Beneficiary shall completely discharge the Employer's
obligations under this Plan.
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment. The Board may at any time amend the
Plan in whole or in part; provided, however, that no
amendment shall be effective to decrease or restrict any
Deferred Benefit Account at the time of such amendment.
9.2 Employer's Right to Terminate. The Board may at
any time terminate the Plan with respect to new
elections to defer if, in its judgment, the continuance
of the Plan, the tax, accounting, or other effects
thereof, or potential payments thereunder would not be
in the best interests of the Company. The Board may also
terminate the Plan in its entirety at any time, and upon
any such termination, each Participant (a) who is then
receiving a Deferral Benefit shall be paid in a lump
sum, or over such period of time as determined by the
Company, the then remaining balance in his Deferred
Benefit Account, and (b) who has not received a Deferral
Benefit shall be paid in a lump sum, or over such period
of time as determined by the Company, the balance in his
Deferred Benefit Account.
ARTICLE X
MISCELLANEOUS
10.1 Unsecured General Creditor. Participants and
their Beneficiaries shall have no legal or equitable
rights, interest or claims in any property or assets of
the Employer, nor shall they be Beneficiaries of, or
have any rights, claims or interests in any life
insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by the Employer
('Policies'). Such Policies or other assets of the
Employer shall not be held under any trust for the
benefit of Participants or their Beneficiaries or held
in any way as collateral security for the fulfilling of
the obligations of the Employer under this Plan. Any and
all of the Employer's assets and Policies shall be, and
remain, the general, unpledged, unrestricted assets of
the Employer. The Employer's obligation under the Plan
shall be merely that of an unfunded and unsecured
promise of the Employer to pay money in the future.
10.2 Nonassignability. Neither a Participant nor any
other person shall have any right to commute, sell,
assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be
unassignable and non-transferable. No part of the
amounts payable shall, prior to actual payment, be
subject to seizure or sequestration for the payment of
any debts, judgments, alimony or separate maintenance
owed by a Participant or any other person, nor be
transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or
insolvency.
10.3 Not a Contract of Service. The terms and
conditions of this Plan shall not be deemed to
constitute a contract of service between the Employer
and the Participant, and the Participant (or his
Beneficiary) shall have no rights against the Employer
except as may otherwise be specifically provided herein.
Moreover, nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of
the Employer or to interfere with the right of the
Employer to discipline or discharge him at any time.
10.4 Protective Provisions. A Participant will
cooperate with the Employer by furnishing any and all
information requested by the Employer, in order to
facilitate the payment of benefits hereunder, and by
taking such physical examinations as the Employer may
deem necessary and taking such other action as may be
requested by the Employer.
10.5 Applicable Law. The Plan, and any Participation
Agreement related thereto, shall be governed by the laws
of the State of Kansas, without regard to the principles
of conflicts of law.
10.6 Alcatel Employees. Employees who transferred to the joint
venture with Alcatel, N.V. (the "Joint Venture")
December 31, 1993, shall not be deemed a retirement or termination
of employment. When such transferred employees retire or terminate
employment with the Joint Venture (other than by reason of a transfer
to employment with the Company or an affiliate of the Company), or if
prior to such retirement or termination of employment, the Company
ceases to own at least a 49 percent interest in the Joint Venture
(or such lesser percentage as determined by the Organization and
Compensation Committee of the Company), the transferred employees
shall be considered to have retired or terminated employment.
<PAGE>
Exhibit 10(c)
DESCRIPTION OF SPRINT SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Sprint Supplemental Executive Retirement Plan
(SERP) supplements the benefits of certain executives whose
retirement income under the Sprint Retirement Pension Plan
(the "Qualified Plan") is limited in accordance with
Sections 415 or 401(a)(17) of the Internal Revenue Code of
1986 (the "Code"). The SERP restores a participant's
overall retirement income to a level which would have been
payable under the Qualified Plan absent either such
limitation. Accordingly, the benefit paid under the SERP
equals the excess of the monthly retirement income benefit
payable under the Qualified Plan without regard to the
restrictions on retirement income benefits under Sections
415 and 401(a)(17) of the Code over the participant's actual
retirement income benefit under the Qualified Plan.
The SERP also provides for a mid-career pension
enhancement for certain participants. Subject to the
approval of the Organization and Compensation Committee of
Sprint's Board of Directors, Sprint's Chief Executive
Officer may recommend that an executive (who is Senior Vice
President or above) be credited with additional years of
service based on his or her relevant business experience
with another company prior to his or her employment with
Sprint or a subsidiary. If approved for a mid-career
pension enhancement, a participant's overall retirement
income will be determined in accordance with the benefit
formula for calculating benefits under the Qualified Plan
including the additional years of service granted.
Accordingly, the benefit paid under the SERP equals the
excess of the monthly retirement income benefit payable
under the Qualified Plan including the additional years
granted over the participant's actual retirement income
benefit under the Qualified Plan. This benefit is further
reduced by any retirement benefits actually received by the
participant by his or her former employers.
<PAGE>
Exhibit 10(d)
AGREEMENT REGARDING SPECIAL COMPENSATION
AND POST EMPLOYMENT RESTRICTIVE COVENANTS
THIS AGREEMENT made this 8th day of August, 1994, by and
among SPRINT CORPORATION, a Kansas corporation ("Sprint"),
SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and
subsidiary of Sprint ("SUMC") (Sprint, SUMC and the subsidiaries
of Sprint are collectively referred to herein as "Employer"), and
WILLIAM T. ESREY ("Executive").
W I T N E S S E T H:
WHEREAS, Employer and its parent and affiliates are engaged
in the telecommunications business;
WHEREAS, Executive has expertise, experience and capability
in the business of Employer and the telecommunications business
in general;
WHEREAS, SUMC provides services for Sprint, its subsidiaries
and affiliates, including providing all personnel to Sprint and
Sprint's Long Distance Division; and
WHEREAS, Employee is employed by SUMC to provide such
services to Sprint;
WHEREAS, Executive has been, and now is serving as Chairman,
President and Chief Executive Officer of Sprint;
WHEREAS, Employer desires to enter into this Agreement to
provide severance and other benefits for Executive and obtain
Executive's agreements regarding confidentiality and post-
employment restrictive covenants for Employer; and
WHEREAS, Executive is willing to provide such agreements to
Employer.
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which consideration
are mutually acknowledged by the parties, it is hereby agreed as
follows:
1. Recitals.
The recitals hereinbefore set forth constitute an integral
part of this Agreement, evidencing the intent of the parties in
executing this Agreement, and describing the circumstances
surrounding its execution. Said recitals are by express
reference made a part of the covenants hereof, and this Agreement
shall be construed in light thereof.
2. Duties and Responsibilities.
The duties and responsibilities of Executive are and shall
continue to be of an executive nature as shall be required by
Employer in the conduct of its business. Executive's powers
and authority shall include all those presently delegated to him
or such other duties and responsibilities as from time to time
may be assigned to him. Executive recognizes, that during his
employment hereunder, he owes an undivided duty of loyalty to
Employer, and agrees to devote his entire business time and
attention to the performance of said duties and responsibilities
and to use his best efforts to promote and develop the business
of Employer.
3. Employment Term.
Executive's employment may be terminated by either party in
accordance with Sections 5, 6, 7, or 8 herein.
4. Compensation and Benefits.
During employment, Executive shall be entitled to receive a
base annual salary, shall be reimbursed for reasonable expenses
incurred and accounted for in accordance with the policies and
procedures of Employer, and shall be entitled to vacation pay
and other benefits applicable to employees generally, each as
may from time to time be established, amended or terminated. In
addition, upon execution of this Agreement, Executive (a) shall
be entitled to 30,000 restricted shares of common stock as set
forth in a restricted stock option agreement of even-date
herewith, attached hereto and incorporated herein (the
"Restricted Stock Agreement"), and (b) shall be entitled to the
Special Compensation set forth in Section 5 hereof in accordance
with the terms of this Agreement.
5. Termination by Employer: Special Compensation.
At any time, Employer may terminate Executive's employment
for any reason. If Executive's termination is other than
pursuant to Section 6, Executive shall, subject to the other
provisions of this Section 5, be entitled to the following
Special Compensation (as that term is defined in this Section 5)
in lieu of any benefits available under any and all Employer
separation plans or policies, except as noted in Section 17. If
Executive's termination is pursuant to Sections 5, 6 or 7,
Executive's obligations under Sections 11, 12, 13, and 14 hereof
shall continue.
For purposes of this Agreement, "Special Compensation"
shall entitle Executive:
(a) to continue to receive for a period of eighteen
(18) months from the date of termination (the "Severance
Period") biweekly compensation at the rate equal to the
biweekly amount of his base annual salary in effect at the
date of termination of employment, provided, however, that
the Board of Directors shall not be precluded from
enhancing the Severance Period at some future date;
(b) to receive a bonus, based on actual performance
results, up to the target amount, under the Management
Incentive Plan ("MIP") throughout the Severance Period
provided that the amount, if any, payable under such Plan
for the award period including the last day of the
Severance Period shall be pro rated based upon the number
of months of the Severance Period that fall within the
award period and the total number of months in such award
period;
(c) to receive an award under the Long Term Incentive
Plan, pro rated based on the Executive's last day worked,
exclusive of any Severance Period, determined in accordance
with the terms of said Plan;
(d) to an acceleration of restricted shares of common
stock in accordance with the relevant provisions of the
Restricted Stock Agreement;
(e) to continue to receive throughout the Severance
Period any executive medical, dental, life, and qualified
or nonqualified retirement benefits which the Executive was
receiving or was entitled to receive at the time of
termination, except that long term disability and short
term disability benefits cease on the last day worked;
(f) to receive outplacement counseling by a firm
selected by Employer to continue until Executive becomes
employed; and
(g) to continue to receive throughout the Severance
Period all applicable executive perquisites (including
automobile allowance, long distance services and all
miscellaneous services) except country club membership dues
and accrual of vacation.
Employer shall pay or cause to be paid the amounts payable
under paragraph (a) above in equal installments, bi-weekly in
arrears, and the amount payable under paragraphs (b) and (c) in
accordance with the terms of the Plans. All payments pursuant
to this Section shall be subject to applicable federal and state
income and other withholding taxes.
In addition to the Special Compensation described above,
Executive shall also be entitled to any vacation pay for
vacation accrued by Executive in the calendar year of
termination but not taken at the time of termination.
In the event Executive becomes employed full time during the
Severance Period, Executive's entitlement to continuation of
the benefits described in paragraph (e) shall immediately cease,
however, Executive shall retain any rights to continue medical
insurance coverage under the COBRA continuation provisions of
the group medical insurance plan by paying the applicable
premium therefor.
The payments and benefits provided for in this Section shall
be in addition to all other sums then payable and owing to
Executive hereunder and, except as expressly provided herein,
shall not be subject to reduction for any amounts received by
Executive for employment or services provided after termination
of employment hereunder, and shall be in full settlement and
satisfaction of all of Executive's claims and demands.
In all events, Executive's right to receive severance and/or
other benefits pursuant to this Section shall cease immediately
in the event Executive is re-employed by Employer or an
affiliate or Executive breaches his Confidential Information
Covenant (as defined in Section 11 hereof), or breaches Sections
12, 13 or 14 hereof. In all cases, Employer's rights under
Section 15 shall continue.
6. Voluntary Resignation by Executive; Termination
for Cause: Total Disability.
