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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 13, 2000
Sprint Corporation
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(Exact name of registrant as specified in its charter)
Kansas 1-04721 48-0457967
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(State of incorporation) (Commission File Number) (IRS Employer
Identification No.)
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913) 624-3000
Not Applicable
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(Former name or former address, if changed since last report)
P.O. Box 11315, Kansas City, Missouri 64112
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(Mailing address of principal executive offices)
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Item 5. Other Events
1. Press Release. On February 1, 2001, the registrant ("Sprint")
announced its fourth quarter and annual results for the fiscal year ending
December 31, 2000. The press release was as follows:
REFER TO THE EDITOR'S NOTE AT THE END OF THIS PRESS RELEASE FOR INFORMATION
REGARDING CHANGES IN THE FON GROUP'S REPORTABLE SEGMENTS, SIGNIFICANT
NON-RECURRING EVENTS AND OTHER REPORTING CHANGES OCCURRING DURING THE 2000
FOURTH QUARTER.
The Sprint FON Group (NYSE: FON) is comprised of Sprint's Global Markets
segment, Local Telecommunications Division and product distribution and
directory publishing businesses.
The Sprint PCS Group (NYSE: PCS) consists of Sprint's mobile wireless
operations.
SPRINT ANNOUNCES RECORD FOURTH QUARTER, YEARLY RESULTS
February 1, 2001, KANSAS CITY, MO -- Sprint today announced record fourth
quarter and annual results. For the year, Sprint's net operating revenues grew
17 percent to $23.61 billion from $20.27 billion a year ago. Sprint's revenue
growth led all large-cap telecom companies in the U.S. for 2000.
"I am extremely pleased with Sprint's performance this year, and I continue to
be very optimistic about Sprint's future growth," said William T. Esrey, Sprint
chairman and chief executive officer. "It is clear that the telecommunications
industry is undergoing a significant transformation. Underlying this
transformation is a shift from voice to data, from calling minutes to bits and
bytes, from wireline to wireless. We will transition our revenue mix that is
today predominantly wireline voice to higher growth areas of data, wireless and
local broadband services.
"With the rapid growth of Sprint's broadband and wireless footprint, a unique
portfolio of data and mobile products and services, and exclusive technology
like Sprint ION(sm), I believe we have the assets and products in place to be
the next-generation leader in delivering broadband services to both businesses
and consumers. Given the insatiable demand for bandwidth, this gives us an
enviable leadership position," he said.
SPRINT PCS GROUP HIGHLIGHTS
. The PCS Group reported nearly 1.25 million new subscribers, which
included approximately 1.2 million direct subscriber additions and
approximately 50,000 resale subscriber additions in the fourth quarter.
The quarterly subscriber growth represented a 19 percent increase over
fourth quarter 1999. For the year, Sprint PCS added nearly 4.1 million
subscribers to end the year with 70 percent more subscribers than a year
ago. Sprint PCS ended the year with a total of more than 9.85 million
subscribers. Sprint PCS affiliates ended the year with more than 800,000
subscribers.
2
. Average monthly revenue per user (ARPU) for the quarter grew to $60
compared to $58 a year ago. For the year, ARPU was over $59, up 2.6
percent from $58 last year.
. Total revenues increased 84 percent to $1.94 billion in the fourth
quarter compared to $1.06 billion a year ago. Annual revenues rose 88
percent to $6.34 billion from $3.37 billion in 1999.
. Operating cash flows (EBITDA) were a positive $21 million for the
quarter compared to a loss of $501 million in the fourth quarter a year
ago. For the year, operating cash flows were a $27 million loss compared
to a loss of $1.71 billion a year ago. The PCS Group has now been EBITDA
positive for three consecutive quarters.
. Capital expenditures were $937 million for the quarter and $3.05 billion
for the year, reflecting continued capacity expansion, and increased
coverage for the company's nationwide wireless network and development
of new service capabilities.
"The continued growth of Sprint PCS this year represents another chapter in an
impressive business success story," said Esrey. "In just four-and-a-half years,
Sprint PCS has grown into a company with over $6 billion in revenue and has been
EBITDA positive for three consecutive quarters. This growth is impressive, and
with our investment in CDMA technology, we are positioned well to migrate
cost-effectively to the next generation of wireless services."
Sprint PCS is the nation's largest all-digital, single-frequency wireless
network with coverage now extending to a population of nearly 223 million, or
nearly 80 percent of the country, including Sprint PCS affiliates.
One driver of customer growth is the continued expansion of national
distribution channels. By the end of the year, Sprint PCS products and services
were sold in over 13,500 locations including 300 Sprint PCS stores.
Sprint PCS continues to be the leader in the domestic wireless data market.
During the quarter, the company announced that it had become the first North
American wireless carrier to serve more than one million unique Wireless Web
users.
Throughout 2000, Sprint PCS continued to expand its wireless data capabilities
by adding content partners and application providers to its Wireless Web service
offering. Announcements included: Go2 Systems to provide location-based
information services; E-compare to provide online comparison shopping services;
Harris Wireless, a complete banking and investment service; Fidelity
Investments, offering brokerage and investment services; Britannica.com, Inc.,
giving Sprint PCS Wireless Web users access to the 32-volume Encyclopedia
Britannica along with valuable local information; and PGA.com, offering golf-
related news, scores and event coverage surrounding major PGA championships.
During the quarter, Sprint PCS and America Online, Inc. announced the nationwide
availability of the AOL Instant Messenger(sm) (AIM) service on any of the more
than 18 different Internet-ready Sprint PCS Phones.
Sprint PCS also entered the digital music arena this quarter with a full suite
of music products and services. Consumers can use these services to create,
store, organize and manage their music
3
collections online using the Sprint PCS My Music(sm) service at
www.sprintpcs.com, supplied and managed by HitHive Inc.
-----------------
To help boost the productivity of business customers, Sprint PCS announced
several alliances in the quarter that expand the suite of wireless data products
and services offered as part of Sprint PCS Wireless Web for Business. Under one
agreement with Sierra Wireless and BlueKite.com, Sprint PCS is offering the
Sprint PCS Wireless Web Modem, which enables faster and easier access to the
mobile Internet on a windows-based laptop without using a phone or cables. A
pact with Hewlett-Packard Company enables Sprint PCS customers to wirelessly
access their electronic mailboxes, folders and directories when they are on the
go.
