<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
AMERICA ONLINE, INC.
(Name of Issuer)
Common Stock (par value $0.01 per share)
(Title of Class of Securities)
00002364J1
(CUSIP Number)
Don A. Jensen, Vice President and Secretary
Sprint Corporation
P.O. Box 11315
Kansas City, Missouri 64112
(913) 624-3326
(Name, Address, and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 31, 1995
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this Schedule 13D and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the
statement [ ].
<TABLE>
<CAPTION>
SCHEDULE 13D
CUSIP NO. 00002364J1
<S> <C> <C> <C>
1) Names of Reporting Persons Sprint
Communications
S.S. or I.R.S. Identification Company L.P.
Nos. of Above Persons 43-1408007
2) Check the Appropriate Box if (a) [ ]
a Member of a Group (b) [X]
3) SEC Use Only
4) Source of Funds OO
5) Check Box if Disclosure of [ ]
Legal Proceedings is Required
Pursuant to Items 2(d) and 2(e)
6) Citizenship or Place of Delaware
Organization
<CAPTION>
Number of shares beneficially
owned by each person with:
<S> <C> <C>
7) Sole Voting Power
8) Shared Voting Power 900,000
9) Sole Dispositive Power
10) Shared Dispositive Power 900,000
11) Aggregate Amount Beneficially
Owned by Each Reporting Person 900,000
12) Check Box if the Aggregate
Amount in Row (11) Excluded [ ]
Certain Shares
13) Percent of Class Represented 5.1%
in Row (11)
14) Type of Reporting Person PN
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE 13D
CUSIP NO. 00002364J1
<S> <C> <C> <C>
1) Names of Reporting Persons Sprint Corporation
S.S. or I.R.S. Identification 48-0457967
Nos. of Above Persons
2) Check the Appropriate Box if (a) [ ]
a Member of a Group (b) [X]
3) SEC Use Only
4) Source of Funds OO
5) Check Box if Disclosure of [ ]
Legal Proceedings is Required
Pursuant to Items 2(d) and 2(e)
6) Citizenship or Place of Kansas
Organization
<CAPTION>
Number of shares beneficially
owned by each person with:
<S> <C> <C>
7) Sole Voting Power
8) Shared Voting Power 900,000
9) Sole Dispositive Power
10) Shared Dispositive Power 900,000
11) Aggregate Amount Beneficially
Owned by Each Reporting Person 900,000
12) Check Box if the Aggregate
Amount in Row (11) Excluded [ ]
Certain Shares
13) Percent of Class Represented 5.1%
in Row (11)
14) Type of Reporting Person HC CO
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE 13D
CUSIP NO. 00002364J1
<S> <C> <C> <C>
1) Names of Reporting Persons US Telecom, Inc.
S.S. or I.R.S. Identification 48-0934012
Nos. of Above Persons
2) Check the Appropriate Box if (a) [ ]
a Member of a Group (b) [X]
3) SEC Use Only
4) Source of Funds OO
5) Check Box if Disclosure of [ ]
Legal Proceedings is Required
Pursuant to Items 2(d) and 2(e)
6) Citizenship or Place of Kansas
Organization
<CAPTION>
Number of shares beneficially
owned by each person with:
<S> <C> <C>
7) Sole Voting Power
8) Shared Voting Power 900,000
9) Sole Dispositive Power
10) Shared Dispositive Power 900,000
11) Aggregate Amount Beneficially
Owned by Each Reporting Person 900,000
12) Check Box if the Aggregate
Amount in Row (11) Excluded [ ]
Certain Shares
13) Percent of Class Represented 5.1%
in Row (11)
14) Type of Reporting Person HC CO
</TABLE>
This Amendment No. 2 (the "Amendment") amends the
Statement on Schedule 13D dated May 14, 1993 (the "Original
13D"), as amended March 21, 1995 ("Amendment No. 1") (the
Original 13D and Amendment No. 1 are collectively referred
to herein as the "13D"), filed by Sprint Communications
Company L.P. ("Sprint L.P."), US Telecom, Inc. ("US
Telecom") and Sprint Corporation ("Sprint") with respect to
the Common Stock of America Online, Inc. Certain
capitalized terms used herein and not defined in this
Amendment have the meanings ascribed to them in the 13D and
the Confirmation (as hereinafter defined).