Upon termination of Executive's employment by either
Voluntary Resignation, Termination for Cause (as those terms are
defined in this Section 6), or Total Disability, as that term is
defined in the Long Term Disability Plan, Executive shall have
no right to compensation, severance pay or other benefits
described herein but Executive's obligations under Sections 11,
12, 13 and 14 hereof shall continue.
(a) Voluntary Resignation by Executive. At any
time, Executive has the right, by written notice to
Employer, to terminate his services hereunder ("Voluntary
Resignation"), effective as of thirty (30) days after such
notice.
(b) Termination for Cause by Employer. At any
time, Employer has the right to terminate Executive's
employment. Termination upon the occurrence of any of the
following shall be deemed termination for cause
("Termination for Cause"):
(i) Conduct by the Executive which reflects adversely
on the Executive's honesty, trustworthiness or fitness
as an Executive, or
(ii) Executive's willful engagement in conduct which
is demonstrably and materially injurious to the
Employer.
Termination for failure to meet performance
expectations, unless willful, continuing and substantial,
shall not be deemed a Termination for Cause. For
Termination for Cause, written notice of the termination of
Executive's employment by Employer shall be served upon
Executive and shall be effective as of the date of such
service. Such notice given by Employer shall specify the
act or acts of Executive underlying such termination.
(c) Total Disability. Upon the total disability of
the Executive, as that term is defined in the Long Term
Disability Plan, Executive shall have no right to
compensation or severance pay described herein but shall
be entitled to long term disability and other such
benefits afforded under the applicable policies and plans.
7. Resignation Following Constructive Discharge.
If at any time, except in connection with a termination
pursuant to Section 5, 6, or 8 Executive is Constructively
Discharged (as that term is defined in this Section 7) then
Executive shall have the right, by written notice to Employer
within sixty (60) days of such Constructive Discharge, to
terminate his services hereunder, effective as of thirty (30)
days after such notice. Executive shall in such event be
entitled to the compensation and benefits as if such employment
were terminated pursuant to Section 5 of this Agreement.
For purposes of this Agreement, the Executive shall be
"Constructively Discharged" upon the occurrence of any one of
the following events:
(a) Executive is removed from his position with
Employer other than as a result of Executive's appointment
to positions of equal or superior scope and responsibility;
or
(b) Executive's targeted total compensation is reduced
by more than 10% (other than across-the-board reductions
similarly affecting all officers of Sprint Corporation).
8. Effect of Change in Control.
In the event that within one year of a Change in Control (as
that term is defined in this Section 8) Executive's employment
is terminated:
(a) by the Employer other than pursuant to Section 6,
(b) by Executive pursuant to Section 7 hereof,
(c) by Executive if Executive is required to be based
anywhere other than his location at the time or the Kansas
City metropolitan area, except for required travel on
business to an extent substantially consistent with
Executive's business travel obligations immediately prior
the Change in Control;
then Executive shall be entitled to the Special Compensation
described in Section 5 and shall be bound by Section 11, but
shall not have any continuing obligations under Sections 12,
13, and 14, except as otherwise required by common law or
statute.
For purposes of this Agreement, a "Change in Control" shall
be deemed to have occurred if:
(i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")) other than a trustee or other fiduciary
holding securities under an employee benefit plan of Sprint
or any of its affiliates, and other than Sprint or a
corporation owned, directly or indirectly, by the
stockholders of Sprint in substantially the same
proportions as their ownership of stock of Sprint, is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of Sprint representing 20% or more of the
combined voting power of Sprint's then outstanding
securities, or
(ii) during any period of two consecutive years (not
including any period prior to the date of this Agreement),
incumbent members cease for any reason to constitute a
majority of the members of the Board of Directors of
Sprint;
provided, however, that a transaction among Employer, France
Telecom and Deutsche Bundespost Telekom commonly known as
Project Phoenix shall not constitute a Change in Control for
this Agreement and the related Restricted Stock Agreement. A
member of the Board of Directors of Sprint shall be an
"incumbent member" if such individual is as of the date of this
Agreement or at the beginning of the applicable two consecutive
year period a member of the Board of Directors of Sprint, and
any new director after the date of this Agreement (other than a
director designated by person who has entered into an agreement
to effect a transaction described in subparagraph (i) above)
whose election to the Board or nomination for election by the
stockholders of Sprint was approved by a vote of at least two-
thirds (2/3) of the directors still in office who either were
directors as of the date hereof or as of the first day of the
applicable two consecutive year period or whose election or
nomination for election was previously so approved.
9. Dispute Resolution.
All disputes arising under this Agreement, other than those
disputes relating to Executive's alleged violations of Sections
11 through 14 herein, shall be submitted to arbitration by the
American Arbitration Association of Kansas City, Missouri.
Costs of arbitration shall be borne equally by the parties. The
decision of the arbitrators shall be final and there shall be no
appeal from any award rendered. Any award rendered may be
entered as a judgment in any court of competent jurisdiction.
In any judicial enforcement proceeding, the losing party shall
reimburse the prevailing party for its reasonable costs and
attorneys' fees for enforcing its rights under this Agreement,
in addition to any damages or other relief granted. This
Section 9 does not apply to any action by Employer to enforce
Sections 11 through 14 of this Agreement and does not in any way
restrict Employer's rights under Section 15 herein.
10. Enforcement.
In the event Employer shall fail to pay any amounts due to
Executive under this Agreement as they come due, Employer agrees
to pay interest on such amounts at a rate of prime plus two
percent (2%) per annum. Employer agrees that Executive and any
successor shall be entitled to recover all costs of successfully
enforcing any provision of this Agreement, including reasonable
attorney fees and costs of litigation.
11. Confidential Information.
Executive acknowledges that during the course of his
employment he has learned or will learn or develop Confidential
Information (as that term is defined in this Section 11).
Executive further acknowledges that unauthorized disclosure or
use of such Confidential Information, other than in discharge of
Executive's duties, will cause Employer irreparable harm.
For purposes of this Section, Confidential Information means
trade secrets (such as technical and non-technical data, a
formula, pattern, compilation, program, device, method,
technique, drawing, process) and other proprietary information
concerning the products, processes or services of Employer or
its parent, and/or affiliates, including but not limited to:
computer programs; unpatented inventions, discoveries or
improvements; marketing, manufacturing, or organizational
research and development; business plans; sales forecasts;
personnel information, including the identity of other employees
of Employer, their responsibilities, competence, abilities, and
compensation; pricing and financial information; current and
prospective customer lists and information on customers or their
employees; information concerning planned or pending
acquisitions or divestitures; and information concerning
purchases of major equipment or property, which information: (a)
has not been made generally available to the public; and (b) is
useful or of value to the current or anticipated business, or
research or development activities of Employer or of any
customer or supplier of Employer, or (c) has been identified to
Employee as confidential by Employer, either orally or in
writing.
Except in the course of his employment and in the pursuit of
the business of Employer or any of its subsidiaries or
affiliates, Executive shall not, during the course of his
employment, or for a period of eighteen (18) months following
termination of his employment for any reason, directly or
indirectly, disclose, publish, communicate or use on his behalf
or another's behalf, any proprietary information or data of
Employer or any of its subsidiaries or affiliates.
Executive acknowledges that Employer operates and competes
nationally, and that Employer will be harmed by unauthorized
disclosure or use of Confidential Information regardless of
where such disclosure or use occurs, and that therefore this
confidentiality agreement is not limited to any single state or
other jurisdiction.
12. Non-Competition.
Executive acknowledges that use or disclosure of Confidential
Information described in Section 11 is likely if Executive were
to perform telecommunications functions on behalf of a competitor
of Employer. Therefore, Executive shall not, for eighteen (18)
months following termination of employment for any reason (the
"Non-Compete Period"), accept any position, including but not
limited to a position in the long distance operations of AT&T or
MCI, where Executive dedicates his time and efforts principally
to managing, controlling, participating in, investing in, acting
as consultant or advisor to, rendering services for, or otherwise
assisting any person or entity in the long distance, local
telephony or wireless businesses and performing functions
relating to long distance, local telephony or wireless services.
Executive acknowledges that Employer operates and competes
nationally, and that therefore this non-competition agreement is
not limited to any single state or other jurisdiction.
13. Inducement of Other Employees.
For a eighteen (18) month period following termination of
employment, Executive will not directly or indirectly solicit,
induce or encourage any employee or agent of Employer to
terminate his relationship with Employer.
14. Return of Employer's Property.
All notes, reports, sketches, plans, published memoranda or
other documents created, developed, generated or held by
Executive during employment, concerning or related to Employer's
business, and whether containing or relating to Confidential
Information or not, are the property of Employer and will be
promptly delivered to Employer upon termination of Executive's
employment for any reason whatsoever. During the course of
employment, Executive shall not remove any of the above property
containing Confidential Information, or reproductions or copies
thereof, or any apparatus from Employer's premises without
authorization.
15. Remedies.
Executive acknowledges that the restraints and agreements
herein provided are fair and reasonable, that enforcement of the
provisions of Sections 11, 12, 13 and 14 will not cause him undue
hardship and that said provisions are reasonably necessary and
commensurate with the need to protect Employer and its legitimate
and proprietary business interests and property from irreparable
harm.
Executive acknowledges that failure to comply with the terms
of this Agreement will cause irreparable damage to Employer.
Therefore, Executive agrees that, in addition to any other
remedies at law or in equity available to Employer for
Executive's breach or threatened breach of this Agreement,
Employer is entitled to specific performance or injunctive
relief, without bond, against Executive to prevent such damage
or breach, and the existence of any claim or cause of action
Executive may have against Employer will not constitute a
defense thereto. Executive further agrees to pay reasonable
attorney fees and costs of litigation incurred by Employer in
any proceeding relating to the enforcement of the Agreement or
to any alleged breach thereof in which Employer shall prevail in
whole or those reasonable fees and costs attributable to the
extent that Employer prevails in part.
In the event of a breach or a violation by Executive of any
of the covenants and provisions of this Agreement, the running
of the Non-Compete Period (but not of Executive's obligation
thereunder), shall be tolled during the period of the
continuance of any actual breach or violation.
16. Confidentiality of Agreement.
As a specific condition to Executive's right to Special
Compensation or other benefits described herein, Executive agrees
that he will not disclose or discuss: the existence of this
Agreement; the Special Compensation provided hereunder; or any
other terms of the Agreement except: (1) to members of his
immediate family; (2) to his financial advisor or attorney but
then only to the extent necessary for them to assist him; (3) to
a potential employer on a strictly confidential basis and then
only to the extent necessary for reasonable disclosure in the
course of serious negotiations; or (4) as required by law or to
enforce legal rights.
17. Entire Understanding.
This Agreement constitutes the entire understanding between
the parties relating to Executive's employment hereunder and
supersedes and cancels all prior written and oral understandings
and agreements with respect to such matters, except for the terms
and provisions of the Key Management Benefit Plan and any other
employee benefit or other compensation plans (or any agreements
or awards thereunder) referred to in or contemplated by this
Agreement and except for the Executive's Contingency Employment
Agreement and the SPRINT UNITED EMPLOYEE AGREEMENT REGARDING
PROPERTY RIGHTS AND BUSINESS PRACTICES which the Executive has
signed and by which Executive continues to be bound.
18. Binding Effect.
This Agreement shall be binding upon and inure to the benefit
of Executive's executors, administrators, legal representatives,
heirs and legatees and the successors and assigns of Employer.