During the year, Sprint PCS also continued its migration to third-generation
(3G) wireless technology - the first phase of which will be implemented this
year and completed in 2002 at a fraction of the cost some competitors will be
required to spend for a similar upgrade. In the first phase of 3G, network data
speeds will be increased 10-fold from 14.4 Kpbs up to 144 Kpbs and voice
capacity will be doubled. The high speed packet data capabilities offered by 3G
technology will further position Sprint PCS as the leader in the mobile wireless
Internet arena, leveraging its pioneering Wireless Web products and services.
Additionally in 2000, Sprint PCS announced:
. A definitive agreement with Pegaso PCS of Mexico allowing the
introduction of cross-border services and a close alignment between
two of the largest, all-digital, all-CDMA nationwide PCS networks in
the world.
. Sprint PCS Wireless Web Mail, a free e-mail account provided to
customers nationwide that enables access to e-mail virtually anytime,
anywhere on the Sprint PCS nationwide wireless network.
. Wireless Web for Business, a full suite of wireless data products and
services offering clear, wireless access to enterprise content and
applications, including corporate e-mail, Intranets, corporate
directories, and sales and service e-Business tools via Internet-ready
Sprint PCS Phones.
. Voice Command, the first nationwide, network-based, voice-activated
dialing and information service. By using their voices, customers can
dial a number, look up directory names, modify address book entries
and perform various speech-enabled, voice-independent functions while
using any Sprint PCS Phone.
SPRINT FON GROUP HIGHLIGHTS
. Fourth quarter revenues of $4.39 billion were flat compared to $4.42
billion in the same period a year ago. For the year, revenues grew 3
percent to $17.69 billion from $17.16 billion in 1999.
. FON Group operating income in the quarter decreased 18 percent to $598
million from $731 million a year ago. Annual operating income fell 3
percent to $2.83 billion from $2.93 billion last year.
. Operating cash flows in the quarter were $1.20 billion, down 8 percent from
$1.29 billion in the fourth quarter a year ago. For the year, operating
cash flows were $5.10 billion compared to $5.06 billion in 1999.
4
. Income from continuing operations was $359 million in the fourth quarter,
a decline of 14 percent from $417 million a year ago. Income from
continuing operations for the year decreased 5 percent to $1.61 billion
from $1.70 billion in 1999.
Local Telecommunications Division
. Revenues were up 2 percent for the quarter and up 5 percent for the year
compared to the same periods last year. For the quarter, revenues were
$1.56 billion compared to $1.53 billion a year ago. For the year, revenues
were $6.11 billion compared to $5.83 billion in 1999.
. Operating income rose 15 percent in the quarter to $443 million from $386
million a year ago. Operating income for 2000 was $1.74 billion, up 16
percent from $1.50 billion in 1999.
. Access lines increased 3.6 percent during the last 12 months. Voice grade
equivalent lines grew 21 percent from a year ago.
. Operating cash flows in the quarter increased 12 percent to $737 million
from $657 million in the previous fourth quarter. 2000 operating cash
flows were $2.88 billion, a 12 percent increase from $2.56 billion last
year.
Global Markets
. Revenues in the Global Markets segment for the quarter were down slightly
from a year ago due largely to increased pricing pressures in the long
distance voice segment, declines in higher margin consumer services
revenues and wireless replacement. Fourth quarter revenues were $2.57
billion compared to $2.61 billion a year ago. In 2000, revenues were
$10.53 billion compared to $10.31 billion in 1999.
. Operating income declined for the quarter and the year due to the
difficult long distance operating environment and the dilution from Sprint
ION(sm) and broadband fixed wireless activities. Fourth quarter operating
income was $92 million, down 66 percent from $267 million a year ago.
Annual operating income was $823 million compared to $1.18 billion a year
ago.
. Operating cash flows in the fourth quarter decreased 29 percent to $394
million from $554 million in 1999. For the year, operating cash flows were
$1.94 billion compared to $2.22 billion in 1999.
. Long distance operating income in the quarter decreased 17 percent to $342
million from $413 million a year ago. Annual operating income was $1.57
billion in 2000 compared to $1.58 billion in 1999.
. Long distance calling volumes rose 18 percent for the quarter and 18
percent for the year.
Product Distribution and Directory Publishing
. Revenues increased 19 percent in the quarter to $508 million from $428
million a year ago. Annual revenues were up 10 percent to $1.94 billion
from $1.76 billion in 1999.
. Operating income increased 17 percent to $74 million in the fourth quarter
from $63 million a year ago. Annual operating income was $284 million, a
17 percent increase from $242 million last year.
5
"As part of our conversion to a data-focused communications business, the FON
Group this year stepped up efforts to leverage the company's tier one Internet
backbone to expand data offerings, advance its broadband fixed wireless
initiative, build on its leadership in bundling voice and data products, and
grow its web hosting and data center businesses," Esrey said.
For the quarter and the year, Sprint's Local Telecommunications Division
delivered consistently strong results, fueling the FON Group's overall
performance. For the full year, the local division generated more than one-third
of FON Group's core revenues and approximately 50 percent of core operating
income and core operating cash flows. The division's performance was driven
largely by effective expense control, increased bundled sales and an improved
product mix, resulting in solid margin gains.
In Sprint's local territories, revenues from data services for the quarter
increased 14 percent and accounted for 66 percent of the division's total
revenue growth. For the year, data revenues increased 20 percent compared to
1999 and represented 30 percent of the division's total revenue growth. Overall
local service revenues rose 4 percent in the quarter compared to a year ago and
6 percent in 2000 compared to 1999. Revenues rose largely due to increased sales
of bundled services.
The local operation continued to lead the industry in selling bundles of
products and services. For the year, more than 22 percent of the local
division's residential customers subscribed to a bundled service plan, up
substantially from 13 percent at the end of 1999.
Bundled services contributed to an increased penetration of Sprint long distance
service in the company's local territories. By the end of 2000, 40 percent of
local residential customers subscribed to Sprint long distance, up from 33
percent a year ago.
The local operation continued to maintain very good cost control. For the
quarter, expenses declined 3 percent compared to a year ago and were flat for
the year compared to 1999.
In the long distance business, the operating environment was once again highly
competitive. Total voice revenues declined 4 percent in the fourth quarter
compared to a year ago. Consumer voice revenues declined 14 percent for the
quarter and 12 percent for the full year compared to a year ago. Business voice
revenues were flat in the quarter.