Each of Sprint L.P., US Telecom and Sprint has executed
a Joint Filing Agreement consenting to the joint filing by
them of this Amendment. Such Joint Filing Agreement is
filed as Exhibit A to this Amendment and is incorporated
herein by reference.
Item 4. Purpose of Transaction.
Sprint L.P. entered into the Master Agreement, the
Schedule and the Confirmation (each as defined in Item 6
hereof) with Morgan Guaranty Trust Company of New York
("Bank"), the purpose of which is to hedge certain
investment risks associated with Sprint L.P.'s rights under
the Warrant. Pursuant to the terms of the Confirmation,
Sprint L.P. entered into a matched set of put and call hedge
transactions (the "Transactions"), to be settled in cash,
based on the price performance of the Common Stock. The
Transactions do not obligate Sprint L.P. or the Bank to
purchase or sell Common Stock.
Sprint L.P. continuously reevaluates its intentions
with respect to its beneficial interest in the Common
Stock and may exercise the Warrant at any time. Sprint
L.P. may retain or dispose of some or all of any shares of
Common Stock that it acquires (either pursuant to the
Warrant or otherwise). Sprint L.P.'s decision on whether
or not to exercise the Warrant, or retain or dispose of
the Common Stock, will depend on a variety of factors,
including, without limitation, the market price of the
Common Stock, other potential investment opportunities or
uses for Sprint L.P.'s cash and other business
considerations.
Apart from the above, the Filers have no current
plans or proposals which relate to or would result in any
actions enumerated in the text of Item 4.
Item 6. Contracts, Arrangements, Understandings, or
Relationships with respect to Securities of the Issuer.
On March 30, 1995, Sprint L.P. and the Bank entered
into a Master Agreement based upon the International Swap
Dealers Association, Inc. (Multicurrency-Cross Border) form
(the "Master Agreement") and a schedule to the Master
Agreement. On March 31, 1995, Sprint L.P. and the Bank
executed a letter agreement constituting a confirmation to
the Master Agreement (the "Confirmation"). The descriptions
of the Transactions and the documents executed in connection
therewith are qualified in their entirety by reference to
Exhibit B (attached hereto and incorporated herein), which
contains the text of the Confirmation. Provided below is a
summary of the terms of the Confirmation:
1. If the average Closing Price for the
Common Stock during the 15 days immediately prior to
the Expiration Date of the Confirmation is less than
$66.825 (defined in the Confirmation as the "Put Strike
Price") (as may be adjusted in accordance with Section
4(a) of the Confirmation), the Confirmation requires
the Bank to make a payment to Sprint L.P. equal to (a)
900,000 multiplied by (b) the Put Strike Price
Differential.
2. If the average Closing Price for the
Common Stock during the 15 days immediately prior to
the Expiration Date of the Confirmation is greater than
$115.09 (defined as the "Call Strike Price" in the
Confirmation) (as may be adjusted pursuant to Section
4(a) of the Confirmation), the Confimation requires
Sprint L.P. to make a payment to the Bank equal to (a)
900,000 multiplied by (b) the Call Strike Price
Differential.
If the average Closing Price for the Common Stock
during the 15 days immediately prior to the Expiration Date
of the Confirmation is between $66.825 and $115.09,
inclusive, neither Sprint L.P. nor the Bank would be
required to make a payment to the other party.
Item 7. Material to be Filed as Exhibits.
A. Joint Filing Agreement among the Filers
B. Confirmation to the Master Agreement between Sprint
L.P. and Morgan Guaranty Trust Company of New York
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Date: April 5, 1995
/s/ Michael T. Hyde
Michael T. Hyde
Secretary
Sprint Communications Company
L.P.