19. Partial Invalidity.
The various provisions of this Agreement are intended to be
severable and to constitute independent and distinct binding
obligations. Should any provision of this Agreement be
determined to be void and unenforceable, in whole or in part, it
shall not be deemed to affect or impair the validity of any
other provision or part thereof, and such provision or part
thereof shall be deemed modified to the extent required to
permit enforcement. Without limiting the generality of the
foregoing, if the scope of any provision contained in this
Agreement is too broad to permit enforcement to its full extent,
but may be made enforceable by limitations thereon, such
provision shall be enforced to the maximum extent permitted by
law, and Executive hereby agrees that such scope may be
judicially modified accordingly.
20. Strict Construction.
The language used in this Agreement will be deemed to be the
language chosen by Employer and Executive to express their
mutual intent and no rule of strict construction shall be
applied against any person.
21. Waiver.
The waiver of any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be
construed as a waiver of any subsequent breach.
22. Notices.
Any notice or other communication required or permitted to be
given hereunder shall be determined to have been duly given to
any party (a) upon delivery to the address of such party
specified below if delivered personally or by courier; (b) upon
dispatch if transmitted by telecopy or other means of facsimile,
provided a copy thereof is also sent by regular mail or courier;
or (c) within forty-eight (48) hours after deposit thereof in
the U.S. mail, postage prepaid, for delivery as certified mail,
return receipt requested, addressed, in any case to the party at
the following address(es) or telecopy numbers:
If to Executive:
William T. Esrey
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, KS 66205
If to Employer:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, KS 66205
Attention: Corporate Secretary
or to such other address(es) or telecopy number(s) as any party
may designate by Written Notice in the aforesaid manner.
23. Governing Law.
This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State
of Kansas.
24. Gender.
Wherever from the context it appears appropriate, each term
stated in either the singular of plural shall include the
singular and the plural, and the pronouns stated in either the
masculine, the feminine or the neuter gender shall include the
masculine, feminine or neuter.
25. Headings.
The headings of the Sections of this Agreement are for
reference purposes only and do not define or limit, and shall
not be used to interpret or construe the contents of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed on the date above set forth.
WILLIAM T. ESREY SPRINT/UNITED MANAGEMENT COMPANY
/s/ W. T. ESREY
By: /s/ B. WATSON
Authorized Officer
SPRINT CORPORATION
By: /s/ DON A. JENSEN
Authorized Officer
<PAGE>
AGREEMENT REGARDING SPECIAL COMPENSATION
AND POST EMPLOYMENT RESTRICTIVE COVENANTS
THIS AGREEMENT made this 8th day of August, 1994, by and
among SPRINT CORPORATION, a Kansas corporation ("Sprint"),
SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and
subsidiary of Sprint ("SUMC") (Sprint, SUMC and the subsidiaries
of Sprint are collectively referred to herein as "Employer"), and
ARTHUR B. KRAUSE ("Executive").
W I T N E S S E T H:
WHEREAS, Employer and its parent and affiliates are engaged
in the telecommunications business;
WHEREAS, Executive has expertise, experience and capability
in the business of Employer and the telecommunications business
in general;
WHEREAS, SUMC provides services for Sprint, its subsidiaries
and affiliates, including providing all personnel to Sprint and
Sprint's Long Distance Division; and
WHEREAS, Employee is employed by SUMC to provide such
services to Sprint;
WHEREAS, Executive has been, and now is serving Employer as
Executive Vice President and Chief Financial Officer of Sprint;
WHEREAS, Employer desires to enter into this Agreement to
provide severance and other benefits for Executive and obtain
Executive's agreements regarding confidentiality and post-
employment restrictive covenants for Employer; and
WHEREAS, Executive is willing to provide such agreements to
Employer.
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which consideration
are mutually acknowledged by the parties, it is hereby agreed as
follows:
1. Recitals.
The recitals hereinbefore set forth constitute an integral
part of this Agreement, evidencing the intent of the parties in
executing this Agreement, and describing the circumstances
surrounding its execution. Said recitals are by express
reference made a part of the covenants hereof, and this Agreement
shall be construed in light thereof.
2. Duties and Responsibilities.
The duties and responsibilities of Executive are and shall
continue to be of an executive nature as shall be required by
Employer in the conduct of its business. Executive's powers
and authority shall include all those presently delegated to him
or such other duties and responsibilities as from time to time
may be assigned to him. Executive recognizes, that during his
employment hereunder, he owes an undivided duty of loyalty to
Employer, and agrees to devote his entire business time and
attention to the performance of said duties and responsibilities
and to use his best efforts to promote and develop the business
of Employer.
3. Employment Term.
Executive's employment may be terminated by either party in
accordance with Sections 5, 6, 7, or 8 herein.
4. Compensation and Benefits.
During employment, Executive shall be entitled to receive a
base annual salary, shall be reimbursed for reasonable expenses
incurred and accounted for in accordance with the policies and
procedures of Employer, and shall be entitled to vacation pay
and other benefits applicable to employees generally, each as
may from time to time be established, amended or terminated. In
addition, upon execution of this Agreement, Executive (a) shall
be entitled to 10,000 shares of restricted stock as set forth in
a restricted stock agreement dated August 8, 1994 (the
"Restricted Stock Agreement"), and (b) shall be entitled to the
Special Compensation set forth in Section 5 hereof in accordance
with the terms of this Agreement.
5. Termination by Employer: Special Compensation.
At any time, Employer may terminate Executive's employment
for any reason. If Executive's termination is other than
pursuant to Section 6, Executive shall, subject to the other
provisions of this Section 5, be entitled to the following
Special Compensation (as that term is defined in this Section 5)
in lieu of any benefits available under any and all Employer
separation plans or policies, except as noted in Section 17. If
Executive's termination is pursuant to Sections 5, 6 or 7,
Executive's obligations under Sections 11, 12, 13, and 14 hereof
shall continue.
For purposes of this Agreement, "Special Compensation"
shall entitle Executive:
(a) to continue to receive for a period of eighteen
(18) months from the date of termination (the "Severance
Period") biweekly compensation at the rate equal to the
biweekly amount of his base annual salary in effect at the
date of termination of employment;
(b) to receive a bonus, based on actual performance
results, up to the target amount, under the Management
Incentive Plan ("MIP") throughout the Severance Period
provided that the amount, if any, payable under such Plan
for the award period including the last day of the
Severance Period shall be pro rated based upon the number
of months of the Severance Period that fall within the
award period and the total number of months in such award
period;
(c) to receive an award under the Long Term Incentive
Plan, pro rated based on the Executive's last day worked,
exclusive of any Severance Period, determined in accordance
with the terms of said Plan;
(d) to an acceleration of vesting of restricted stock
in accordance with the relevant provisions of the
Restricted Stock Agreement;
(e) to continue to receive throughout the Severance
Period any executive medical, dental, life, and qualified
or nonqualified retirement benefits which the Executive was
receiving or was entitled to receive at the time of
termination, except that long term disability and short
term disability benefits cease on the last day worked;
(f) to receive outplacement counseling by a firm
selected by Employer to continue until Executive becomes
employed; and
(g) to continue to receive throughout the Severance
Period all applicable executive perquisites (including
automobile allowance, long distance services and all
miscellaneous services) except country club membership dues
and accrual of vacation.
Employer shall pay or cause to be paid the amounts payable
under paragraph (a) above in equal installments, bi-weekly in
arrears, and the amount payable under paragraphs (b) and (c) in
accordance with the terms of the Plans. All payments pursuant
to this Section shall be subject to applicable federal and state
income and other withholding taxes.
In addition to the Special Compensation described above,
Executive shall also be entitled to any vacation pay for
vacation accrued by Executive in the calendar year of
termination but not taken at the time of termination.
In the event Executive becomes employed full time during the
Severance Period, Executive's entitlement to continuation of
the benefits described in paragraph (e) shall immediately cease,
however, Executive shall retain any rights to continue medical
insurance coverage under the COBRA continuation provisions of
the group medical insurance plan by paying the applicable
premium therefor.
The payments and benefits provided for in this Section shall
be in addition to all other sums then payable and owing to
Executive hereunder and, except as expressly provided herein,
shall not be subject to reduction for any amounts received by
Executive for employment or services provided after termination
of employment hereunder, and shall be in full settlement and
satisfaction of all of Executive's claims and demands.
In all events, Executive's right to receive severance and/or
other benefits pursuant to this Section shall cease immediately
in the event Executive is re-employed by Employer or an
affiliate or Executive breaches his Confidential Information
Covenant (as defined in Section 11 hereof), or breaches Sections
12, 13 or 14 hereof. In all cases, Employer's rights under
Section 15 shall continue.
6. Voluntary Resignation by Executive; Termination
for Cause: Total Disability.
Upon termination of Executive's employment by either
Voluntary Resignation, Termination for Cause (as those terms are
defined in this Section 6), or Total Disability, as that term is
defined in the Long Term Disability Plan, Executive shall have
no right to compensation, severance pay or other benefits
described herein but Executive's obligations under Sections 11,
12, 13 and 14 hereof shall continue.
(a) Voluntary Resignation by Executive. At any
time, Executive has the right, by written notice to
Employer, to terminate his services hereunder ("Voluntary
Resignation"), effective as of thirty (30) days after such
notice.
(b) Termination for Cause by Employer. At any
time, Employer has the right to terminate Executive's
employment. Termination upon the occurrence of any of the
following shall be deemed termination for cause
("Termination for Cause"):
(i) Conduct by the Executive which reflects adversely
on the Executive's honesty, trustworthiness or fitness
as an Executive, or
(ii) Executive's willful engagement in conduct which
is demonstrably and materially injurious to the
Employer.
Termination for failure to meet performance
expectations, unless willful, continuing and substantial,
shall not be deemed a Termination for Cause. For
Termination for Cause, written notice of the termination of
Executive's employment by Employer shall be served upon
Executive and shall be effective as of the date of such
service. Such notice given by Employer shall specify the
act or acts of Executive underlying such termination.
(c) Total Disability. Upon the total disability of
the Executive, as that term is defined in the Long Term
Disability Plan, Executive shall have no right to
compensation or severance pay described herein but shall
be entitled to long term disability and other such
benefits afforded under the applicable policies and plans.
7. Resignation Following Constructive Discharge.
If at any time, except in connection with a termination
pursuant to Section 5, 6, or 8 Executive is Constructively
Discharged (as that term is defined in this Section 7) then
Executive shall have the right, by written notice to Employer
within sixty (60) days of such Constructive Discharge, to
terminate his services hereunder, effective as of thirty (30)
days after such notice. Executive shall in such event be
entitled to the compensation and benefits as if such employment
were terminated pursuant to Section 5 of this Agreement.
For purposes of this Agreement, the Executive shall be
"Constructively Discharged" upon the occurrence of any one of
the following events:
(a) Executive is removed from his position with
Employer other than as a result of Executive's appointment
to positions of equal or superior scope and responsibility;
or
(b) Executive's targeted total compensation is reduced
by more than 10% (other than across-the-board reductions
similarly affecting all officers of Sprint Corporation).
8. Effect of Change in Control.
In the event that within one year of a Change in Control (as
that term is defined in this Section 8) Executive's employment
is terminated:
(a) by the Employer other than pursuant to Section 6,
(b) by Executive pursuant to Section 7 hereof,
(c) by Executive if Executive is required to be based
anywhere other than his location at the time or the Kansas
City metropolitan area, except for required travel on
business to an extent substantially consistent with
Executive's business travel obligations immediately prior
the Change in Control;
then Executive shall be entitled to the Special Compensation
described in Section 5 and shall be bound by Section 11, but
shall not have any continuing obligations under Sections 12,
13, and 14, except as otherwise required by common law or
statute.