At the end of the quarter, 15 percent of Sprint PCS's customer base subscribed
to wireline long distance service.
In the quarter, Sprint continued to produce strong growth in current-generation
data services. In the quarter, combined ATM and Frame Relay revenues grew 18
percent compared to a year ago.
Internet revenues for the quarter grew 25 percent to $244 million from $195
million a year ago and 50 percent for the year to $920 million from $615 million
in 1999.
In the quarter, the long distance business also maintained good cost control.
These efforts contributed to an 8 percent decline in selling, general and
administrative costs for the quarter.
6
To fuel Internet revenue performance, Sprint during the quarter announced an
aggressive data center expansion strategy following Sprint's recent unveiling of
a new business unit, Sprint E/Solutions. Sprint E/Solutions was formed to offer
business customers a comprehensive suite of broadband products and services
through a single provider.
The expansion strategy consists of the completion of 11 operational data centers
by year-end 2001 and 18 by 2002, including locations in Asia and Europe. Each
data center will offer a variety of services, from collocation to application
support, as well as comprehensive IT professional services.
During the quarter, Sprint continued to expand it broadband capabilities to new
markets. By the end of 2000, Sprint had installed DSL equipment in more than 950
central offices in 31 markets. By the end of 2001, DSL will be in more than 2000
central offices in 86 markets, which will enable the company to reach 18 million
households and 3 million business locations across the country.
Sprint launched Sprint Broadband Direct, the company's fixed wireless MMDS
service, in six markets during the quarter including Houston, San Jose, San
Francisco, Denver, Salt Lake City and Wichita. The new markets complement four
other markets launched earlier in 2000. Demand for the product is growing as
demonstrated by an average of more than 1,600 orders per week by the end of the
year.
Similar demand is evident for the Sprint ION(sm) consumer suite of products. By
year-end the company averaged 350 orders per week in the ten markets in which
Sprint ION(sm) is available to consumers. Three out of four of these orders are
for the high-end Sprint ION(sm) product. Sprint will extend its ION consumer
offering to an additional 5 markets over the next four months. Sprint ION(sm) is
currently available nationwide to business customers with dedicated access.
Under the Sprint ION(sm) name, the company began offering consumer broadband
services during the quarter ranging from stand-alone high-speed Internet access
to more robust services that integrate high-speed access with multiple phone
lines, local calling and long-distance service over a single connection to the
home.
During the year Sprint unveiled its strategy for home networking and announced
that sales for the Sprint ION(sm) Home LAN (Local Area Network) would begin in
the first quarter of 2001. The initial home networking product will allow
broadband customers to turn any phone jack in their home into a high-speed data
connection. Customers will be able to add new computers and Internet appliances
to their broadband service, and Sprint will enable customers both broadband
access and home networking solutions from a single provider.
EDITOR'S NOTE: In the fourth quarter of 2000, the FON Group and the PCS Group
implemented SEC Staff Accounting Bulletin No. 101 which requires certain
activation and installation fee revenues to be amortized over the average life
of the related service rather than be recognized immediately. Related costs, up
to the amount of revenues, are deferred and amortized as well. Implementing this
accounting requires previously reported 2000 results to be restated. PCS Group
restated results reflect a reduction in revenues and expenses with no
7
change to operating loss. FON Group restated results reflect only minor changes
to revenues and expenses with no change to operating income.
Beginning this quarter, the FON Group will report operating results under three
segments: Global Markets, Local Telecommunications, and Product Distribution and
Directory Publishing. The change in segment reporting was made to align
financial reporting with recent changes in how Sprint manages the FON Group's
operations and assesses its performance. The Global Markets segment includes
data communications services such as Internet, web hosting, collocation, and
security services, as well as domestic and international voice services (except
for consumer services provided to customers within Sprint's local franchise
territories), our integrated communications services (referred to as Sprint
ION(sm)), and broadband fixed wireless services. The local telecommunications
segment was expanded to include the consumer long distance services provided to
customers within Sprint's local franchise territories. The Product Distribution
and Directory Publishing segment was unchanged.
Also in the 2000 fourth quarter, the FON Group and the PCS Group restated their
statements of operations to reclassify certain revenue and expense components to
better align with industry events or standards. All periods presented have been
restated to reflect both the segment and classification changes. These
restatements had no impact on FON Group operating income or PCS Group operating
loss.
The FON Group recorded non-recurring charges related to the write-downs of
goodwill and other related assets of its professional services business, and
certain equity investments in the 2000 fourth quarter. These charges reduced
diluted earnings per share by $0.30 in the 2000 fourth quarter. In prior 2000
quarters, the FON Group recorded non-recurring charges associated with the
terminated WorldCom merger; a gain on the sale of an independent directory
publishing operation; and net gains on investment activities. Total 2000
non-recurring items reduced diluted earning per share by $0.36. The accompanying
discussion of operating results excludes these non-recurring items.
In the second quarter of 2000, the local division transferred a customer service
operation to the PCS Group. Additionally, in the third quarter of 2000, Sprint
changed its transfer pricing for certain transactions between the local division
and the directory publishing business, which mainly had the effect of reducing
local division revenues. The discussion of the local division's results assumes
both events occurred at the beginning of 1999.
In the 1999 fourth quarter, the FON Group recorded non-recurring net gains from
investment activities, which increased diluted earnings per share by $0.02. In
the 1999 first quarter, the FON Group recorded non-recurring net gains from
equity investments. Total 1999 non-recurring items increased diluted earnings
per share by $0.04. The accompanying discussion of operating results excludes
these non-recurring items.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This press release includes certain estimates, projections and other
forward-looking statements. Future performance cannot be ensured. Actual results
may differ materially from those in the forward-looking statements. Some factors
that could cause actual results to differ include:
8
. the effects of vigorous competition in the markets in which Sprint
operates;
. the costs and business risks related to entering and expanding new markets
necessary to provide seamless services and new services;
. the ability of the PCS Group to continue to grow its market presence;
. the risks related to Sprint's investments in joint ventures;
. the impact of any unusual items resulting from ongoing evaluations of
Sprint's business strategies;
. regulatory risks, including the impact of the Telecommunications Act of
1996;
. unexpected results of litigation filed against Sprint;
. the possibility of one or more of the markets in which Sprint competes
being impacted by changes in political, economic or other factors such as
monetary policy, legal and regulatory changes or other external factors
over which Sprint has no control; and
. other risks referenced from time to time in Sprint's filings with the
Securities and Exchange Commission ("SEC").