Date: April 5, 1995
/s/ Michael T. Hyde
Michael T. Hyde
Assistant Secretary
Sprint Corporation
Date: April 5, 1995
/s/ Michael T. Hyde
Michael T. Hyde
Assistant Secretary
US Telecom, Inc.
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Document Page
<S> <C> <C>
A. Joint Filing Agreement among the Filers 9
B. Confirmation to the Master Agreement
between Sprint L.P. and Morgan
Guaranty Trust Company of New York 10
</TABLE>
<PAGE>
EXHIBIT A
JOINT FILING AGREEMENT
DATED APRIL 5, 1995,
AMONG SPRINT CORPORATION,
US TELECOM, INC., AND
SPRINT COMMUNICATIONS COMPANY L.P.
JOINT FILING AGREEMENT
The undersigned (each, a "Filer" and collectively, the
"Filers") for purposes of filing an amendment to a statement
on Schedule 13D pursuant to Securities and Exchange
Commission Rule 13d-1(f)(i) each hereby agree:
(a) each Filer is individually responsible for the
timely filing of any further amendments to the Schedule 13D,
and for the completeness and accuracy of the information
concerning themselves, but is not responsible for the
completeness and accuracy of any of the information
contained in the Schedule 13D as to any other Filer, unless
such Filer knows or has reason to believe that the
information is inaccurate;
(b) this Schedule 13D contains the required information
with regard to each Filer and indicates that it is filed on
behalf of all Filers;
(c) each Filer agrees that the Schedule 13D, as
amended, to which this Joint Filing Agreement is attached as
Exhibit A is filed on its behalf; and
(d) this Joint Filing Agreement may be executed in
counterparts.
Dated: April 5, 1995
SPRINT CORPORATION
By: /s/ Michael T. Hyde
Michael T. Hyde
Assistant Secretary
US TELECOM, INC.
By: /s/ Michael T. Hyde
Michael T. Hyde
Assistant Secretary
SPRINT COMMUNICATIONS COMPANY
L.P.
By: /s/ Michael T. Hyde
Michael T. Hyde
Secretary
<PAGE>
EXHIBIT B
Confirmation to
the Master Agreement
between
Sprint Communications Company L.P.
and Morgan Guaranty Trust Company of New York
March 31, 1995
Sprint Communications Company L.P.
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Attention: Manager - Financial Risk Management
Re: Equity Option Transaction
The purpose of this letter is to confirm the terms and
conditions of the Equity Option Transaction (the
"Transaction") entered into between us on March 31, 1995
(the "Trade Date"). This Transaction shall become effective
on the Effective Date.
This letter constitutes a "Confirmation" as referred to in
the Master Agreement entered into between the parties and
dated as of March 30, 1995 (the "Agreement") and
incorporates by reference the 1991 ISDA Definitions (as
published by the International Swap Dealers Association,
Inc.) (the "1991 Definitions").
This Confirmation supplements, forms a part of, and is
subject to, the Agreement. All provisions set forth in the
1991 Definitions or contained or incorporated by reference
in the Agreement shall govern this Confirmation except as
expressly modified below. It is our intention to have this
Confirmation serve as the final documentation for this trade
and, accordingly, no later Confirmation will follow.
The terms of the Transaction to which this Confirmation
relates are as follows:
1. Parties
The parties are:
(1) MORGAN GUARANTY TRUST COMPANY OF NEW YORK
("Morgan").
Office through which this Transaction is booked and
address for notices:
Morgan Guaranty Trust Company of New York
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
Attention: MGT Swap Operations
Telex: 8954804
Answerback: MGTLD G
Telecopy No.: (071) 325-8210
Telephone No.: (071) 325-3227
Account for
Payments: [To be advised.]
(2) SPRINT COMMUNICATIONS COMPANY L.P.
(the "Counterparty")
Office through which this Transaction is booked and
address for notices:
Sprint Communications Company L.P.
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Attention: Manager - Financial Risk Management
Telecopy No.: (913) 624-3088
Telephone No.: (913) 624-3105
Account for
Payments: [To be advised.]
