UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
----------------------------------
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 1-04721
SPRINT CORPORATION
(Exact name of registrant as specified in its charter)
KANSAS 48-0457967
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
P.O. Box 11315, Kansas City, Missouri 64112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (913) 624-3000
--------------------------------------------------------------------------------
(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 these reports), and (2) has been subject to these filing
requirements for the past 90 days.
Yes X No
COMMON SHARES OUTSTANDING AT JULY 31, 2000:
FON COMMON STOCK 798,435,108
PCS COMMON STOCK 928,245,590
CLASS A COMMON STOCK 86,236,036
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
Reference
Part I - Financial Information
<S> <C>
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk 1
Part II - Other Information
Item 1. Legal Proceedings 2
Item 2. Changes in Securities 2
Item 3. Defaults Upon Senior Securities 3
Item 4. Submission of Matters to a Vote of Security Holders 3
Item 5. Other Information 4
Item 6. Exhibits and Reports on Form 8-K 4
Signature 6
Exhibits
ANNEX I
SPRINT CORPORATION
Consolidated Financial Information
Consolidated Statements of Operations I-1
Consolidated Statements of Comprehensive Income (Loss) I-3
Consolidated Balance Sheets I-4
Consolidated Statements of Cash Flows I-6
Consolidated Statement of Shareholders' Equity I-7
Condensed Notes to Consolidated Financial Statements I-8
Management's Discussion and Analysis of Financial Condition and Results of Operations I-12
ANNEX II
SPRINT FON GROUP
Combined Financial Information
Combined Statements of Operations II-1
Combined Statements of Comprehensive Income II-2
Combined Balance Sheets II-3
Combined Statements of Cash Flows II-4
Condensed Notes to Combined Financial Statements II-5
Management's Discussion and Analysis of Financial Condition and Results of Operations II-9
ANNEX III
SPRINT PCS GROUP
Combined Financial Information
Combined Statements of Operations III-1
Combined Statements of Comprehensive Loss III-2
Combined Balance Sheets III-3
Combined Statements of Cash Flows III-4
Condensed Notes to Combined Financial Statements III-5
Management's Discussion and Analysis of Financial Condition and Results of Operations III-8
</TABLE>
<PAGE>
Part I. - Financial Information
Item 1. Financial Statements
The information required by Item 1 is incorporated by reference from
Annex I, Annex II and Annex III included herein.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by Item 2 is incorporated by reference from
Annex I, Annex II and Annex III included herein.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Sprint's exposure to market risk through derivative financial
instruments and other financial instruments, such as investments in
marketable securities and long-term debt, is not material. There have
been no material changes in market risk since year-end 1999.
<PAGE>
PART II. - Other Information
Item 1. Legal Proceedings
There were no reportable events during the quarter ended June 30, 2000.
Item 2. Changes in Securities
On April 28, 2000, the shareholders of Sprint approved amendments to
Sprint's Articles of Incorporation and Bylaws.
Amendments to the Articles of Incorporation
Under the amended articles of incorporation, France Telecom and
Deutsche Telekom, which hold Series 3 FON common stock, Series 3 PCS
common stock and Class A common stock (together, Class A stock), no
longer have the ability to elect designated directors as a class.
Instead, France Telecom and Deutsche Telekom, as the holders of Class A
stock, will vote together with other Sprint shareholders in the
election of all directors generally. The amendments deleted numerous
provisions of the articles of incorporation relating to the ability of
France Telecom and Deutsche Telekom to designate directors by a
separate class vote.
Under the amended articles of incorporation, France Telecom and
Deutsche Telekom have the right to convert any of their shares into the
publicly traded classes and series of Sprint capital stock. In
particular, France Telecom and Deutsche Telekom may at any time convert
(1) any of their shares of Series 3 FON common stock into shares of
Series 1 FON common stock, and (2) any of their shares of Series 3 PCS
common stock into Series 1 PCS common stock. This also applies to the
shares of Series 3 FON common stock and Series 3 PCS common stock that
are issuable with respect to the shares of Class A common stock.
Under the amended articles of incorporation, France Telecom and
Deutsche Telekom are no longer entitled to vote their shares as a
separate class on amendments to Sprint's bylaws. The articles of
incorporation previously included the right to a class vote by the
holders of Class A stock on amendments to provisions of the bylaws that
related to the ability of the holders of the Class A stock to designate
directors by a separate class vote.
The amendments to the articles of incorporation deleted certain
disapproval rights of France Telecom and Deutsche Telekom, including
the right of France Telecom and Deutsche Telekom to disapprove:
- amendments to the articles of incorporation and bylaws that would
adversely affect their rights,
- issuances by Sprint of capital stock or debt securities with
super voting rights, and
- any action by Sprint before January 31, 2006, that would result
in, or is taken for the purpose of encouraging or facilitating,
certain competitors of France Telecom, Deutsche Telekom or Global
One owning 10% or more of the outstanding voting power of Sprint.