The words "estimate," "project," "intend," "expect," "believe" and similar
expressions are intended to identify forward-looking statements. You should not
place undue reliance on forward-looking statements, which speak only as of the
date of this press release. Sprint is not obligated to publicly release any
revisions to forward-looking statements to reflect events after the date of this
press release or unforeseen events. Sprint provides a detailed discussion of
risk factors in periodic SEC filings and you are encouraged to review these
filings.
About Sprint
Sprint is a global communications company - at the forefront of integrating
long-distance, local and wireless communications services, and a large carrier
of Internet traffic. Sprint built and operates the United States' first
nationwide all-digital, fiber-optic network and is a leader in advanced data
communications services. Sprint has $23 billion in annual revenues and serves
more than 20 million business and residential customers.
9
Sprint Corporation
FON GROUP
COMBINED STATEMENTS OF OPERATIONS
(millions, except per share data)
Quarters Ended Years Ended
December 31, December 31,
------------------------ ------------------------
2000 1999 2000 1999
------------------------ ------------------------
(unaudited)
Net operating revenues $ 4,394 $ 4,418 $ 17,688 $ 17,160
---------------------------------------------------------------------------------- ------------------------
Operating expenses
Costs of services and products 2,059 1,900 8,094 7,481
Selling, general and administrative 1,139 1,224 4,493 4,620
Depreciation and amortization 598 563 2,267 2,129
Asset write-down and merger related costs/(1)/ 238 - 401 -
---------------------------------------------------------------------------------- ------------------------
Total operating expenses 4,034 3,687 15,255 14,230
---------------------------------------------------------------------------------- ------------------------
Operating income 360 731 2,433 2,930
Interest expense (18) (63) (76) (182)
Other income (expense), net/(2)/ (137) 4 (187) 49
---------------------------------------------------------------------------------- ------------------------
Income from continuing operations before income taxes 205 672 2,170 2,797
Income taxes (107) (241) (878) (1,061)
---------------------------------------------------------------------------------- ------------------------
Income from continuing operations 98 431 1,292 1,736
Discontinued operation, net - 24 675 (130)
Extraordinary items, net (1) (39) (1) (39)
Cumulative effect of change in accounting principle, net - - (2) -
---------------------------------------------------------------------------------- ------------------------
Net income 97 416 1,964 1,567
Preferred stock dividends received 2 2 7 7
---------------------------------------------------------------------------------- ------------------------
Earnings applicable to common stock $ 99 $ 418 $ 1,971 $ 1,574
======================== ========================
Diluted earnings per common share
Income from continuing operations - recurring $ 0.41 $ 0.47 $ 1.81 $ 1.93
Non-recurring items/(1)(2)/ (0.30) 0.02 (0.36) 0.04
---------------------------------------------------------------------------------- ------------------------
Income from continuing operations 0.11 0.49 1.45 1.97
Discontinued operation - 0.02 0.76 (0.15)
Extraordinary items - (0.04) - (0.04)
---------------------------------------------------------------------------------- ------------------------
Total $ 0.11 $ 0.47 $ 2.21 $ 1.78
=========== ========== ========== ===========
Diluted weighted average common shares outstanding 886.8 894.1 892.4 887.2
=========== ========== ========== ===========
Basic earnings per common share $ 0.11 $ 0.48 $ 2.24 $ 1.81
=========== ========== ========== ===========
(1) The $238 million charge in the 2000 fourth quarter principally represents a
write-down of goodwill and the $163 million of costs recorded in the 2000
second quarter were associated with the proposed WorldCom merger, which has
been terminated. These charges reduced income from continuing operations by
$152 million, or $0.17 per share and $105 million, or $0.12 per share,
respectively.
(2) In the 2000 fourth quarter, the FON Group recorded non-recurring charges of
$122 million related to write-downs of certain equity investments. These
charges reduced income from continuing operations by $109 million, or $0.13
per share in the 2000 fourth quarter. In the 2000 second quarter, the FON
Group recorded a $45 million gain on the sale of an independent directory
publishing operation. The gain increased income from continuing operations
by $27 million or $0.03 per share. In the 2000 first quarter, the FON Group
recorded net gains on investment activities of $26 million which increased
income from continuing operations by $17 million or $0.02 per share. In the
1999 fourth quarter, the FON Group recorded net gains from investment
activities of $19 million which increased income from continuing operations
by $14 million, or $0.02 per share. In the 1999 first quarter, the FON
Group recorded net gains from equity investments of $35 million which
increased income from continuing operations by $21 million or $0.02 per
share.
10
Sprint Corporation
FON GROUP
SELECTED OPERATING RESULTS
(millions)
Quarters Ended Years Ended
December 31, December 31,
------------------------- ----------------------------
2000 1999 2000 1999
------------------------- ----------------------------
Global Markets Division (unaudited)
Net operating revenues
Voice $ 1,724 $ 1,804 $ 7,094 $ 7,445
Data 508 479 1,937 1,696
Internet 244 195 920 615
Other 92 133 577 552
----------------------------------------------------------------------------- ----------------------
Net operating revenues $ 2,568 $ 2,611 $ 10,528 $ 10,308
----------------------------------------------------------------------------- ----------------------
Operating expenses
Costs of services and products 1,409 1,223 5,558 4,947
Selling, general and administrative 765 834 3,026 3,141
Depreciation and amortization 302 287 1,121 1,045
Asset write-down 238 - 238 -
----------------------------------------------------------------------------- ----------------------
Total operating expenses 2,714 2,344 9,943 9,133
----------------------------------------------------------------------------- ----------------------
Operating income (loss) $ (146) $ 267 $ 585 $ 1,175
------------------- ----------------------
Local Division
Net operating revenues
Local service $ 725 $ 694 $ 2,846 $ 2,677
Network access 490 486 1,987 1,918
Toll service 181 172 717 611
Other 162 218 605 752
----------------------------------------------------------------------------- ----------------------
Net operating revenues 1,558 1,570 6,155 5,958
----------------------------------------------------------------------------- ----------------------
Operating expenses
Costs of services and products 501 547 1,965 2,016
Selling, general and administrative 320 349 1,288 1,320
Depreciation 294 272 1,139 1,069
----------------------------------------------------------------------------- ----------------------
Total operating expenses 1,115 1,168 4,392 4,405
----------------------------------------------------------------------------- ----------------------
Operating income $ 443 $ 402 $ 1,763 $ 1,553
------------------- ----------------------
Product Distribution and Directory Publishing
Net operating revenues $ 508 $ 428 $ 1,936 $ 1,758
------------------- ----------------------
Operating income $ 74 $ 63 $ 284 $ 242
------------------- ----------------------
Unallocated Corporate Operations and
Intercompany Eliminations
Net operating revenues $ (240) $ (191) $ (931) $ (864)
------------------- ----------------------
Operating income (1) $ (11) $ (1) $ (199) $ (40)
------------------- ----------------------
Sprint's FON Group reporting segments are intended to reflect the operating
results of its global markets, local services, and product distribution and
directory publishing businesses. The FON Group changed its segment reporting in
the 2000 fourth quarter to align financial reporting with recent changes in how
Sprint manages the FON Group's operations and assesses its performance. The
Global Markets segment includes data communications services such as Internet,
web hosting, collocation, and security services, as well as domestic and
international voice services (except for consumer services provided to customers
with Sprint's local franchise territories), our integrated communications
services, referred to as Sprint ION, and broadband fixed wireless services. Our
local services segment was expanded to include the consumer long distance
services provided to customers within our local franchise territories. The
Product Distribution and Directory Publishing Segment definition was unchanged.