2. Payments
(a) Counterparty Payment Amounts. If on the final
Trading Day in the Valuation Period, the Final Equity Value
of the Underlying Security is greater than the Call Strike
Price, the Counterparty shall pay in U.S. Dollars to Morgan,
the Call Cash Settlement Amount, if any, on the Cash
Settlement Payment Date. Where:
(i) "Call Strike Price" means $115.09 (as may be
adjusted in accordance with Section 4(a) hereof);
(ii) "Number of Options" means 900,000 (as may be
adjusted in accordance with Section 4(a) hereof);
(iii) "Call Strike Price Differential" means an amount
equal to the greater of (A) the excess remaining after
subtracting the Call Strike Price from the Final Equity
Value of the Underlying Security and (B) zero; and
(iv) "Call Cash Settlement Amount" means an amount, as
calculated by the Calculation Agent, equal to the Number
of Options multiplied by the Call Strike Price
Differential.
(b) Morgan Payment Amounts. If on the final Trading Day
in the Valuation Period, the Final Equity Value of the
Underlying Security is less than the Put Strike Price,
Morgan shall pay in U.S. Dollars to the Counterparty, the
Put Cash Settlement Amount, if any, on the Cash Settlement
Payment Date. Where:
(i) "Put Strike Price" means $66.825 (as may be
adjusted in accordance with Section 4(a) hereof);
(ii) "Number of Options" means 900,000 (as may be
adjusted in accordance with Section 4(a) hereof);
(iii) "Put Strike Price Differential" means an amount
equal to the greater of (A) the excess remaining after
subtracting the Final Equity Value of the Underlying
Security from the Put Strike Price and (B) zero; and
(iv) "Put Cash Settlement Amount" means an amount, as
calculated by the Calculation Agent, equal to the Number
of Options multiplied by the Put Strike Price
Differential.
3. Definitions
"Option Style" means European.
"Business Day" means any day, other than a Saturday
or Sunday, on which commercial banks are open for
business in the City of New York.
"Calculation Agent" means Morgan, the determinations
and calculations of which shall be binding in the
absence of manifest error.
"Cash Settlement Payment Date" means that day which
is the Business Day immediately following the final
Trading Day in the Valuation Period.
"Closing Price" on any date of determination for any
security means the closing sale price (or if no closing
price is reported, the last reported sale price) on the
New York Stock Exchange ("NYSE") on such date or, if the
security is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for
the principal United States securities exchange on which
the security is so listed, or if the security is not so
listed on a United States national or regional
securities exchange, as reported by the National
Association of Securities Dealers, Inc. Automated
Quotation System, or if such security is not so
reported, the last quoted bid price for the security in
the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or if such bid
price is not available, the market value of the security
as determined by a nationally recognized independent
investment banking firm retained for this purpose by the
Calculation Agent.
"Effective Date" means March 31, 1995.
"Expiration Date" means April 30, 1999. In the
event that any of the 15 Business Days immediately prior
to April 30, 1999 is not a Trading Day (a "Non-Trading
Day"), the Expiration Date will be extended one Trading
Day for each Non-Trading Day; provided, however, the
Expiration Date will not be later than May 7, 1999.
"Final Equity Value" means, as determined by the
Calculation Agent, the average Closing Price per share
for the Underlying Security during the Valuation Period.
"Strike Price" means the Put Strike Price and the
Call Strike Price.
"Trading Day" means a day on which the Closing Price
of a security being determined (i) is not suspended for
trading on any national or regional securities exchange
or association or over-the-counter market at the close
of business and (ii) has traded at least once on the
national or regional securities exchange or association
or over-the-counter market that is the primary market
for the trading of such security.
"Underlying Security" means the shares of common
stock, par value $0.01 (the "Common Stock"), of America
Online, Inc., a Delaware corporation (the "Company").
"Valuation Period" means the 15 Trading Days
immediately prior to (but not including) the Expiration
Date.
"Warrant" means the common stock warrant dated May
14, 1993 granted by the Company to the Counterparty.