For purposes of this Agreement, a "Change in Control" shall
be deemed to have occurred if:
(i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")) other than a trustee or other fiduciary
holding securities under an employee benefit plan of Sprint
or any of its affiliates, and other than Sprint or a
corporation owned, directly or indirectly, by the
stockholders of Sprint in substantially the same
proportions as their ownership of stock of Sprint, is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of Sprint representing 20% or more of the
combined voting power of Sprint's then outstanding
securities, or
(ii) during any period of two consecutive years (not
including any period prior to the date of this Agreement),
incumbent members cease for any reason to constitute a
majority of the members of the Board of Directors of
Sprint;
provided, however, that a transaction among Employer, France
Telecom and Deutsche Bundespost Telekom commonly known as
Project Phoenix shall not constitute a Change in Control for
this Agreement and the related Restricted Stock Agreement. A
member of the Board of Directors of Sprint shall be an
"incumbent member" if such individual is as of the date of this
Agreement or at the beginning of the applicable two consecutive
year period a member of the Board of Directors of Sprint, and
any new director after the date of this Agreement (other than a
director designated by person who has entered into an agreement
to effect a transaction described in subparagraph (i) above)
whose election to the Board or nomination for election by the
stockholders of Sprint was approved by a vote of at least two-
thirds (2/3) of the directors still in office who either were
directors as of the date hereof or as of the first day of the
applicable two consecutive year period or whose election or
nomination for election was previously so approved.
9. Dispute Resolution.
All disputes arising under this Agreement, other than those
disputes relating to Executive's alleged violations of Sections
11 through 14 herein, shall be submitted to arbitration by the
American Arbitration Association of Kansas City, Missouri.
Costs of arbitration shall be borne equally by the parties. The
decision of the arbitrators shall be final and there shall be no
appeal from any award rendered. Any award rendered may be
entered as a judgment in any court of competent jurisdiction.
In any judicial enforcement proceeding, the losing party shall
reimburse the prevailing party for its reasonable costs and
attorneys' fees for enforcing its rights under this Agreement,
in addition to any damages or other relief granted. This
Section 9 does not apply to any action by Employer to enforce
Sections 11 through 14 of this Agreement and does not in any way
restrict Employer's rights under Section 15 herein.
10. Enforcement.
In the event Employer shall fail to pay any amounts due to
Executive under this Agreement as they come due, Employer agrees
to pay interest on such amounts at a rate of prime plus two
percent (2%) per annum. Employer agrees that Executive and any
successor shall be entitled to recover all costs of successfully
enforcing any provision of this Agreement, including reasonable
attorney fees and costs of litigation.
11. Confidential Information.
Executive acknowledges that during the course of his
employment he has learned or will learn or develop Confidential
Information (as that term is defined in this Section 11).
Executive further acknowledges that unauthorized disclosure or
use of such Confidential Information, other than in discharge of
Executive's duties, will cause Employer irreparable harm.
For purposes of this Section, Confidential Information means
trade secrets (such as technical and non-technical data, a
formula, pattern, compilation, program, device, method,
technique, drawing, process) and other proprietary information
concerning the products, processes or services of Employer or
its parent, and/or affiliates, including but not limited to:
computer programs; unpatented inventions, discoveries or
improvements; marketing, manufacturing, or organizational
research and development; business plans; sales forecasts;
personnel information, including the identity of other employees
of Employer, their responsibilities, competence, abilities, and
compensation; pricing and financial information; current and
prospective customer lists and information on customers or their
employees; information concerning planned or pending
acquisitions or divestitures; and information concerning
purchases of major equipment or property, which information: (a)
has not been made generally available to the public; and (b) is
useful or of value to the current or anticipated business, or
research or development activities of Employer or of any
customer or supplier of Employer, or (c) has been identified to
Employee as confidential by Employer, either orally or in
writing.
Except in the course of his employment and in the pursuit of
the business of Employer or any of its subsidiaries or
affiliates, Executive shall not, during the course of his
employment, or for a period of eighteen (18) months following
termination of his employment for any reason, directly or
indirectly, disclose, publish, communicate or use on his behalf
or another's behalf, any proprietary information or data of
Employer or any of its subsidiaries or affiliates.
Executive acknowledges that Employer operates and competes
nationally, and that Employer will be harmed by unauthorized
disclosure or use of Confidential Information regardless of
where such disclosure or use occurs, and that therefore this
confidentiality agreement is not limited to any single state or
other jurisdiction.
12. Non-Competition.
Executive acknowledges that use or disclosure of Confidential
Information described in Section 11 is likely if Executive were
to perform telecommunications functions relating to long distance
services on behalf of a competitor of Employer. Therefore,
Executive shall not, for eighteen (18) months following
termination of employment for any reason (the "Non-Compete
Period"), accept any position, including but not limited to a
position in the long distance operations of AT&T or MCI, where
Executive dedicates his time and efforts principally to managing,
controlling, participating in, investing in, acting as consultant
or advisor to, rendering services for, or otherwise assisting any
person or entity in the long distance business or the wireless
business and performing functions relating to long distance or
wireless services.
Executive acknowledges that Employer operates and competes
nationally, and that therefore this non-competition agreement is
not limited to any single state or other jurisdiction.
13. Inducement of Other Employees.
For a eighteen (18) month period following termination of
employment, Executive will not directly or indirectly solicit,
induce or encourage any employee or agent of Employer to
terminate his relationship with Employer.
14. Return of Employer's Property.
All notes, reports, sketches, plans, published memoranda or
other documents created, developed, generated or held by
Executive during employment, concerning or related to Employer's
business, and whether containing or relating to Confidential
Information or not, are the property of Employer and will be
promptly delivered to Employer upon termination of Executive's
employment for any reason whatsoever. During the course of
employment, Executive shall not remove any of the above property
containing Confidential Information, or reproductions or copies
thereof, or any apparatus from Employer's premises without
authorization.
15. Remedies.
Executive acknowledges that the restraints and agreements
herein provided are fair and reasonable, that enforcement of the
provisions of Sections 11, 12, 13 and 14 will not cause him undue
hardship and that said provisions are reasonably necessary and
commensurate with the need to protect Employer and its legitimate
and proprietary business interests and property from irreparable
harm.
Executive acknowledges that failure to comply with the terms
of this Agreement will cause irreparable damage to Employer.
Therefore, Executive agrees that, in addition to any other
remedies at law or in equity available to Employer for
Executive's breach or threatened breach of this Agreement,
Employer is entitled to specific performance or injunctive
relief, without bond, against Executive to prevent such damage
or breach, and the existence of any claim or cause of action
Executive may have against Employer will not constitute a
defense thereto. Executive further agrees to pay reasonable
attorney fees and costs of litigation incurred by Employer in
any proceeding relating to the enforcement of the Agreement or
to any alleged breach thereof in which Employer shall prevail in
whole or those reasonable fees and costs attributable to the
extent that Employer prevails in part.
In the event of a breach or a violation by Executive of any
of the covenants and provisions of this Agreement, the running
of the Non-Compete Period (but not of Executive's obligation
thereunder), shall be tolled during the period of the
continuance of any actual breach or violation.
16. Confidentiality of Agreement.
As a specific condition to Executive's right to Special
Compensation or other benefits described herein, Executive agrees
that he will not disclose or discuss: the existence of this
Agreement; the Special Compensation provided hereunder; or any
other terms of the Agreement except: (1) to members of his
immediate family; (2) to his financial advisor or attorney but
then only to the extent necessary for them to assist him; (3) to
a potential employer on a strictly confidential basis and then
only to the extent necessary for reasonable disclosure in the
course of serious negotiations; or (4) as required by law or to
enforce legal rights.
17. Entire Understanding.
This Agreement constitutes the entire understanding between
the parties relating to Executive's employment hereunder and
supersedes and cancels all prior written and oral understandings
and agreements with respect to such matters, except for the terms
and provisions of the Key Management Benefit Plan and any other
employee benefit or other compensation plans (or any agreements
or awards thereunder) referred to in or contemplated by this
Agreement and except for Executive's Contingency Employment
Agreement and the SPRINT UNITED EMPLOYEE AGREEMENT REGARDING
PROPERTY RIGHTS AND BUSINESS PRACTICES which the Executive has
signed and by which Executive continues to be bound.
18. Binding Effect.
This Agreement shall be binding upon and inure to the benefit
of Executive's executors, administrators, legal representatives,
heirs and legatees and the successors and assigns of Employer.
19. Partial Invalidity.
The various provisions of this Agreement are intended to be
severable and to constitute independent and distinct binding
obligations. Should any provision of this Agreement be
determined to be void and unenforceable, in whole or in part, it
shall not be deemed to affect or impair the validity of any
other provision or part thereof, and such provision or part
thereof shall be deemed modified to the extent required to
permit enforcement. Without limiting the generality of the
foregoing, if the scope of any provision contained in this
Agreement is too broad to permit enforcement to its full extent,
but may be made enforceable by limitations thereon, such
provision shall be enforced to the maximum extent permitted by
law, and Executive hereby agrees that such scope may be
judicially modified accordingly.
20. Strict Construction.
The language used in this Agreement will be deemed to be the
language chosen by Employer and Executive to express their
mutual intent and no rule of strict construction shall be
applied against any person.
21. Waiver.
The waiver of any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be
construed as a waiver of any subsequent breach.
22. Notices.
Any notice or other communication required or permitted to be
given hereunder shall be determined to have been duly given to
any party (a) upon delivery to the address of such party
specified below if delivered personally or by courier; (b) upon
dispatch if transmitted by telecopy or other means of facsimile,
provided a copy thereof is also sent by regular mail or courier;
or (c) within forty-eight (48) hours after deposit thereof in
the U.S. mail, postage prepaid, for delivery as certified mail,
return receipt requested, addressed, in any case to the party at
the following address(es) or telecopy numbers:
If to Executive:
Arthur B. Krause
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, KS 66205
If to Employer:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, KS 66205
Attention: Corporate Secretary
or to such other address(es) or telecopy number(s) as any party
may designate by Written Notice in the aforesaid manner.
23. Governing Law.
This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State
of Kansas.
24. Gender.
Wherever from the context it appears appropriate, each term
stated in either the singular of plural shall include the
singular and the plural, and the pronouns stated in either the
masculine, the feminine or the neuter gender shall include the
masculine, feminine or neuter.
25. Headings.
The headings of the Sections of this Agreement are for
reference purposes only and do not define or limit, and shall
not be used to interpret or construe the contents of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed on the date above set forth.