(1) Includes merger costs of $163 million in the 2000 second quarter related to
costs associated with the proposed WorldCom merger, which has been
terminated.
11
Sprint Corporation
FON GROUP
PROFORMA FINANCIAL INFORMATION (unaudited)
(millions, except per share data)
The following proforma financial information presents revenues, operating income
(loss) and diluted earnings per share in the format previously used by the
Company to present segment results. The long distance division results are shown
after the transfer to the local division of the consumer long distance services
provided to customers within Sprint's local franchise territories.
Quarters Ended Years Ended
December 31, December 31,
----------------------- -----------------------
2000 1999 2000 1999
----------------------- -----------------------
Global Markets - Proforma
Net Operating Revenues
Long Distance Division $ 2,550 $ 2,592 $ 10,456 $ 10,288
Sprint ION 4 - 9 -
Other Ventures 14 19 63 20
-------- -------- -------- --------
Net Operating Revenues $ 2,568 $ 2,611 $ 10,528 $ 10,308
-------- -------- -------- --------
Operating income (loss)
Long Distance Division $ 342 $ 413 $ 1,572 $ 1,581
Sprint ION (225) (115) (683) (358)
Other Ventures (25) (31) (66) (48)
Asset Write-Down (238) - (238) -
-------- -------- -------- --------
Operating income (loss) $ (146) $ 267 $ 585 $ 1,175
-------- -------- -------- --------
Diluted earnings per common share
- Proforma
Core businesses $ 0.65 $ 0.61 $ 2.64 $ 2.31
Sprint ION (0.17) (0.09) (0.54) (0.26)
Other ventures (0.07) (0.05) (0.29) (0.12)
-------------------------------------------------------------------------------------------
Income from continuing operations
- recurring $ 0.41 $ 0.47 $ 1.81 $ 1.93
-------- -------- -------- --------
12
Sprint Corporation
FON GROUP
SUPPLEMENTAL OPERATING INFORMATION (unaudited)
(millions)
Quarters Ended
---------------------------------------------------------------------------------------
December 31, September 30, June 30, March 31,
2000 2000 2000 2000
---------------------------------------------------------------------------------------
Global Markets Division
Net operating revenues
Voice $ 1,724 $ 1,795 $ 1,795 $ 1,780
Data 508 470 485 474
Internet 244 223 235 218
Other 92 158 172 155
-------------------------------------------------------------------------------------------------------------------
Net operating revenues $ 2,568 $ 2,646 $ 2,687 $ 2,627
-------------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and
products 1,409 1,410 1,417 1,322
Selling, general and
administrative 765 723 763 775
Depreciation and
amortization 302 287 267 265
Asset write-down 238 - - -
-------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,714 2,420 2,447 2,362
-------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ (146) $ 226 $ 240 $ 265
----------------------------------------------------------------------------------
Local Division
Net operating revenues
Local service $ 725 $ 720 $ 705 $ 696
Network access 490 486 500 511
Toll service 181 187 178 171
Other 162 152 140 151
-------------------------------------------------------------------------------------------------------------------
Net operating revenues 1,558 1,545 1,523 1,529
-------------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and
products 501 513 471 480
Selling, general and
administrative 320 318 313 337
Depreciation 294 283 283 279
-------------------------------------------------------------------------------------------------------------------
Total operating expenses 1,115 1,114 1,067 1,096
-------------------------------------------------------------------------------------------------------------------
Operating income $ 443 $ 431 $456 $ 433
----------------------------------------------------------------------------------
Product Distribution and
Directory Publishing
Net operating revenues $ 508 $ 496 $ 471 $ 461
----------------------------------------------------------------------------------
Operating income $ 74 $ 75 $ 68 $ 67
----------------------------------------------------------------------------------
The supplemental operating information presented above has been restated to
reflect our new operating segments as well as to incorporate the impact of SEC
Staff Accounting Bulletin No. 101 and the reclassification of certain revenues
and expenses to conform with recent industry events or standards.
