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) June 10, 2003
SPRINT CORPORATION
(Exact name of Registrant as specified in its charter)
Kansas 1-04721 48-0457967
(State of Incorporation) (Commission File Number) (I.R.S.Employer
Identification No.)
6200 Sprint Parkway, Overland Park, Kansas 66251
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (913) 624-3000
(Former name or former address, if changed since last report)
P. O. Box 11315, Kansas City, Missouri 64112 (Mailing address of
principal executive offices)
Item 5. Other Events.
On June 10, 2003, the registrant ("Sprint") announced that it would take
second quarter charges resulting from its decision to wind down its hosting
business and from executive separation agreements. The press release was as
follows:
Sprint Announces Second Quarter Charges Resulting from Decision to Wind Down its
Hosting Business, Executive Separation Agreements
OVERLAND PARK, Kan. - June 10, 2003 - Sprint (NYSE: FON, PCS) today announced it
expects to report an approximate 20-cents-per- share charge against its FON
Group earnings in the second quarter related to winding down its Web hosting
business. The company also expects to report a 1-cent-per-share charge in the
quarter against both FON Group and PCS Group earnings related to separation
agreements for three former executives.
The hosting actions are expected to result in pre-tax charges ranging in the
aggregate from $400 million to $475 million. These charges include approximately
$300 million related to the impairment of hosting assets, with the remainder
related to expected cash requirements for facility lease terminations, customer
migration, employee termination, and other wind-down costs. The asset impairment
charges will be recorded in the 2003 second quarter and the remaining charges
will be recognized in subsequent periods as the company executes plans related
to migrating hosting customers to other providers. The decision to wind down the
hosting business reflects an ongoing evaluation of the company's strategic
direction by Sprint's new executive management team. The Global Markets Group
will continue to focus on strategic IP-related opportunities. For the 12 months
ending March 31, 2003, hosting activities contributed approximately $60 million
in revenue and diluted FON Group earnings by approximately 10 cents per share.
"Sprint's priorities have clearly been articulated and include growing top-line
revenue and protecting and improving the company's bottom line," said Howard
Janzen, president, Global Markets Group. "Those priorities require us constantly
to monitor and review which areas make both economic and strategic sense to
pursue on behalf of customers, investors and shareholders."
Specifically, Sprint:
o Plans to transition current hosting customers to preferred third-party
providers or strategic partners under a migration plan to meet the critical
needs of customers.
o Will no longer pursue direct sales of hosting, including managed hosting
and collocation services, to enterprise business customers. Sprint's direct
sales force will continue to focus on aggressively selling IP-related
products and services that are critical to hosting, such as managed
services and network transport on its Tier 1 IP backbone.
o Will phase out operations at eight Sprint E|Solutions Centers once the
customer migration plan has been completed. These centers are located in
Atlanta; Boston; Dallas; Denver; Los Angeles; New York City; Sacramento,
Calif.; and Santa Clara, Calif.
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o Plans to transition two Sprint E|Solutions Centers in the Kansas City area
and Reston, Va., to corporate data centers that also support other Sprint
network capabilities.
The hosting actions are expected to affect approximately 500 employees over the
course of the customer migration plan. Most of this reduction in force is
expected to be completed by the end of 2003.
Sprint also will recognize in the 2003 second quarter pre-tax charges of
approximately $36 million in connection with separation agreements agreed to by
Sprint and William T. Esrey, former chairman and chief executive officer; Ronald
T. LeMay, former president and chief operating officer; and J. Richard Devlin,
former executive vice president - general counsel, external affairs and
corporate secretary. The charges include $15 million of non-cash expense
associated with accounting for modifications to certain terms of stock options
granted in prior periods, as required by Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation." Most of the FON
options have exercise prices that are approximately two times the current market
prices, while most of the PCS options have exercise prices that are
approximately five times the current market prices. The charge to earnings in
the second quarter will be approximately one cent per share each for the FON
Group and the PCS Group. The agreements for Messrs. Esrey and Devlin will be
filed with the SEC with a Form 8-K. Mr. LeMay's agreement was filed with the SEC
on May 14, 2003.
Over the next four quarters, the company will also recognize pre- tax charges of
$6 million related to the consulting and non- compete components of the
separation agreements.
Cautionary Statement regarding forward-looking information
This news release includes "forward-looking statements" within the meaning of
securities laws. The statements in this news release regarding the business
outlook and expected performance as well as other statements that are not
historical facts are forward-looking statements. The words "estimate,"
"project," "intend," "expect," "believe," and similar expressions identify
forward-looking statements. Forward-looking statements are estimates and
projections reflecting management's judgment and involve a number of risks and
uncertainties that could cause actual results to differ materially from those
suggested by the forward-looking statements. With respect to these
forward-looking statements, Sprint has made assumptions regarding, among other
things, customer and network usage, customer growth, pricing, costs to acquire
customers and to provide services, the timing of various events and the economic
environment. Important factors that could cause actual results to differ
materially from estimates or projections contained in the forward-looking
statements include:
o extent and duration of the current economic downturn;
o the effects of vigorous competition in the markets in which Sprint
operates;
o the effects of mergers and consolidations within the telecommunications
industry and unexpected announcements or developments from others in the
telecommunications industry;
o the uncertainties related to the outcome of bankruptcies affecting the
telecommunications industry;
o the uncertainties related to Sprint's investments;
o the impact of any unusual items resulting from ongoing evaluations of
Sprint's business strategies;
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o the impact of new and emerging technologies on Sprint's business;
o the possibility of one or more of the markets in which Sprint competes
being impacted by changes in political or other factors such as monetary
policy, legal and regulatory changes including the impact of the
Telecommunications Act of 1996 (Telecom Act), or other external factors
over which Sprint has no control; and
o other risks referenced from time to time in Sprint's filings with the
Securities and Exchange Commission ("SEC").
Sprint believes these forward-looking statements are reasonable; however, you
should not place undue reliance on forward-looking statements, which are based
on current expectations and speak only as of the date of this release. Sprint is
not obligated to publicly release any revisions to forward-looking statements to
reflect events after the date of this release. Sprint provides a detailed
discussion of risk factors in periodic SEC filings, including its 2002 Form
10-K, and you are encouraged to review these filings.
About Sprint
Sprint is a global communications company serving more than 26 million business
and residential customers in over 70 countries. With approximately 72,000
employees worldwide and nearly $27 billion in annual revenues, Sprint is widely
recognized for developing, engineering and deploying state-of-the-art network
technologies, including the United States' first nationwide all- digital,
fiber-optic network and an award-winning Tier 1 Internet backbone. Sprint
provides local voice and data services in 18 states and operates the largest
100-percent digital, nationwide PCS wireless network in the United States.
Item 7. Financial Statements and Exhibits.
Exhibits
99(a)Letter Agreement dated May 12, 2003 and Full and Final General Release
effective May 12, 2003, between Sprint Corporation and J. Richard Devlin.
99(b)Separation Agreement dated as of May 12, 2003, by and among Sprint
Corporation, Sprint/United Management Company and William T. Esrey.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
SPRINT CORPORATION
Date: June 10, 2003
By: /s/ Michael T. Hyde
Michael T. Hyde, Assistant Secretary
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EXHIBIT INDEX
No. Description
99(a)Letter Agreement dated May 12, 2003 and Full and Final General Release
effective May 12, 2003, between Sprint Corporation and J. Richard Devlin.
99(b)Separation Agreement dated as of May 12, 2003, by and among Sprint
Corporation, Sprint/United Management Company and William T. Esrey.