ARTHUR B. KRAUSE SPRINT/UNITED MANAGEMENT COMPANY
/s/ ARTHUR B. KRAUSE
By: /s/ B. WATSON
Authorized Officer
SPRINT CORPORATION
By: /s/ DON A. JENSEN
Authorized Officer
<PAGE>
AGREEMENT REGARDING SPECIAL COMPENSATION
AND POST EMPLOYMENT RESTRICTIVE COVENANTS
THIS AGREEMENT made this 8th day of August, 1994, by and
among SPRINT CORPORATION, a Kansas corporation ("Sprint"),
SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and
subsidiary of Sprint ("SUMC") (Sprint, SUMC and the subsidiaries
of Sprint are collectively referred to herein as "Employer"), and
J. RICHARD DEVLIN ("Executive").
W I T N E S S E T H:
WHEREAS, Employer and its parent and affiliates are engaged
in the telecommunications business;
WHEREAS, Executive has expertise, experience and capability
in the business of Employer and the telecommunications business
in general;
WHEREAS, SUMC provides services for Sprint, its subsidiaries
and affiliates, including providing all personnel to Sprint and
Sprint's Long Distance Division; and
WHEREAS, Employee is employed by SUMC to provide such
services to Sprint;
WHEREAS, Executive has been, and now is serving Employer as
Executive Vice President - Law and External Affairs of Sprint;
WHEREAS, Employer desires to enter into this Agreement to
provide severance and other benefits for Executive and obtain
Executive's agreements regarding confidentiality and post-
employment restrictive covenants for Employer; and
WHEREAS, Executive is willing to provide such agreements to
Employer.
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which consideration
are mutually acknowledged by the parties, it is hereby agreed as
follows:
1. Recitals.
The recitals hereinbefore set forth constitute an integral
part of this Agreement, evidencing the intent of the parties in
executing this Agreement, and describing the circumstances
surrounding its execution. Said recitals are by express
reference made a part of the covenants hereof, and this Agreement
shall be construed in light thereof.
2. Duties and Responsibilities.
The duties and responsibilities of Executive are and shall
continue to be of an executive nature as shall be required by
Employer in the conduct of its business. Executive's powers
and authority shall include all those presently delegated to him
or such other duties and responsibilities as from time to time
may be assigned to him. Executive recognizes, that during his
employment hereunder, he owes an undivided duty of loyalty to
Employer, and agrees to devote his entire business time and
attention to the performance of said duties and responsibilities
and to use his best efforts to promote and develop the business
of Employer.
3. Employment Term.
Executive's employment may be terminated by either party in
accordance with Sections 5, 6, 7, or 8 herein.
4. Compensation and Benefits.
During employment, Executive shall be entitled to receive a
base annual salary, shall be reimbursed for reasonable expenses
incurred and accounted for in accordance with the policies and
procedures of Employer, and shall be entitled to vacation pay
and other benefits applicable to employees generally, each as
may from time to time be established, amended or terminated. In
addition, upon execution of this Agreement, Executive (a) shall
be entitled to 10,000 shares of restricted stock as set forth in
a restricted stock agreement dated August 8, 1994 (the
"Restricted Stock Agreement"), and (b) shall be entitled to the
Special Compensation set forth in Section 5 hereof in accordance
with the terms of this Agreement.
5. Termination by Employer: Special Compensation.
At any time, Employer may terminate Executive's employment
for any reason. If Executive's termination is other than
pursuant to Section 6, Executive shall, subject to the other
provisions of this Section 5, be entitled to the following
Special Compensation (as that term is defined in this Section 5)
in lieu of any benefits available under any and all Employer
separation plans or policies, except as noted in Section 17. If
Executive's termination is pursuant to Sections 5, 6 or 7,
Executive's obligations under Sections 11, 12, 13, and 14 hereof
shall continue.
For purposes of this Agreement, "Special Compensation"
shall entitle Executive:
(a) to continue to receive for a period of eighteen
(18) months from the date of termination (the "Severance
Period") biweekly compensation at the rate equal to the
biweekly amount of his base annual salary in effect at the
date of termination of employment;
(b) to receive a bonus, based on actual performance
results, up to the target amount, under the Management
Incentive Plan ("MIP") throughout the Severance Period
provided that the amount, if any, payable under such Plan
for the award period including the last day of the
Severance Period shall be pro rated based upon the number
of months of the Severance Period that fall within the
award period and the total number of months in such award
period;
(c) to receive an award under the Long Term Incentive
Plan, pro rated based on the Executive's last day worked,
exclusive of any Severance Period, determined in accordance
with the terms of said Plan;
(d) to an acceleration of vesting of restricted stock
in accordance with the relevant provisions of the
Restricted Stock Agreement;
(e) to continue to receive throughout the Severance
Period any executive medical, dental, life, and qualified
or nonqualified retirement benefits which the Executive was
receiving or was entitled to receive at the time of
termination, except that long term disability and short
term disability benefits cease on the last day worked;
(f) to receive outplacement counseling by a firm
selected by Employer to continue until Executive becomes
employed; and
(g) to continue to receive throughout the Severance
Period all applicable executive perquisites (including
automobile allowance, long distance services and all
miscellaneous services) except country club membership dues
and accrual of vacation.
Employer shall pay or cause to be paid the amounts payable
under paragraph (a) above in equal installments, bi-weekly in
arrears, and the amount payable under paragraphs (b) and (c) in
accordance with the terms of the Plans. All payments pursuant
to this Section shall be subject to applicable federal and state
income and other withholding taxes.
In addition to the Special Compensation described above,
Executive shall also be entitled to any vacation pay for
vacation accrued by Executive in the calendar year of
termination but not taken at the time of termination.
In the event Executive becomes employed full time during the
Severance Period, Executive's entitlement to continuation of
the benefits described in paragraph (e) shall immediately cease,
however, Executive shall retain any rights to continue medical
insurance coverage under the COBRA continuation provisions of
the group medical insurance plan by paying the applicable
premium therefor.
The payments and benefits provided for in this Section shall
be in addition to all other sums then payable and owing to
Executive hereunder and, except as expressly provided herein,
shall not be subject to reduction for any amounts received by
Executive for employment or services provided after termination
of employment hereunder, and shall be in full settlement and
satisfaction of all of Executive's claims and demands.
In all events, Executive's right to receive severance and/or
other benefits pursuant to this Section shall cease immediately
in the event Executive is re-employed by Employer or an
affiliate or Executive breaches his Confidential Information
Covenant (as defined in Section 11 hereof), or breaches Sections
12, 13 or 14 hereof. In all cases, Employer's rights under
Section 15 shall continue.
6. Voluntary Resignation by Executive; Termination
for Cause: Total Disability.
Upon termination of Executive's employment by either
Voluntary Resignation, Termination for Cause (as those terms are
defined in this Section 6), or Total Disability, as that term is
defined in the Long Term Disability Plan, Executive shall have
no right to compensation, severance pay or other benefits
described herein but Executive's obligations under Sections 11,
12, 13 and 14 hereof shall continue.
(a) Voluntary Resignation by Executive. At any
time, Executive has the right, by written notice to
Employer, to terminate his services hereunder ("Voluntary
Resignation"), effective as of thirty (30) days after such
notice.
(b) Termination for Cause by Employer. At any
time, Employer has the right to terminate Executive's
employment. Termination upon the occurrence of any of the
following shall be deemed termination for cause
("Termination for Cause"):
(i) Conduct by the Executive which reflects
adversely on the Executive's honesty, trustworthiness
or fitness as an Executive, or
(ii) Executive's willful engagement in conduct
which is demonstrably and materially injurious to the
Employer.
Termination for failure to meet performance
expectations, unless willful, continuing and
substantial, shall not be deemed a Termination for
Cause. For Termination for Cause, written notice of
the termination of Executive's employment by Employer
shall be served upon Executive and shall be effective
as of the date of such service. Such notice given by
Employer shall specify the act or acts of Executive
underlying such termination.
(c) Total Disability. Upon the total disability
of the Executive, as that term is defined in the Long
Term Disability Plan, Executive shall have no right to
compensation or severance pay described herein but
shall be entitled to long term disability and other
such benefits afforded under the applicable policies
and plans.
7. Resignation Following Constructive Discharge.
If at any time, except in connection with a termination
pursuant to Section 5, 6, or 8 Executive is Constructively
Discharged (as that term is defined in this Section 7) then
Executive shall have the right, by written notice to Employer
within sixty (60) days of such Constructive Discharge, to
terminate his services hereunder, effective as of thirty (30)
days after such notice. Executive shall in such event be
entitled to the compensation and benefits as if such employment
were terminated pursuant to Section 5 of this Agreement.
For purposes of this Agreement, the Executive shall be
"Constructively Discharged" upon the occurrence of any one of
the following events:
(a) Executive is removed from his position with
Employer other than as a result of Executive's appointment
to positions of equal or superior scope and responsibility;
or
(b) Executive's targeted total compensation is reduced
by more than 10% (other than across-the-board reductions
similarly affecting all officers of Sprint Corporation).
8. Effect of Change in Control.
In the event that within one year of a Change in Control (as
that term is defined in this Section 8) Executive's employment
is terminated:
(a) by the Employer other than pursuant to Section 6,
(b) by Executive pursuant to Section 7 hereof,
(c) by Executive if Executive is required to be based
anywhere other than his location at the time or the Kansas
City metropolitan area, except for required travel on
business to an extent substantially consistent with
Executive's business travel obligations immediately prior
the Change in Control;
then Executive shall be entitled to the Special Compensation
described in Section 5 and shall be bound by Section 11, but
shall not have any continuing obligations under Sections 12,
13, and 14, except as otherwise required by common law or
statute.
For purposes of this Agreement, a "Change in Control" shall
be deemed to have occurred if:
(i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")) other than a trustee or other fiduciary
holding securities under an employee benefit plan of Sprint
or any of its affiliates, and other than Sprint or a
corporation owned, directly or indirectly, by the
stockholders of Sprint in substantially the same
proportions as their ownership of stock of Sprint, is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of Sprint representing 20% or more of the
combined voting power of Sprint's then outstanding
securities, or
(ii) during any period of two consecutive years (not
including any period prior to the date of this Agreement),
incumbent members cease for any reason to constitute a
majority of the members of the Board of Directors of
Sprint;
provided, however, that a transaction among Employer, France
Telecom and Deutsche Bundespost Telekom commonly known as
Project Phoenix shall not constitute a Change in Control for
this Agreement and the related Restricted Stock Agreement. A
member of the Board of Directors of Sprint shall be an
"incumbent member" if such individual is as of the date of this
Agreement or at the beginning of the applicable two consecutive
year period a member of the Board of Directors of Sprint, and
any new director after the date of this Agreement (other than a
director designated by person who has entered into an agreement
to effect a transaction described in subparagraph (i) above)
whose election to the Board or nomination for election by the
stockholders of Sprint was approved by a vote of at least two-
thirds (2/3) of the directors still in office who either were
directors as of the date hereof or as of the first day of the
applicable two consecutive year period or whose election or
nomination for election was previously so approved.
9. Dispute Resolution.
All disputes arising under this Agreement, other than those
disputes relating to Executive's alleged violations of Sections
11 through 14 herein, shall be submitted to arbitration by the
American Arbitration Association of Kansas City, Missouri.
Costs of arbitration shall be borne equally by the parties. The
decision of the arbitrators shall be final and there shall be no
appeal from any award rendered. Any award rendered may be
entered as a judgment in any court of competent jurisdiction.
In any judicial enforcement proceeding, the losing party shall
reimburse the prevailing party for its reasonable costs and
attorneys' fees for enforcing its rights under this Agreement,
in addition to any damages or other relief granted. This
Section 9 does not apply to any action by Employer to enforce
Sections 11 through 14 of this Agreement and does not in any way
restrict Employer's rights under Section 15 herein.
10. Enforcement.
In the event Employer shall fail to pay any amounts due to
Executive under this Agreement as they come due, Employer agrees
to pay interest on such amounts at a rate of prime plus two
percent (2%) per annum. Employer agrees that Executive and any
successor shall be entitled to recover all costs of successfully
enforcing any provision of this Agreement, including reasonable
attorney fees and costs of litigation.