13
Sprint Corporation
FON GROUP
SUPPLEMENTAL OPERATING INFORMATION (unaudited)
(millions)
Quarters Ended
---------------------------------------------------------------------------------------
December 31, September 30, June 30, March 31,
1999 1999 1999 1999
--------------------------------------------------------------------------------------
Global Markets Division
Net operating revenues
Voice $ 1,804 $ 1,903 $ 1,880 $ 1,858
Data 479 426 401 390
Internet 195 156 146 118
Other 133 109 160 150
--------------------------------------------------------------------------------------------------------------------
Net operating revenues $ 2,611 $ 2,594 $ 2,587 $ 2,516
--------------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and
products 1,223 1,264 1,244 1,216
Selling, general and
administrative 834 786 785 736
Depreciation and
amortization 287 264 251 243
Asset write-down - - - -
--------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,344 2,314 2,280 2,195
--------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 267 $ 280 $ 307 $ 321
--------------------------------------------------------------------------------------
Local Division
Net operating revenues
Local service $ 694 $ 671 $ 671 $ 641
Network access 486 480 466 486
Toll service 172 157 141 141
Other 218 185 178 171
--------------------------------------------------------------------------------------------------------------------
Net operating revenues 1,570 1,493 1,456 1,439
--------------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and
products 547 496 489 484
Selling, general and
administrative 349 330 319 322
Depreciation 272 271 265 261
--------------------------------------------------------------------------------------------------------------------
Total operating expenses 1,168 1,097 1,073 1,067
--------------------------------------------------------------------------------------------------------------------
Operating income $ 402 $ 396 $ 383 $ 372
--------------------------------------------------------------------------------------
Product Distribution and
Directory Publishing
Net operating revenues $ 428 $ 444 $ 453 $ 433
--------------------------------------------------------------------------------------
Operating income $ 63 $ 64 $ 59 $ 56
--------------------------------------------------------------------------------------
The supplemental operating information presented above has been restated to
reflect our new operating segments as well as to incorporate the impact of SEC
Staff Accounting Bulletin No. 101 and the reclassification of certain revenues
and expenses to conform with recent industry events or standards.
14
Sprint Corporation
FON GROUP
CONDENSED COMBINED BALANCE SHEETS
(millions)
December 31, December 31,
2000 1999
--------------------------------------
Assets
Current assets
Cash and equivalents $ 122 $ 104
Accounts receivable, net 3,126 2,836
Receivables from the PCS Group 361 136
Inventories 434 441
Other 469 765
----------------------------------------------------------------------------------------------------------------------
Total current assets 4,512 4,282
----------------------------------------------------------------------------------------------------------------------
Property, plant and equipment
Global markets division 12,512 10,602
Local division 16,835 15,828
Other 1,651 1,257
----------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment 30,998 27,687
Accumulated depreciation (15,165) (13,685)
----------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 15,833 14,002
----------------------------------------------------------------------------------------------------------------------
Net intangible assets 1,204 1,379
Other 2,100 2,140
----------------------------------------------------------------------------------------------------------------------
Total $ 23,649 $ 21,803
--------------------------------------
Liabilities and group equity
Current liabilities
Current maturities of long-term debt $ 1,026 $ 902
Accounts payable and accrued interconnection costs 2,145 1,695
Other 1,833 1,704
----------------------------------------------------------------------------------------------------------------------
Total current liabilities 5,004 4,301
Long-term debt and capital lease obligations 3,482 4,531
Deferred income taxes and investment tax credits 1,276 935
Other 1,544 1,522
Group equity 12,343 10,514
----------------------------------------------------------------------------------------------------------------------
Total $ 23,649 $ 21,803
--------------------------------------
15
Sprint Corporation
FON GROUP
CONDENSED COMBINED CASH FLOW INFORMATION
(millions)
Years Ended
December 31,
---------------------------------------------
2000 1999
---------------------------------------------
Operating Activities
Net income $ 1,964 $ 1,567
Discontinued operations, net (675) 130
Equity in net losses of affiliates 201 70
Depreciation and amortization 2,267 2,129
Deferred income taxes 386 220
Changes in assets and liabilities (91) (425)
Other, net 271 22
------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,323 3,713
------------------------------------------------------------------------------------------------------
Investing Activities
Capital expenditures
Global markets division (2,294) (1,774)
Local division (1,371) (1,354)
Other (440) (406)
Investments in and loans to affiliates, net (686) (135)
Proceeds from sales of assets 51 90
Purchase of fixed wireless broadband - (618)
companies, net of cash acquired
Other, net 1 232
------------------------------------------------------------------------------------------------------
Net cash used by continuing operations (4,739) (3,965)
Proceeds from the sale of investment in Global 1,403 -
One
Net investing activity of discontinued operations - (384)
------------------------------------------------------------------------------------------------------
Net cash used by investing activities (3,336) (4,349)
------------------------------------------------------------------------------------------------------
Financing Activities
Increase (decrease) in debt, net (605) 491
Proceeds from stock issued 160 186
Dividends paid (433) (426)
Treasury stock purchases (61) (48)
Other, net (30) 105
------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (969) 308
------------------------------------------------------------------------------------------------------
Increase (Decrease) in cash and equivalents 18 (328)
Cash and equivalents at beginning of period 104 432
------------------------------------------------------------------------------------------------------
Cash and equivalents at end of period $ 122 $ 104
---------------------------------------------
16
Sprint Corporation
PCS GROUP
COMBINED STATEMENTS OF OPERATIONS
(millions, except per share data)
Quarters Ended Years Ended
December 31, December 31,
--------------------------- ----------------------------
2000 1999 2000 1999
--------------------------- ----------------------------
(unaudited)
Net operating revenues $ 1,938 $ 1,055 $ 6,341 $ 3,373
-----------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and products 1,129 951 3,942 3,150
Selling, general and administrative 788 605 2,426 1,937
Depreciation 376 280 1,339 1,060
Amortization 135 131 538 463
Merger related costs /(1)/ - - 24 -
------------------------------------------------------------------------ -------------------------
Total operating expenses 2,428 1,967 8,269 6,610
------------------------------------------------------------------------ -------------------------
Operating loss (490) (912) (1,928) (3,237)
Interest expense (260) (201) (933) (698)
Other income (expense), net /(3)/ (27) 27 (11) 66
------------------------------------------------------------------------ -------------------------
Loss from continuing operations before income (777) (1,086) (2,872) (3,869)
taxes
Income taxes 265 380 1,004 1,388
------------------------------------------------------------------------ -------------------------
Loss from continuing operations (512) (706) (1,868) (2,481)
Extraordinary items, net - - (3) (21)
--------------------------------------------------------------------------------------------------------
Net loss (512) (706) (1,871) (2,502)
Preferred stock dividends (3) (4) (14) (15)
--------------------------------------------------------------------------------------------------------
Loss applicable to common stock $ (515) $ (710) $ (1,885) $ (2,517)
------------------------- -------------------------
Diluted and basic loss per common share /(2)/
Loss from continuing operations - $ (0.53) $ (0.75) $ (1.93) $ (2.71)
recurring /(3)/
Merger costs - - (0.02) -
--------------------------------------------------------------------------------------------------------
Loss from continuing operations (0.53) (0.75) (1.95) (2.71)
Extraordinary items - - - (0.02)
------------------------- -------------------------
Total $ (0.53) $ (0.75) $ (1.95) $ (2.73)
----------- --------- --------- ---------
Diluted and basic weighted average
common shares 975.4 950.4 966.5 920.4
----------- --------- --------- ---------
(1) Represents costs associated with the proposed WorldCom merger, which has
been terminated.