4. Other Provisions
(a) Adjustment to Strike Prices and Number of Options.
In the event of any change affecting the Underlying
Security, including without limitation, a capitalization
issue, rights issue, share split, extraordinary dividend,
merger, consolidation, amalgamation, sub-division,
recapitalization, reclassification, dissolution,
liquidation, winding up or other similar event, which occurs
after the Trade Date but before the Expiration Date, the
Calculation Agent shall (after consultation with the
Counterparty) adjust the Strike Prices and/or the Number of
Options in the manner described in subclauses (i) to (iv)
below.
(i) In the case of a stock dividend, stock
distribution or stock split in respect of the
outstanding shares of Common Stock of the Company shall
have occurred, the Number of Options immediately prior
to such event shall be increased, and, conversely, in
the case of a reverse stock split or combination of
Common Stock of the Company, the Number of Options
immediately prior to such event shall be decreased. In
the event the Number of Options are increased or
decreased in accordance with this subclause (iii), the
Strike Price in effect immediately prior to such event
shall be decreased or increased accordingly in inverse
proportion.
(ii) The Strike Prices are subject to adjustment if
the Company shall (A) issue by reclassification of its
shares of Common Stock any shares of common stock of the
Company, (B) issue rights or warrants to all holders of
its Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share
less than the market price of its Common Stock (other
than rights to purchase shares of Common Stock pursuant
to a plan for the reinvestment of dividends or interest)
or (C) pay a dividend or make a distribution to all
holders of its Common Stock of evidence of its
indebtedness or other assets (excluding any dividends or
distributions referred to in subclause (i) above or any
cash dividends other than any Extraordinary Cash
Dividends) or issue to all holders of its Common Stock
rights or warrants to subscribe for or purchase any of
its securities (other than those referred to in clause
(B) above). An "Extraordinary Cash Dividend" means,
with respect to any one-year period, all cash dividends
on the Company's Common Stock during such period to the
extent such dividends exceed on a per share basis 10% of
the average price of the Company's Common Stock over
such period (less any such dividends for which a prior
adjustment to the Strike Price was previously made).
All adjustments to the Strike Price will be calculated
to the nearest 1/100th of a cent (or if there is not a
nearest 1/100th of a cent to the next lower 1/100th of a
cent). No adjustment in the Strike Price shall be
required unless such adjustment would require an
increase or decrease of at least one cent; provided,
however, that any adjustments which by reason of the
foregoing are not required to be made shall be carried
forward and taken into account in any subsequent
adjustment.
(iii) In the event of (A) any consolidation or
merger of the Company, or any surviving entity or
subsequent surviving entity of the Company (an "AMER
Successor"), with or into another entity (other than a
merger or consolidation in which the Company is the
continuing corporation and in which the Common Stock of
the Company outstanding immediately prior to the merger
or consolidation is not exchanged for cash, securities
or other property of the Company or another
corporation), (B) any sale, transfer, lease or
conveyance to another corporation of the property of the
Company or any AMER Successor as an entirety or
substantially as an entirety, (C) any statutory exchange
of securities of the Company or any AMER Successor with
another corporation (other than in connection with a
merger or acquisition) or (D) any liquidation,
dissolution or winding up of the Company or any AMER
Successor (any such event, a "Reorganization Event"),
the securities to which the Number of Options shall
relate will be adjusted to provide that the Final Equity
Value shall be deemed to be the Transaction Value.
"Transaction Value" means (i) for any cash received in
any such Reorganization Event, the amount of cash
received per share of Common Stock of the Company, (ii)
for any property other than cash or securities received
in any such Reorganization Event, an amount equal to the
market value at the Expiration Date of such property
received per share of Common Stock of the Company as
determined by a nationally organized investment banking
firm retained for this purpose by Morgan (which may
include J.P. Morgan Securities Inc.) and (iii) for any
securities received in any such Reorganization Event, an
amount equal to the average Closing Price per share of
such securities on the 15 Trading Days immediately prior
to the Expiration Date multiplied by the number of
securities received for each share of Common Stock of
the Company.