11. Confidential Information.
Executive acknowledges that during the course of his
employment he has learned or will learn or develop Confidential
Information (as that term is defined in this Section 11).
Executive further acknowledges that unauthorized disclosure or
use of such Confidential Information, other than in discharge of
Executive's duties, will cause Employer irreparable harm.
For purposes of this Section, Confidential Information means
trade secrets (such as technical and non-technical data, a
formula, pattern, compilation, program, device, method,
technique, drawing, process) and other proprietary information
concerning the products, processes or services of Employer or
its parent, and/or affiliates, including but not limited to:
computer programs; unpatented inventions, discoveries or
improvements; marketing, manufacturing, or organizational
research and development; business plans; sales forecasts;
personnel information, including the identity of other employees
of Employer, their responsibilities, competence, abilities, and
compensation; pricing and financial information; current and
prospective customer lists and information on customers or their
employees; information concerning planned or pending
acquisitions or divestitures; and information concerning
purchases of major equipment or property, which information: (a)
has not been made generally available to the public; and (b) is
useful or of value to the current or anticipated business, or
research or development activities of Employer or of any
customer or supplier of Employer, or (c) has been identified to
Employee as confidential by Employer, either orally or in
writing.
Except in the course of his employment and in the pursuit of
the business of Employer or any of its subsidiaries or
affiliates, Executive shall not, during the course of his
employment, or for a period of eighteen (18) months following
termination of his employment for any reason, directly or
indirectly, disclose, publish, communicate or use on his behalf
or another's behalf, any proprietary information or data of
Employer or any of its subsidiaries or affiliates.
Executive acknowledges that Employer operates and competes
nationally, and that Employer will be harmed by unauthorized
disclosure or use of Confidential Information regardless of
where such disclosure or use occurs, and that therefore this
confidentiality agreement is not limited to any single state or
other jurisdiction.
12. Non-Competition.
Executive acknowledges that use or disclosure of Confidential
Information described in Section 11 is likely if Executive were
to perform telecommunications functions relating to long distance
services on behalf of a competitor of Employer. Therefore,
Executive shall not, for eighteen (18) months following
termination of employment for any reason (the "Non-Compete
Period"), accept any position, including but not limited to a
position in the long distance operations of AT&T or MCI, where
Executive dedicates his time and efforts principally to managing,
controlling, participating in, investing in, acting as consultant
or advisor to, rendering services for, or otherwise assisting any
person or entity in the long distance business or the wireless
business and performing functions relating to long distance or
wireless services.
Executive acknowledges that Employer operates and competes
nationally, and that therefore this non-competition agreement is
not limited to any single state or other jurisdiction.
13. Inducement of Other Employees.
For a eighteen (18) month period following termination of
employment, Executive will not directly or indirectly solicit,
induce or encourage any employee or agent of Employer to
terminate his relationship with Employer.
14. Return of Employer's Property.
All notes, reports, sketches, plans, published memoranda or
other documents created, developed, generated or held by
Executive during employment, concerning or related to Employer's
business, and whether containing or relating to Confidential
Information or not, are the property of Employer and will be
promptly delivered to Employer upon termination of Executive's
employment for any reason whatsoever. During the course of
employment, Executive shall not remove any of the above property
containing Confidential Information, or reproductions or copies
thereof, or any apparatus from Employer's premises without
authorization.
15. Remedies.
Executive acknowledges that the restraints and agreements
herein provided are fair and reasonable, that enforcement of the
provisions of Sections 11, 12, 13 and 14 will not cause him undue
hardship and that said provisions are reasonably necessary and
commensurate with the need to protect Employer and its legitimate
and proprietary business interests and property from irreparable
harm.
Executive acknowledges that failure to comply with the terms
of this Agreement will cause irreparable damage to Employer.
Therefore, Executive agrees that, in addition to any other
remedies at law or in equity available to Employer for
Executive's breach or threatened breach of this Agreement,
Employer is entitled to specific performance or injunctive
relief, without bond, against Executive to prevent such damage
or breach, and the existence of any claim or cause of action
Executive may have against Employer will not constitute a
defense thereto. Executive further agrees to pay reasonable
attorney fees and costs of litigation incurred by Employer in
any proceeding relating to the enforcement of the Agreement or
to any alleged breach thereof in which Employer shall prevail in
whole or those reasonable fees and costs attributable to the
extent that Employer prevails in part.
In the event of a breach or a violation by Executive of any
of the covenants and provisions of this Agreement, the running
of the Non-Compete Period (but not of Executive's obligation
thereunder), shall be tolled during the period of the
continuance of any actual breach or violation.
16. Confidentiality of Agreement.
As a specific condition to Executive's right to Special
Compensation or other benefits described herein, Executive agrees
that he will not disclose or discuss: the existence of this
Agreement; the Special Compensation provided hereunder; or any
other terms of the Agreement except: (1) to members of his
immediate family; (2) to his financial advisor or attorney but
then only to the extent necessary for them to assist him; (3) to
a potential employer on a strictly confidential basis and then
only to the extent necessary for reasonable disclosure in the
course of serious negotiations; or (4) as required by law or to
enforce legal rights.
17. Entire Understanding.
This Agreement constitutes the entire understanding between
the parties relating to Executive's employment hereunder and
supersedes and cancels all prior written and oral understandings
and agreements with respect to such matters, except for the terms
and provisions of the Key Management Benefit Plan and any other
employee benefit or other compensation plans (or any agreements
or awards thereunder) referred to in or contemplated by this
Agreement and except for Executive's Contingency Employment
Agreement and the SPRINT UNITED EMPLOYEE AGREEMENT REGARDING
PROPERTY RIGHTS AND BUSINESS PRACTICES which the Executive has
signed and by which Executive continues to be bound.
18. Binding Effect.
This Agreement shall be binding upon and inure to the benefit
of Executive's executors, administrators, legal representatives,
heirs and legatees and the successors and assigns of Employer.
19. Partial Invalidity.
The various provisions of this Agreement are intended to be
severable and to constitute independent and distinct binding
obligations. Should any provision of this Agreement be
determined to be void and unenforceable, in whole or in part, it
shall not be deemed to affect or impair the validity of any
other provision or part thereof, and such provision or part
thereof shall be deemed modified to the extent required to
permit enforcement. Without limiting the generality of the
foregoing, if the scope of any provision contained in this
Agreement is too broad to permit enforcement to its full extent,
but may be made enforceable by limitations thereon, such
provision shall be enforced to the maximum extent permitted by
law, and Executive hereby agrees that such scope may be
judicially modified accordingly.
20. Strict Construction.
The language used in this Agreement will be deemed to be the
language chosen by Employer and Executive to express their
mutual intent and no rule of strict construction shall be
applied against any person.
21. Waiver.
The waiver of any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be
construed as a waiver of any subsequent breach.
22. Notices.
Any notice or other communication required or permitted to be
given hereunder shall be determined to have been duly given to
any party (a) upon delivery to the address of such party
specified below if delivered personally or by courier; (b) upon
dispatch if transmitted by telecopy or other means of facsimile,
provided a copy thereof is also sent by regular mail or courier;
or (c) within forty-eight (48) hours after deposit thereof in
the U.S. mail, postage prepaid, for delivery as certified mail,
return receipt requested, addressed, in any case to the party at
the following address(es) or telecopy numbers:
If to Executive:
J. Richard Devlin
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, KS 66205
If to Employer:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, KS 66205
Attention: Corporate Secretary
or to such other address(es) or telecopy number(s) as any party
may designate by Written Notice in the aforesaid manner.
23. Governing Law.
This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State
of Kansas.
24. Gender.
Wherever from the context it appears appropriate, each term
stated in either the singular of plural shall include the
singular and the plural, and the pronouns stated in either the
masculine, the feminine or the neuter gender shall include the
masculine, feminine or neuter.
25. Headings.
The headings of the Sections of this Agreement are for
reference purposes only and do not define or limit, and shall
not be used to interpret or construe the contents of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed on the date above set forth.
J. RICHARD DEVLIN SPRINT/UNITED MANAGEMENT COMPANY
/s/ J. RICHARD DEVLIN
By: /s/ B. WATSON
Authorized Officer
SPRINT CORPORATION
By: /s/ DON A. JENSEN
Authorized Officer
<PAGE>
AGREEMENT REGARDING SPECIAL COMPENSATION
AND POST EMPLOYMENT RESTRICTIVE COVENANTS
THIS AGREEMENT made this 12th day of July, 1994, by and among
SPRINT CORPORATION, a Kansas corporation ("Sprint"),
SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and
subsidiary of Sprint ("SUMC") (Sprint, SUMC and the subsidiaries
of Sprint are collectively referred to herein as "Employer"), and
JOHN R. HOFFMAN ("Executive").
W I T N E S S E T H:
WHEREAS, Employer and its parent and affiliates are engaged
in the telecommunications business;
WHEREAS, Executive has expertise, experience and capability
in the business of Employer and the telecommunications business
in general;
WHEREAS, SUMC provides services for Sprint, its subsidiaries
and affiliates, including providing all personnel to Sprint and
Sprint's Long Distance Division; and
WHEREAS, Employee is employed by SUMC to provide such
services to Sprint;
WHEREAS, Executive has been, and now is serving as Senior
Vice President - External Affairs of Sprint;
WHEREAS, Employer desires to enter into this Agreement to
provide severance and other benefits for Executive and obtain
Executive's agreements regarding confidentiality and post-
employment restrictive covenants for Employer; and
WHEREAS, Executive is willing to provide such agreements to
Employer.
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which consideration
are mutually acknowledged by the parties, it is hereby agreed as
follows:
1. Recitals.
The recitals hereinbefore set forth constitute an integral
part of this Agreement, evidencing the intent of the parties in
executing this Agreement, and describing the circumstances
surrounding its execution. Said recitals are by express
reference made a part of the covenants hereof, and this Agreement
shall be construed in light thereof.
2. Duties and Responsibilities.
The duties and responsibilities of Executive are and shall
continue to be of an executive nature as shall be required by
Employer in the conduct of its business. Executive's powers
and authority shall include all those presently delegated to him
or such other duties and responsibilities as from time to time
may be assigned to him. Executive recognizes, that during his
employment hereunder, he owes an undivided duty of loyalty to
Employer, and agrees to devote his entire business time and
attention to the performance of said duties and responsibilities
and to use his best efforts to promote and develop the business
of Employer.
3. Employment Term.
Executive's employment may be terminated by either party in
accordance with Sections 5, 6, 7, or 8 herein.
4. Compensation and Benefits.
During employment, Executive shall be entitled to receive a
base annual salary, shall be reimbursed for reasonable expenses
incurred and accounted for in accordance with the policies and
procedures of Employer, and shall be entitled to vacation pay
and other benefits applicable to employees generally, each as
may from time to time be established, amended or terminated. In
addition, upon execution of this Agreement, Executive (a) shall
be entitled to an option to purchase 15,000 shares of common
stock as set forth in a stock option agreement of even-date
herewith, attached hereto and incorporated herein (the "Stock
Option Agreement"), and (b) shall be entitled to the Special
Compensation set forth in Section 5 hereof in accordance with
the terms of this Agreement.
5. Termination by Employer: Special Compensation.
At any time, Employer may terminate Executive's employment
for any reason. If Executive's termination is other than
pursuant to Section 6, Executive shall, subject to the other
provisions of this Section 5, be entitled to the following
Special Compensation (as that term is defined in this Section 5)
in lieu of any benefits available under any and all Employer
separation plans or policies. If Executive's termination is
pursuant to Sections 5, 6 or 7, Executive's obligations under
Sections 11, 12, 13, and 14 hereof shall continue.