(2) In the 2000 first quarter, Sprint effected a two-for-one stock split of
its PCS stock. PCS Group loss per share for prior periods has been
restated to reflect this stock split.
(3) Includes a gain on sale of customers and network infrastructure to a PCS
affiliate of $28 million in the 2000 first quarter, which decreased PCS
Group loss from continuing operations by $18 million or $0.02 per share.
Excluding this non-recurring item, PCS Group normalized diluted and basic
loss per share for the 2000 year-to-date period is $1.95.
17
Sprint Corporation
PCS GROUP
SUPPLEMENTAL OPERATING INFORMATION (unaudited)
(millions, except selected statistics)
Quarters Ended
------------------------------------------------------------------------
December 31, September 30, June 30, March 31,
2000 2000 2000 2000
------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Net operating revenues $ 1,938 $ 1,707 $ 1,476 $ 1,220
-------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and products 1,129 982 937 894
Selling, general and 788 603 528 507
administrative
Depreciation 376 352 322 289
Amortization 135 137 134 132
Merger related costs - - 24 -
-------------------------------------------------------------------------------------------------------------
Total operating expenses 2,428 2,074 1,945 1,822
-------------------------------------------------------------------------------------------------------------
Operating loss $ (490) $ (367) $ (469) $ (602)
------------------------------------------------------------------------
Average revenue per user (ARPU) $ 60 $ 61 $ 59 $ 57
(dollars)
------------------------------------------------------------------------
Cost to Acquire (dollars) $ 380 $ 340 $ 350 $ 390
------------------------------------------------------------------------
Cash Cost per User (dollars) $ 34 $ 35 $ 35 $ 37
------------------------------------------------------------------------
The supplemental operating information presented above has been restated to
reflect the impact of SEC Staff Accounting Bulletin No. 101 and the
reclassification of bad debt expense to a component of selling, general and
administrative costs (previously classified as a reduction of revenue)
consistent with industry standards. These restatements had no effect on reported
operating losses or operating cash flows.
18
Sprint Corporation
PCS GROUP
SUPPLEMENTAL OPERATING INFORMATION (unaudited)
(millions, except selected statistics)
Quarters Ended
-----------------------------------------------------------------------
December 31, September 30, June 30, March 31,
1999 1999 1999 1999
-----------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Net operating revenues $ 1,055 $ 901 $ 780 $ 637
--------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and products 951 795 687 717
Selling, general and administrative 605 503 431 398
Depreciation 280 276 259 245
Amortization 131 117 111 104
Merger related costs - - - -
--------------------------------------------------------------------------------------------------------------
Total operating expenses 1,967 1,691 1,488 1,464
--------------------------------------------------------------------------------------------------------------
Operating loss $ (912) $ (790) $ (708) $ (827)
-----------------------------------------------------------------------
Average revenue per user (ARPU)
(dollars) $ 58 $ 58 $ 58 $ 56
-----------------------------------------------------------------------
Cost to Acquire (dollars) $ 420 $ 450 $ 470 $ 495
-----------------------------------------------------------------------
Cash Cost per User (dollars) $ 45 $ 48 $ 48 $ 53
-----------------------------------------------------------------------
The supplemental operating information presented above has been restated to
reflect the impact of SEC Staff Accounting Bulletin No. 101 and the
reclassification of bad debt expense to a component of selling, general and
administrative costs (previously classified as a reduction of revenue)
consistent with industry standards. These restatements had no effect on reported
operating losses or operating cash flows.
19
Sprint Corporation
PCS GROUP
SUPPLEMENTAL OPERATING INFORMATION (unaudited)
(millions, except selected statistics)
Years Ended
-----------------------------------------
December 31, December 31,
2000 1999
-----------------------------------------
---------------------------------------------------------------------------------------
Net operating revenues $ 6,341 $ 3,373
---------------------------------------------------------------------------------------
Operating expenses
Costs of services and products 3,942 3,150
Selling, general and administrative 2,426 1,937
Depreciation 1,339 1,060
Amortization 538 463
Merger related costs 24 -
---------------------------------------------------------------------------------------
Total operating expenses 8,269 6,610
---------------------------------------------------------------------------------------
Operating loss $ (1,928) $ (3,237)
-----------------------------------------
Average revenue per user (ARPU) (dollars) $ 59 $ 58
-----------------------------------------
Cost to Acquire (dollars) $ 365 $ 455
-----------------------------------------
Cash Cost per User (dollars) $ 35 $ 48
-----------------------------------------
The supplemental operating information presented above has been restated to
reflect the impact of SEC Staff Accounting Bulletin No. 101 and the
reclassification of bad debt expense to a component of selling, general and
administrative costs (previously classified as a reduction of revenue)
consistent with industry standards. These restatements had no effect on reported
operating losses or operating cash flows.