(iv) In the event of any other change affecting the
Underlying Security, including without limitation, a
capitalization issue, rights issue, share split,
extraordinary dividend, merger, consolidation,
amalgamation, sub-division, recapitalization,
reclassification, dissolution, liquidation, winding up
or other similar event of which is not described above
in subclauses (i) through (iii) above, which occurs
after the Trade Date but before the Expiration Date, the
Calculation Agent shall (after consultation with the
Counterparty) adjust the Strike Price and/or the Number
of Options to preserve as nearly as practicable, the
economic equivalent of the obligations of the parties
hereunder prior to such change.
(b) Representations of the Counterparty. The
Counterparty represents and warrants to Morgan as of the
date hereof:
(i) The Counterparty is not an "affiliate" of the
Company as such term is defined in Rule 144 of the
Securities Act of 1933, as amended.
(ii) The Counterparty does not have any special
access to, and does not possess, any non-public material
information relating to the Company, nor does the
Counterparty have any ability or right to perform any
investigation as to the business or financial condition
of the Company.
(iii) The Counterparty acquired the Warrant in a
private transaction on May 14, 1993, full consideration
for the Warrant was given on such date, such Warrant is
in full force and effect , and the Counterparty has not
exercised such Warrant.
(iv) The Counterparty is not entering into this
Transaction with Morgan (A) in anticipation of a sale of
the Warrant prior to May 14, 1996, (B) in anticipation
of a sale of the underlying shares of Common Stock of
the Company issuable upon exercise of the Warrant prior
to three years following such exercise for cash or other
consideration or (C) with the present intention of
exercising the Warrant within six months from the
Effective Date of this Transaction.
(c) Representations of Morgan. Morgan represents and
warrants to the Counterparty as of the date hereof:
(i) Morgan is not an "affiliate" of the Company as
such term is defined in Rule 144 of the Securities Act
of 1933, as amended.
(ii) Morgan does not have any special access to,
and does not possess, any non-public material
information relating to the Company, nor does Morgan
have any ability or right to perform any investigation
as to the business or financial condition of the
Company.
(iii) Morgan acknowledges that the Counterparty has
not participated in the preparation of any disclosure
documents relating to the offer and sale of securities
based on the value of the Common Stock of the Company
issued by an Affiliate of Morgan and that the
Counterparty is not liable to Morgan or any Affiliate of
Morgan for any material misstatements or omissions
contained in such disclosure documents; provided,
however, that the foregoing is without prejudice to any
of the Counterparty's rights in respect of the
Counterparty's representations and warranties herein.
(d) No Reliance, etc. Each party represents that (i)
it is entering into the Transaction evidenced hereby as
principal (and not as agent or in any other capacity); (ii)
the other party is not acting as a fiduciary for it; (iii)
it is not relying upon any representations except those
expressly set forth in the Agreement or this Confirmation;
(iv) it has consulted with its own legal, regulatory, tax,
business, investment, financial, and accounting advisors to
the extent it has deemed necessary, and it has made its own
investment, hedging, and trading decisions based upon its
own judgment and upon any advice from such advisors as it
has deemed necessary and not upon any view expressed by the
other party; and (v) it is entering into this Transaction
with a full understanding of the terms, conditions and risks
thereof and it is capable of and willing to assume those
risks.
(e) Private Placement. The parties hereto each
acknowledge that this Transaction will not be registered
under the Securities Act of 1933, as amended (the
"Securities Act"), and is being entered into in reliance
upon the exemption for private placement pursuant to Section
4(2) of the Securities Act.
Please confirm your agreement to be bound by the terms of
the foregoing by executing the copy of this Confirmation
enclosed for that purpose and returning it to us.
Very truly yours,
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Karen Grieb
Name: Karen Grieb, as Agent
Title: Vice President
Accepted and confirmed as of
the date first above written:
SPRINT COMMUNICATIONS COMPANY L.P.
By: /s/ Peter W. Chehayl
Name: Peter W. Chehayl
Title: Vice President