For purposes of this Agreement, "Special Compensation"
shall entitle Executive:
(a) to continue to receive for a period of eighteen
(18) months from the date of termination (the "Severance
Period") biweekly compensation at the rate equal to the
biweekly amount of his base annual salary in effect at the
date of termination of employment;
(b) to receive a bonus, based on actual performance
results, up to the target amount, under the Management
Incentive Plan ("MIP") throughout the Severance Period
provided that the amount, if any, payable under such Plan
for the award period including the last day of the
Severance Period shall be pro rated based upon the number
of months of the Severance Period that fall within the
award period and the total number of months in such award
period;
(c) to receive an award under the Long Term Incentive
Plan, pro rated based on the Executive's last day worked,
exclusive of any Severance Period, determined in accordance
with the terms of said Plan;
(d) to an acceleration of vesting of stock options in
accordance with the relevant provisions of the Stock Option
Agreement;
(e) to continue to receive throughout the Severance
Period any executive medical, dental, life, and qualified
or nonqualified retirement benefits which the Executive was
receiving or was entitled to receive at the time of
termination, except that long term disability and short
term disability benefits cease on the last day worked;
(f) to receive outplacement counseling by a firm
selected by Employer to continue until Executive becomes
employed; and
(g) to continue to receive throughout the Severance
Period all applicable executive perquisites (including
automobile allowance, long distance services and all
miscellaneous services) except country club membership dues
and accrual of vacation.
Employer shall pay or cause to be paid the amounts payable
under paragraph (a) above in equal installments, bi-weekly in
arrears, and the amount payable under paragraphs (b) and (c) in
accordance with the terms of the Plans. All payments pursuant
to this Section shall be subject to applicable federal and state
income and other withholding taxes.
In addition to the Special Compensation described above,
Executive shall also be entitled to any vacation pay for
vacation accrued by Executive in the calendar year of
termination but not taken at the time of termination.
In the event Executive becomes employed full time during the
Severance Period, Executive's entitlement to continuation of
the benefits described in paragraph (e) shall immediately cease,
however, Executive shall retain any rights to continue medical
insurance coverage under the COBRA continuation provisions of
the group medical insurance plan by paying the applicable
premium therefor.
The payments and benefits provided for in this Section shall
be in addition to all other sums then payable and owing to
Executive hereunder and, except as expressly provided herein,
shall not be subject to reduction for any amounts received by
Executive for employment or services provided after termination
of employment hereunder, and shall be in full settlement and
satisfaction of all of Executive's claims and demands.
In all events, Executive's right to receive severance and/or
other benefits pursuant to this Section shall cease immediately
in the event Executive is re-employed by Employer or an
affiliate or Executive breaches his Confidential Information
Covenant (as defined in Section 11 hereof), or breaches Sections
12, 13 or 14 hereof. In all cases, Employer's rights under
Section 15 shall continue.
6. Voluntary Resignation by Executive; Termination
for Cause: Total Disability.
Upon termination of Executive's employment by either
Voluntary Resignation, Termination for Cause (as those terms are
defined in this Section 6), or Total Disability, as that term is
defined in the Long Term Disability Plan, Executive shall have
no right to compensation, severance pay or other benefits
described herein but Executive's obligations under Sections 11,
12, 13 and 14 hereof shall continue.
(a) Voluntary Resignation by Executive. At any
time, Executive has the right, by written notice to
Employer, to terminate his services hereunder ("Voluntary
Resignation"), effective as of thirty (30) days after such
notice.
(b) Termination for Cause by Employer. At any
time, Employer has the right to terminate Executive's
employment. Termination upon the occurrence of any of the
following shall be deemed termination for cause
("Termination for Cause"):
(i) Conduct by the Executive which reflects adversely
on the Executive's honesty, trustworthiness or fitness
as an Executive, or
(ii) Executive's willful engagement in conduct which
is demonstrably and materially injurious to the
Employer.
For Termination for Cause, written notice of the
termination of Executive's employment by Employer shall be
served upon Executive and shall be effective as of the date
of such service. Such notice given by Employer shall
specify the act or acts of Executive underlying such
termination.
(c) Total Disability. Upon the total disability of
the Executive, as that term is defined in the Long Term
Disability Plan, Executive shall have no right to
compensation or severance pay described herein but shall
be entitled to long term disability and other such
benefits afforded under the applicable policies and plans.
7. Resignation Following Constructive Discharge.
If at any time, except in connection with a termination
pursuant to Section 5, 6, or 8 Executive is Constructively
Discharged (as that term is defined in this Section 7) then
Executive shall have the right, by written notice to Employer
within sixty (60) days of such Constructive Discharge, to
terminate his services hereunder, effective as of thirty (30)
days after such notice. Executive shall in such event be
entitled to the compensation and benefits as if such employment
were terminated pursuant to Section 5 of this Agreement.
For purposes of this Agreement, the Executive shall be
"Constructively Discharged" upon the occurrence of any one of
the following events:
(a) Executive is removed from his position with
Employer other than as a result of Executive's appointment
to positions of equal or superior scope and responsibility;
or
(b) Executive's targeted total compensation is reduced
by more than 10% (other than across-the-board reductions
similarly affecting all officers of Sprint Corporation).
8. Effect of Change in Control.
In the event that within one year of a Change in Control (as
that term is defined in this Section 8) Executive's employment
is terminated:
(a) by the Employer other than pursuant to Section 6,
(b) by Executive pursuant to Section 7 hereof,
(c) by Executive if Executive is required to be based
anywhere other than his location at the time or the Kansas
City metropolitan area, except for required travel on
business to an extent substantially consistent with
Executive's business travel obligations immediately prior
the Change in Control;
then Executive shall be entitled to the Special Compensation
described in Section 5 and shall be bound by Section 11, but
shall not have any continuing obligations under Sections 12,
13, and 14, except as otherwise required by common law or
statute.
For purposes of this Agreement, a "Change in Control" shall
be deemed to have occurred if:
(i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")) other than a trustee or other fiduciary
holding securities under an employee benefit plan of Sprint
or any of its affiliates, and other than Sprint or a
corporation owned, directly or indirectly, by the
stockholders of Sprint in substantially the same
proportions as their ownership of stock of Sprint, is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of Sprint representing 20% or more of the
combined voting power of Sprint's then outstanding
securities, or
(ii) during any period of two consecutive years (not
including any period prior to the date of this Agreement),
incumbent members cease for any reason to constitute a
majority of the members of the Board of Directors of
Sprint;
provided, however, that a transaction among Employer, France
Telecom and Deutsche Bundespost Telekom commonly known as
Project Phoenix shall not constitute a Change in Control for
this Agreement and the related Stock Option Agreement. A member
of the Board of Directors of Sprint shall be an "incumbent
member" if such individual is as of the date of this Agreement
or at the beginning of the applicable two consecutive year
period a member of the Board of Directors of Sprint, and any new
director after the date of this Agreement (other than a director
designated by person who has entered into an agreement to effect
a transaction described in subparagraph (i) above) whose
election to the Board or nomination for election by the
stockholders of Sprint was approved by a vote of at least two-
thirds (2/3) of the directors still in office who either were
directors as of the date hereof or as of the first day of the
applicable two consecutive year period or whose election or
nomination for election was previously so approved.
9. Dispute Resolution.
All disputes arising under this Agreement, other than those
disputes relating to Executive's alleged violations of Sections
11 through 14 herein, shall be submitted to arbitration by the
American Arbitration Association of Kansas City, Missouri.
Costs of arbitration shall be borne equally by the parties. The
decision of the arbitrators shall be final and there shall be no
appeal from any award rendered. Any award rendered may be
entered as a judgment in any court of competent jurisdiction.
In any judicial enforcement proceeding, the losing party shall
reimburse the prevailing party for its reasonable costs and
attorneys' fees for enforcing its rights under this Agreement,
in addition to any damages or other relief granted. This
Section 9 does not apply to any action by Employer to enforce
Sections 11 through 14 of this Agreement and does not in any way
restrict Employer's rights under Section 15 herein.
10. Enforcement.
In the event Employer shall fail to pay any amounts due to
Executive under this Agreement as they come due, Employer agrees
to pay interest on such amounts at a rate of prime plus two
percent (2%) per annum. Employer agrees that Executive and any
successor shall be entitled to recover all costs of successfully
enforcing any provision of this Agreement, including reasonable
attorney fees and costs of litigation.
11. Confidential Information.
Executive acknowledges that during the course of his
employment he has learned or will learn or develop Confidential
Information (as that term is defined in this Section 11).
Executive further acknowledges that unauthorized disclosure or
use of such Confidential Information, other than in discharge of
Executive's duties, will cause Employer irreparable harm.
For purposes of this Section, Confidential Information means
trade secrets (such as technical and non-technical data, a
formula, pattern, compilation, program, device, method,
technique, drawing, process) and other proprietary information
concerning the products, processes or services of Employer or
its parent, and/or affiliates, including but not limited to:
computer programs; unpatented inventions, discoveries or
improvements; marketing, manufacturing, or organizational
research and development; business plans; sales forecasts;
personnel information, including the identity of other employees
of Employer, their responsibilities, competence, abilities, and
compensation; pricing and financial information; current and
prospective customer lists and information on customers or their
employees; information concerning planned or pending
acquisitions or divestitures; and information concerning
purchases of major equipment or property, which information: (a)
has not been made generally available to the public; and (b) is
useful or of value to the current or anticipated business, or
research or development activities of Employer or of any
customer or supplier of Employer, or (c) has been identified to
Employee as confidential by Employer, either orally or in
writing.
Except in the course of his employment and in the pursuit of
the business of Employer or any of its subsidiaries or
affiliates, Executive shall not, during the course of his
employment, or for a period of eighteen (18) months following
termination of his employment for any reason, directly or
indirectly, disclose, publish, communicate or use on his behalf
or another's behalf, any proprietary information or data of
Employer or any of its subsidiaries or affiliates.
Executive acknowledges that Employer operates and competes
nationally, and that Employer will be harmed by unauthorized
disclosure or use of Confidential Information regardless of
where such disclosure or use occurs, and that therefore this
confidentiality agreement is not limited to any single state or
other jurisdiction.
12. Non-Competition.
Executive acknowledges that use or disclosure of Confidential
Information described in Section 11 is likely if Executive were
to perform telecommunications functions relating to long distance
services on behalf of a competitor of Employer. Therefore,
Executive shall not, for eighteen (18) months following
termination of employment for any reason (the "Non-Compete
Period"), accept any position, including but not limited to a
position in the long distance operations of AT&T or MCI, where
Executive dedicates his time and efforts principally to managing,
controlling, participating in, investing in, acting as consultant
or advisor to, rendering services for, or otherwise assisting any
person or entity in the long distance business or the wireless
business and performing functions relating to long distance or
wireless services.
Executive acknowledges that Employer operates and competes
nationally, and that therefore this non-competition agreement is
not limited to any single state or other jurisdiction.
This section shall not prevent Executive from using general
skills and experience developed during employment with Employer
or other employers; or from accepting a position of employment
with another company, firm, or other organization which competes
with Employer, if its business is diversified and Executive is
employed in a part of the business that is not related to long
distance or wireless services and provided that such position
does not require or permit the disclosure or use of Confidential
Information.