The amendments also deleted provisions requiring the approval of the
independent directors of the Board of Directors before Sprint could
complete a transaction in which it issues securities representing 30%
or more of its total voting power and provisions that would have been
triggered if the Sprint Board of Directors had (1) decided to sell
control of Sprint in a way that resulted in a shareholder owning more
than 35% of the voting power of the resulting corporation, or (2)
decided not to oppose a tender offer for securities representing more
than 35% of the voting power of all Sprint voting securities.
In addition, the amendments deleted a provision that allowed France
Telecom and Deutsche Telekom, in cases where Sprint decided to (1) sell
all or substantially all of its assets or (2) sell control of Sprint in
a way that resulted in a 35% or larger shareholder in the resulting
entity, to participate on a basis no less favorable than that granted
any other participant.
<PAGE>
Amendments to the Bylaws
The amendments to the bylaws:
- removed references to the directors that France Telecom and
Deutsche Telekom elected by class vote,
- reflect the fact that under the amended articles of
incorporation, France Telecom and Deutsche Telekom vote together
with other Sprint shareholders in the election of all directors
generally, and
- deleted provisions relating to the right of France Telecom and
Deutsche Telekom to vote their shares of Sprint capital stock as
a separate class on amendments to certain sections of the bylaws.
In addition, the amendments deleted provisions in the bylaws that
required at least one of the directors elected by a class vote of
France Telecom and Deutsche Telekom to be a member of the executive
committee of the Sprint Board of Directors. A similar provision
generally requiring that at least one of these directors be a member of
all other committees of the Board of Directors was also deleted.
Item 3. Defaults Upon Senior Securities
There were no reportable events during the quarter ended June 30, 2000.
Item 4. Submission of Matters to a Vote of Security Holders
Special Meeting
On April 28, 2000, Sprint held a Special Meeting of Shareholders to
vote on (1) a proposal to adopt the merger agreement between WorldCom,
Inc. and Sprint, (2) a proposal to amend Sprint's Articles of
Incorporation and Bylaws, and (3) a proposal to amend the Employees
Stock Purchase Plan. The shareholders approved all three proposals.
The following votes were cast with respect to the proposal to adopt the
merger agreement:
For 993,478,554
Against 31,938,520
Abstain 4,159,464
Broker non-votes 165,379,369
The following votes were cast with respect to the proposal to amend
Sprint's Articles of Incorporation and Bylaws:
For 1,001,092,994
Against 22,586,023
Abstain 5,897,522
Broker non-votes 165,379,369
The following votes were cast with respect to the proposal to amend the
Employees Stock Purchase Plan:
For 1,156,353,462
Against 29,447,726
Abstain 9,154,722
<PAGE>
Annual Meeting
On June 13, 2000, Sprint held its Annual Meeting of Shareholders. In
addition to the election of three Class II Directors to serve for a
term of three years, the shareholders approved the appointment of Ernst
& Young LLP as independent auditors for Sprint. The shareholders did
not approve a shareholder proposal.
The following votes were cast for each of the following nominees for
Director or were withheld with respect to such nominees:
For Withheld
----------------------- ------------------------ --------------------
Harold S. Hook 1,253,585,550 14,497,871
Charles E. Rice 1,253,574,651 14,508,771
Louis W. Smith 1,253,269,335 14,814,087
The following votes were cast with respect to the proposal to approve
the appointment of Ernst & Young LLP as independent auditors of Sprint
for 2000:
For 1,258,369,697
Against 3,389,739
Abstain 6,323,986
The following votes were cast with respect to a shareholder proposal
urging the Sprint Board to adopt a policy against making compensation
awards to officers and Directors which are contingent on a change of
control of Sprint unless such awards are submitted to a vote of
shareholders and approved by a majority of the votes cast:
For 364,912,498
Against 684,195,943
Abstain 20,313,229
Broker non-votes 198,661,752
Item 5. Other Information
Ratio of Earnings to Fixed Charges
Sprint's earnings, as adjusted, were inadequate to cover fixed charges
by $100 million in the 2000 second quarter, $172 million for the 2000
year-to-date period, $149 million in the 1999 second quarter and $415
million for the 1999 year-to-date period. Earnings include loss from
continuing operations before taxes, plus equity in the net losses of
less-than-50%-owned entities, less capitalized interest. Fixed charges
include interest on all debt of continuing operations, including
amortization of debt issuance costs and the interest component of
operating rents.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
(3) Articles of Incorporation and Bylaws:
(a) Articles of Incorporation, as amended (filed as Exhibit
3(a) to Sprint Corporation Quarterly Report on Form
10-Q for the quarter ended March 31, 2000 and
incorporated herein by reference).
