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) January 3, 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 2. Acquisition or Disposition of Assets.
On January 3, 2003, Sprint Corporation ("Sprint") closed the sale to R.H.
Donnelley Corporation, a Delaware corporation ("Donnelley"), of all of the
issued and outstanding shares of capital stock of DirectoriesAmerica, Inc. and
Centel Directory Company for approximately $2.23 billion in cash.
DirectoriesAmerica, Inc. owns all of the issued and outstanding capital stock of
Sprint Publishing and Advertising, Inc., a Kansas corporation which publishes
white and yellow page directories in certain of the local exchange areas served
by Sprint's local division. Centel Directory Company owns a membership interest
in CenDon, LLC, a Delaware limited liability company which publishes white and
yellow page telephone directories in the remaining local exchange areas served
by Sprint's local division. The amount of the consideration was derived through
arm's length negotiations.
Before the sale Donnelley owned a membership interest in CenDon, LLC and
served as the exclusive sales agent for the limited liability company.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited pro forma condensed consolidated balance
sheet as of September 30, 2002 gives effect to this sale as if the
transaction had occurred on September 30, 2002.
The accompanying unaudited pro forma condensed consolidated statements
of operations for the nine months ended September 30, 2002 and the
year ended December 31, 2001 give effect to the sale as if the
transaction occurred January 1, 2001. The non-recurring one-time gain
associated with this transaction is not included.
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Sprint Corporation
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
September 30, 2002
(millions)
Sprint
Historical Corporation
Sprint Pro Forma Consolidated
Corporation Adjustments Pro Forma
(A) (B)
Assets
Current assets
Cash and equivalents $ 738 $ 2,217 $ 2,955
Other current assets 5,451 (826) 4,625
-----------------------------------------------
Total current assets 6,189 1,391 7,580
Assets of discontinued operation 332 (332) -
Net property, plant and equipment 28,902 - 28,902
Net intangibles 9,042 - 9,042
Other assets 1,538 (13) 1,525
-----------------------------------------------
Total $ 46,003 $ 1,046 $ 47,049
-----------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities
Short-term borrowings and current maturities of long-term debt $ 1,226 $ - $ 1,226
Other current liabilities 6,027 5 6,032
-----------------------------------------------
Total current liabilities 7,253 5 7,258
Liabilities of discontinued operation 229 (229) -
Noncurrent liabilities
Long-term debt and capital lease obligations 19,433 - 19,433
Equity unit notes 1,725 - 1,725
Other noncurrent liabilities 4,060 (40) 4,020
-----------------------------------------------
Total noncurrent liabilities 25,218 (40) 25,178
Redeemable preferred stock 256 - 256
Shareholders' equity
Common stock
Class A FT 22 - 22
FON 1,787 - 1,787
PCS 998 - 998
Retained earnings 323 1,310 1,633
Other shareholders' equity 9,917 - 9,917
-----------------------------------------------
Total shareholders' equity 13,047 1,310 14,357
Total $ 46,003 $ 1,046 $ 47,049
-----------------------------------------------
See Notes to Pro Forma Condensed Consolidated Financial Statements
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Sprint Corporation
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
Nine Months Ended September 30, 2002
(millions)
Sprint
Historical Corporation
Sprint Pro Forma Consolidated
Corporation Adjustments Pro Forma
(A)
Net Operating Revenues $ 20,102 $ - $ 20,102
Operating Expenses
Costs of services and products 9,210 - 9,210
Selling, general and administrative 5,407 - 5,407
Depreciation 3,625 - 3,625
Amortization 4 - 4
Restructuring and asset impairments 144 - 144
--------------------------------------------------
Total operating expenses 18,390 - 18,390
--------------------------------------------------
Operating Income 1,712 - 1,712
Interest expense (1,044) 116C (928)
Other expense, net (234) - (234)
--------------------------------------------------
Income from continuing operations before income taxes 434 116 550
Income tax (expense) benefit 37 (43)D (6)
--------------------------------------------------
Income from Continuing Operations $ 471 $ 73 $ 544
--------------------------------------------------
See Notes to Pro Forma Condensed Consolidated Financial Statements
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Sprint Corporation
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