20
Sprint Corporation
PCS GROUP
NET CUSTOMER ADDITIONS (unaudited)
(thousands)
Quarter Ended December 31, 2000
------------------------------------------------------------------
Direct Resale Affiliate Total
------------ ------------ ------------ ------------
Operational net additions 1,196 51 258 1,505
Purchases (Sales), net (1) - 1 -
-------------------------------------------------------------------------------------------------------------------------
Reported net additions 1,195 51 259 1,505
===================================================================
Year Ended December 31, 2000
-------------------------------------------------------------------
Direct Resale Affiliate Total
------------ ------------ ------------ ------------
Operational net additions 3,805 312 557 4,674
Purchases (Sales), net 15 (74) 59 -
-------------------------------------------------------------------------------------------------------------------------
Reported net additions 3,820 238 616 4,674
===================================================================
Ending customers - December 31, 1999 5,723 72 193 5,988
Ending customers - December 31, 2000 9,543 310 809 10,662
===================================================================
21
Sprint Corporation
PCS GROUP
CONDENSED COMBINED BALANCE SHEETS
(millions)
December 31, December 31,
2000 1999
-----------------------------------------
Assets
Current assets
Cash and equivalents $ 117 $ 16
Accounts receivable, net 902 572
Current tax benefit receivable from the FON Group 26 293
Inventories 515 336
Other 290 98
--------------------------------------------------------------------------------------------------------------------
Total current assets 1,850 1,315
Net property, plant and equipment 9,522 7,996
Net intangible assets 7,734 8,188
Other 657 425
--------------------------------------------------------------------------------------------------------------------
Total $ 19,763 $ 17,924
=========================================
Liabilities and group equity
Current liabilities
Current maturities of long-term debt $ 244 $ 185
Accounts payable 687 450
Construction obligations 997 1,039
Payables to the FON Group 296 136
Other 1,168 768
--------------------------------------------------------------------------------------------------------------------
Total current liabilities 3,392 2,578
Long-term debt and capital lease obligations 14,136 11,304
Deferred income taxes 90 582
Other 253 140
Group equity 1,892 3,320
--------------------------------------------------------------------------------------------------------------------
Total $ 19,763 $ 17,924
=========================================
22
Sprint Corporation
PCS GROUP
CONDENSED COMBINED CASH FLOW INFORMATION
(millions)
Years Ended
December 31,
-------------------------------
2000 1999
-------------------------------
Operating Activities
Net loss $ (1,871) $ (2,502)
Equity in net loss of affiliate 55 -
Depreciation and amortization 1,877 1,523
Deferred income taxes (591) (553)
Changes in assets and liabilities 518 (190)
Other, net 4 30
-----------------------------------------------------------------------------------------------------------
Net cash used by operating activities (8) (1,692)
-----------------------------------------------------------------------------------------------------------
Investing Activities
Capital expenditures (3,047) (2,580)
Proceeds from sales of assets 207 153
Investments in affiliates (203) -
Other, net (11) (82)
-----------------------------------------------------------------------------------------------------------
Net cash used by investing activities (3,054) (2,509)
-----------------------------------------------------------------------------------------------------------
Financing Activities
Increase in debt, net 2,862 3,167
Proceeds from stock issued 121 905
Dividends paid (15) (15)
Other, net 195 (13)
-----------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 3,163 4,044
-----------------------------------------------------------------------------------------------------------
Increase (Decrease) in cash and equivalents 101 (157)
Cash and equivalents at beginning of period 16 173
-----------------------------------------------------------------------------------------------------------
Cash and equivalents at end of period $ 117 $ 16
-------------------------------
23
Sprint Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
December 31, December 31,
2000 1999
----------------------------------------
Assets
Current assets
Cash and equivalents $ 239 $ 120
Accounts receivable, net 4,028 3,408
Inventories 949 777
Other 757 1,275
-----------------------------------------------------------------------------------------------------------------------
Total current assets 5,973 5,580
Net property, plant and equipment 25,316 21,969
Net intangible assets 8,938 9,567
Other 2,374 2,134
-----------------------------------------------------------------------------------------------------------------------
Total $ 42,601 $ 39,250
----------------------------------------
Liabilities and shareholders' equity
Current liabilities
Current maturities of long-term debt $ 1,205 $ 1,087
Accounts payable and accrued interconnection costs 2,832 2,145
Construction obligations 997 1,039
Other 2,934 2,561
-----------------------------------------------------------------------------------------------------------------------
Total current liabilities 7,968 6,832
Long-term debt and capital lease obligations 17,514 15,685
Deferred taxes and investment tax credits 1,360 1,511
Other 1,796 1,662
Common stock and other shareholders' equity
Common stock
Class A 216 216
FON 1,598 1,576
PCS 933 910
PCS preferred stock 247 247
Other shareholders' equity 10,969 10,611
-----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 13,963 13,560
-----------------------------------------------------------------------------------------------------------------------
Total $ 42,601 $ 39,250
----------------------------------------
24
Sprint Corporation
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(millions)
Years Ended
December 31,
----------------------------
2000 1999
----------------------------
Operating Activities
Net income (loss) $ 93 $ (935)
Discontinued operation, net (675) 130
Equity in net losses of affiliates 256 70
Depreciation and amortization 4,144 3,652
Deferred income taxes (205) (333)
Changes in assets and liabilities 427 (635)
Other, net 275 3
---------------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,315 1,952
---------------------------------------------------------------------------------------------------
Investing Activities
Capital expenditures
FON Group (4,105) (3,534)
PCS Group (3,047) (2,580)
Investments in and loans to affiliates, net (889) (135)
Proceeds from sales of assets 258 243
Purchase of fixed wireless broadband companies, net of cash
acquired - (618)
Other, net (27) (149)
---------------------------------------------------------------------------------------------------
Net cash used by continuing operations (7,810) (6,773)
Proceeds from the sale of investment in Global One 1,403 -
Net investing activity of discontinued operations - (384)
---------------------------------------------------------------------------------------------------
Net cash used by investing activities (6,407) (7,157)
---------------------------------------------------------------------------------------------------
Financing Activities
Increase in debt, net 2,257 3,972
Proceeds from stock issued 281 1,091
Dividends paid (448) (441)
Treasury stock purchases (61) (48)
Other, net 182 146
---------------------------------------------------------------------------------------------------
Net cash provided by financing activities 2,211 4,720
---------------------------------------------------------------------------------------------------
Increase (Decrease) in cash and equivalents 119 (485)
Cash and equivalents at beginning of period 120 605
---------------------------------------------------------------------------------------------------
Cash and equivalents at end of period $ 239 $ 120
----------------------------
25
2. Recent Developments. On December 13, 2000, Amalgamated Bank, an
institutional stockholder, filed a derivative action purportedly on behalf of
the registrant against certain of the registrant's current and former officers
and directors in the Circuit Court of Jackson County, Missouri. The complaint
alleges that the individual defendants breached their fiduciary duties to the
registrant and were unjustly enriched by making undisclosed amendments to the
registrant's stock option plans, by failing to disclose certain information
concerning regulatory approval of the proposed merger of the registrant and
WorldCom, and by overstating the registrant's earnings for the first quarter of
2000. The plaintiff seeks damages, to be paid to the registrant, in an
unspecified amount. Two additional, substantially identical, derivative actions
by other shareholders of the registrant have been filed, but have not been
served.
26
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 hereunto duly authorized.
Date: February 20, 2001 SPRINT CORPORATION
By: /s/ MICHAEL T. HYDE
---------------------
Name: Michael T. Hyde
Title: Assistant Secretary
27