13. Inducement of Other Employees.
For a eighteen (18) month period following termination of
employment, Executive will not directly or indirectly solicit,
induce or encourage any employee or agent of Employer to
terminate his relationship with Employer.
14. Return of Employer's Property.
All notes, reports, sketches, plans, published memoranda or other
documents created, developed, generated or held by Executive during
employment, concerning or related to Employer's business, and
whether containing or relating to Confidential Information or not,
are the property of Employer and will be promptly delivered to
Employer upon termination of Executive's employment for any reason
whatsoever. During the course of employment, Executive shall not
remove any of the above property containing Confidential
Information, or reproductions or copies thereof, or any apparatus
from Employer's premises without authorization.
15. Remedies.
Executive acknowledges that the restraints and agreements
herein provided are fair and reasonable, that enforcement of the
provisions of Sections 11, 12, 13 and 14 will not cause him undue
hardship and that said provisions are reasonably necessary and
commensurate with the need to protect Employer and its legitimate
and proprietary business interests and property from irreparable
harm.
Executive acknowledges that failure to comply with the terms
of this Agreement will cause irreparable damage to Employer.
Therefore, Executive agrees that, in addition to any other
remedies at law or in equity available to Employer for
Executive's breach or threatened breach of this Agreement,
Employer is entitled to specific performance or injunctive
relief, without bond, against Executive to prevent such damage
or breach, and the existence of any claim or cause of action
Executive may have against Employer will not constitute a
defense thereto. Executive further agrees to pay reasonable
attorney fees and costs of litigation incurred by Employer in
any proceeding relating to the enforcement of the Agreement or
to any alleged breach thereof in which Employer shall prevail in
whole or in part.
In the event of a breach or a violation by Executive of any
of the covenants and provisions of this Agreement, the running
of the Non-Compete Period (but not of Executive's obligation
thereunder), shall be tolled during the period of the
continuance of any actual breach or violation.
16. Confidentiality of Agreement.
As a specific condition to Executive's right to Special
Compensation or other benefits described herein, Executive agrees
that he will not disclose or discuss: the existence of this
Agreement; the Special Compensation provided hereunder; or any
other terms of the Agreement except: (1) to members of his
immediate family; (2) to his financial advisor or attorney but
then only to the extent necessary for them to assist him; or (3)
as required by law or to enforce legal rights.
17. Entire Understanding.
This Agreement constitutes the entire understanding between
the parties relating to Executive's employment hereunder and
supersedes and cancels all prior written and oral understandings
and agreements with respect to such matters, except for the terms
and provisions of the Key Management Benefit Plan and any other
employee benefit or other compensation plans (or any agreements
or awards thereunder) referred to in or contemplated by this
Agreement and except for the SPRINT UNITED EMPLOYEE AGREEMENT
REGARDING PROPERTY RIGHTS AND BUSINESS PRACTICES which the
Executive has signed and by which Executive continues to be
bound.
18. Binding Effect.
This Agreement shall be binding upon and inure to the benefit
of Executive's executors, administrators, legal representatives,
heirs and legatees and the successors and assigns of Employer.
19. Partial Invalidity.
The various provisions of this Agreement are intended to be
severable and to constitute independent and distinct binding
obligations. Should any provision of this Agreement be
determined to be void and unenforceable, in whole or in part, it
shall not be deemed to affect or impair the validity of any
other provision or part thereof, and such provision or part
thereof shall be deemed modified to the extent required to
permit enforcement. Without limiting the generality of the
foregoing, if the scope of any provision contained in this
Agreement is too broad to permit enforcement to its full extent,
but may be made enforceable by limitations thereon, such
provision shall be enforced to the maximum extent permitted by
law, and Executive hereby agrees that such scope may be
judicially modified accordingly.
20. Strict Construction.
The language used in this Agreement will be deemed to be the
language chosen by Employer and Executive to express their
mutual intent and no rule of strict construction shall be
applied against any person.
21. Waiver.
The waiver of any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be
construed as a waiver of any subsequent breach.
22. Notices.
Any notice or other communication required or permitted to be
given hereunder shall be determined to have been duly given to
any party (a) upon delivery to the address of such party
specified below if delivered personally or by courier; (b) upon
dispatch if transmitted by telecopy or other means of facsimile,
provided a copy thereof is also sent by regular mail or courier;
or (c) within forty-eight (48) hours after deposit thereof in
the U.S. mail, postage prepaid, for delivery as certified mail,
return receipt requested, addressed, in any case to the party at
the following address(es) or telecopy numbers:
If to Executive:
John R. Hoffman
Sprint Corporation
8140 Ward Parkway
Kansas City, MO 64114
If to Employer:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, KS 66205
Attention: Corporate Secretary
or to such other address(es) or telecopy number(s) as any party
may designate by Written Notice in the aforesaid manner.
23. Governing Law.
This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State
of Kansas.
24. Gender.
Wherever from the context it appears appropriate, each term
stated in either the singular of plural shall include the
singular and the plural, and the pronouns stated in either the
masculine, the feminine or the neuter gender shall include the
masculine, feminine or neuter.
25. Headings.
The headings of the Sections of this Agreement are for
reference purposes only and do not define or limit, and shall
not be used to interpret or construe the contents of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed on the date above set forth.
JOHN R. HOFFMAN SPRINT/UNITED MANAGEMENT COMPANY
/s/ JOHN R. HOFFMAN
By: /s/ I. BENJAMIN WATSON
Authorized Officer
SPRINT CORPORATION
By: /s/ DON A. JENSEN
Authorized Officer
<PAGE>
Exhibit 10(e)
DESCRIPTION OF AGREEMENT REGARDING SUPPLEMENTAL
PENSION BENEFITS BETWEEN SPRINT CORPORATION AND
D. WAYNE PETERSON, PRESIDENT - LOCAL
TELECOMMUNICATIONS DIVISION
The agreement provides that if Mr. Peterson's
employment should be discontinued, through no fault of Mr.
Peterson's, after August 1, 1996, at which time he will be
60 years of age, he will not incur any early retirement
pension reduction penalty.
EXHIBIT (11)
SPRINT CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (UNAUDITED)
(In Millions, Except Per Share Data)
Three Months Nine Months
Ended Ended
September 30, September 30,
1994 1993 1994 1993
PRIMARY EARNINGS PER SHARE
Income from continuing
operations $ 230.1 $136.7 $ 677.1 $ 290.5
Preferred stock dividends (0.6) (0.6) (2.0) (2.1)
229.5 136.1 675.1 288.4
Discontinued operations, net -- -- -- (12.3)
Extraordinary losses on early
extinguishments of debt, net -- (14.5) -- (28.2)
Cumulative effect of changes in
accounting principles, net -- -- -- (384.2)
Earnings (loss) applicable to
common stock $ 229.5 $121.6 $ 675.1 $(136.3)
Weighted average number of
common shares (1) 349.4 344.6 348.0 343.1
Primary earnings (loss) per
share
Continuing operations $ 0.66 $ 0.39 $ 1.94 $ 0.84
Discontinued operations -- -- -- (0.04)
Extraordinary item -- (0.04) -- (0.08)
Cumulative effect of changes in
accounting principles -- -- -- (1.12)
Total $ 0.66 $ 0.35 $ 1.94 $ (0.40)
FULLY DILUTED EARNINGS PER
SHARE
Income from continuing
operations, net of preferred
stock dividends $ 229.5 $136.1 $ 675.1 $ 288.4
Convertible preferred stock
dividends 0.1 0.2 0.4 0.5
229.6 136.3 675.5 288.9
Discontinued operations, net -- -- -- (12.3)
Extraordinary losses on early
extinguishments of debt, net -- (14.5) -- (28.2)
Cumulative effect of changes in
accounting principles, net -- -- -- (384.2)
Earnings (loss) as adjusted for
purposes of computing fully
diluted earnings per share $ 229.6 $121.8 $ 675.5 $(135.8)
Weighted average number of
common shares 349.4 344.6 348.0 343.1
Additional dilution for common
stock equivalents and dilutive
securities (2) 1.3 1.9 1.4 2.5
Total 350.7 346.5 349.4 345.6
Fully diluted earnings (loss)
per share
Continuing operations $ 0.65 $ 0.39 $ 1.93 $ 0.84
Discontinued operations -- -- -- (0.04)
Extraordinary item -- (0.04) -- (0.08)
Cumulative effect of changes in
accounting principles -- -- -- (1.12)
Total $ 0.65 $ 0.35 $ 1.93 $ (0.39)
(1) Weighted average number of common shares have been
adjusted for dilutive common stock equivalents using the
treasury stock method.
(2) During 1993, the additional dilution for common stock
equivalents and dilutive securities is not included in the
computation of fully diluted earnings (loss) per share from
discontinued operations, extraordinary item, cumulative effect
of changes in accounting principles and net loss because the
impact is anti-dilutive. Accordingly, the sum of the fully
diluted earnings per share amounts may not equal the total.
EXHIBIT (12)
SPRINT CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
(Dollars in Millions)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
Earnings
Income from continuing
operations $ 230.1 $ 136.7 $ 677.1 $290.5
Capitalized interest (2.5) (1.1) (5.3) (6.1)
Income tax provision 132.3 96.4 389.2 190.1
Subtotal 359.9 232.0 1,061.0 474.5
Fixed charges
Interest charges 101.1 115.3 305.0 351.2
Interest factor of operating
rents 29.2 31.1 85.1 90.1
Pre-tax cost of preferred stock
dividends of subsidiaries 0.2 0.7 0.7 1.3
Total fixed charges 130.5 147.1 390.8 442.6
Earnings, as adjusted $ 490.4 $ 379.1 $1,451.8 $917.1
Ratio of earnings to fixed
charges 3.76 2.58(1) 3.71 2.07(1)
(1) Earnings as computed for the ratio of earnings to fixed
charges includes the nonrecurring merger, integration and
restructuring costs of $44.5 million and $292.5 million
recorded during the third quarter and first nine months of
1993. In the absence of the nonrecurring costs, the ratios of
earnings to fixed charges would have been 2.88 and 2.73 for
the third quarter and first nine months of 1993, respectively.
Note: The above ratios have been computed by dividing fixed
charges into the sum of (a) income from continuing
operations less capitalized interest included in income, (b)
income taxes, and (c) fixed charges. Fixed charges consist
of interest on all indebtedness (including amortization of
debt issuance expenses), the interest factor of operating
rents and the pre-tax cost of preferred stock dividends of
subsidiaries.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 92,600
<SECURITIES> 0
<RECEIVABLES> 1,573,000
<ALLOWANCES> 137,500
<INVENTORY> 201,000
<CURRENT-ASSETS> 2,084,900
<PP&E> 18,689,200
<DEPRECIATION> 8,118,500
<TOTAL-ASSETS> 14,477,000
<CURRENT-LIABILITIES> 2,816,800
<BONDS> 4,580,000
<COMMON> 871,300
37,200
0
<OTHER-SE> 3,535,100
<TOTAL-LIABILITY-AND-EQUITY> 14,477,000
<SALES> 0
<TOTAL-REVENUES> 9,417,400
<CGS> 0
<TOTAL-COSTS> 5,803,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 299,700
<INCOME-PRETAX> 1,066,300
<INCOME-TAX> 389,200
<INCOME-CONTINUING> 677,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 677,100
<EPS-PRIMARY> 1.94
<EPS-DILUTED> 1.93
</TABLE>