Year Ended December 31, 2001
(millions)
Sprint
Historical Corporation
Sprint Pro Forma Consolidated
Corporation Adjustments Pro Forma
(A) (E)
Net Operating Revenues $ 26,071 $ (556) $ 25,515
Operating Expenses
Costs of services and products 12,995 (229) 12,766
Selling, general and administrative 7,325 (67) 7,258
Depreciation 4,217 (8) 4,209
Amortization 382 - 382
Restructuring and asset impairments 1,814 (1) 1,813
---------------------------------------------------
Total operating expenses 26,733 (305) 26,428
---------------------------------------------------
Operating Loss (662) (251) (913)
Interest expense (1,181) 1 (1,027)
153C
Other expense, net (183) 2 (181)
---------------------------------------------------
Loss from continuing operations before income taxes (2,026) (95) (2,121)
Income tax (expense) benefit 624 98 665
(57)D
---------------------------------------------------
Loss from Continuing Operations $ (1,402) $ (54) $ (1,456)
---------------------------------------------------
See Notes to Pro Forma Condensed Consolidated Financial Statements
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Sprint Corporation
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
A. Reflects the historical financial position and results of operations of Sprint. Effective September 30, 2002, the
assets, liabilities, and results of operations of Sprint's directory publishing business were reported as discontinued
operations.
B. To record the removal of the directory publishing assets and liabilities as a result of the sale, the net proceeds
on the sale, and the estimated after-tax gain. The following table summarizes this transaction:
(millions)
Sale proceeds $ 2,230
Less: Net estimated transaction and settlement costs (13)
--------------------
Net cash proceeds 2,217
Less net assets removed as of September 30, 2002
consisting of the following:
Gross assets removed (332)
Gross liabilities removed 229
Adjustments to certain assets and
liabilities related to the directory
publishing business retained by Sprint:
Other assets (13)
Other current liabilities (5)
Other non-current liabilities 40
--------------------
Estimated gain on sale 2,136
Less: Estimated tax expense (826)
--------------------
Net gain on sale $ 1,310
--------------------
Sprint retains certain assets and liabilities associated with the directory publishing business, primarily associated
with deferred income taxes, accrued income taxes, and post retirement and other benefit obligations. The estimated tax expense
is calculated using Sprint's estimated statutory Federal and state income tax rates. Any tax liability associated with
the gain from this transaction will be substantially offset by loss carry-forwards.
C. To reflect reduced interest expense assuming reduction of outstanding borrowings resulting from the application of all
net cash proceeds provided by the sale of Sprint's directory publishing business. Interest expense is computed using
Sprint's weighted average effective interest rate on long-term debt.
D. To record the impact on income taxes of pro forma adjustment C using Sprint's estimated statutory Federal and state
income tax rates.
E. To reflect the adjustments to continuing operations to remove the results of Sprint's directory publishing business
unless otherwise identified by footnotes C and D.
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Item 7. Financial Statements and Exhibits
(c) Exhibits
2(a) Stock Purchase Agreement, by and between Sprint Corporation,
Centel Directories LLC and R.H. Donnelley Corporation, dated as
of September 21, 2002 (filed as Exhibit 2 to Sprint Corporation
Current Report on Form 8-K dated September 21, 2002 and
incorporated herein by reference).
2(b) Supplemental Agreement to Stock Purchase Agreement, by and
between Sprint Corporation, Centel Directories LLC and R.H.
Donnelley Corporation, dated as of December 31, 2002.
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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: January 7, 2003 By: /s/ Michael T. Hyde
Michael T. Hyde, Assistant Secretary
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EXHIBIT INDEX
Exhibit
Number Description Page
2(a) Stock Purchase Agreement, by and between Sprint
Corporation, Centel Directories LLC and R.H. Donnelley
Corporation, dated as of September 21, 2002 (filed as
Exhibit 2 to Sprint Corporation Current Report on Form
8-K dated September 21, 2002 and incorporated herein by
reference).
2(b) Supplemental Agreement to Stock Purchase Agreement, by and
between Sprint Corporation, Centel Directories LLC and
R.H. Donnelley Corporation, dated as of December 31, 2002.
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