(b) Bylaws, as amended (filed as Exhibit 3(b) to Sprint
Corporation Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000 and incorporated herein by
reference).
(4) Instruments defining the Rights of Sprint's Equity Security
Holders:
(a) The rights of Sprint's equity security holders are
defined in the Fifth, Sixth, Seventh and Eighth
Articles of Sprint's Articles of Incorporation. See
Exhibit 3(a).
<PAGE>
(b) Rights Agreement dated as of November 23, 1998, between
Sprint Corporation and UMB Bank, n.a. (filed as Exhibit
4.1 to Amendment No. 1 to Sprint Corporation's
Registration Statement on Form 8-A relating to Sprint's
PCS Group Rights, filed November 25, 1998, and
incorporated herein by reference).
(c) Amended and Restated Standstill Agreement dated
November 23, 1998, by and among Sprint Corporation,
France Telecom S.A. and Deutsche Telekom AG (filed as
Exhibit 4E to Post-Effective Amendment No. 2 to Sprint
Corporation's Registration Statement on Form S-3 (No.
33-58488) and incorporated herein by reference), as
amended by the Master Transfer Agreement dated January
21, 2000 between and among France Telecom, Deutsche
Telekom AG, NAB Nordamerika Beteiligungs Holding GmbH,
Atlas Telecommunications, S.A., Sprint Corporation,
Sprint Global Venture, Inc. and the JV Entities set
forth in Schedule II thereto (filed as Exhibit 2 to
Sprint Corporation's Current Report on Form 8-K dated
January 26, 2000 and incorporated herein by reference).
(d) Tracking Stock Policies of Sprint Corporation (filed as
Exhibit 4D to Post-Effective Amendment No. 2 to Sprint
Corporation's Registration Statement on Form S-3 (No.
33-58488) and incorporated herein by reference).
(12) Computation of Ratio of Earnings to Fixed Charges
(27) Financial Data Schedule
(a) June 30, 2000
(b) Reports on Form 8-K
Sprint filed a Current Report on Form 8-K dated July 13, 2000, in which
it reported that it and WorldCom had announced that the boards of
directors of both companies had acted to terminate their merger
agreement.
<PAGE>
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: August 10, 2000
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER
(3) Articles of Incorporation and Bylaws:
(a) Articles of Incorporation, as amended (filed as Exhibit
3(a) to Sprint Corporation Quarterly Report on Form
10-Q for the quarter ended March 31, 2000 and
incorporated herein by reference).
(b) Bylaws, as amended (filed as Exhibit 3(b) to Sprint
Corporation Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000 and incorporated herein by
reference).
(4) Instruments defining the Rights of Sprint's Equity Security
Holders:
(a) The rights of Sprint's equity security holders are
defined in the Fifth, Sixth, Seventh and Eighth
Articles of Sprint's Articles of Incorporation. See
Exhibit 3(a).
(b) Rights Agreement dated as of November 23, 1998, between
Sprint Corporation and UMB Bank, n.a. (filed as Exhibit
4.1 to Amendment No. 1 to Sprint Corporation's
Registration Statement on Form 8-A relating to Sprint's
PCS Group Rights, filed November 25, 1998, and
incorporated herein by reference).
(c) Amended and Restated Standstill Agreement dated
November 23, 1998, by and among Sprint Corporation,
France Telecom S.A. and Deutsche Telekom AG (filed as
Exhibit 4E to Post-Effective Amendment No. 2 to Sprint
Corporation's Registration Statement on Form S-3 (No.
33-58488) and incorporated herein by reference), as
amended by the Master Transfer Agreement dated January
21, 2000 between and among France Telecom, Deutsche
Telekom AG, NAB Nordamerika Beteiligungs Holding GmbH,
Atlas Telecommunications, S.A., Sprint Corporation,
Sprint Global Venture, Inc. and the JV Entities set
forth in Schedule II thereto (filed as Exhibit 2 to
Sprint Corporation's Current Report on Form 8-K dated
January 26, 2000 and incorporated herein by reference).
(d) Tracking Stock Policies of Sprint Corporation (filed as
Exhibit 4D to Post-Effective Amendment No. 2 to Sprint
Corporation's Registration Statement on Form S-3 (No.
33-58488) and incorporated herein by reference).
(12) Computation of Ratio of Earnings to Fixed Charges
(27) Financial Data Schedule
(a) June 30, 2000
