0000101830-95-000060.txt : 19950816 0000101830-95-000060.hdr.sgml : 19950816 ACCESSION NUMBER: 0000101830-95-000060 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPRINT CORP CENTRAL INDEX KEY: 0000101830 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 480457967 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-04721 FILM NUMBER: 95563913 BUSINESS ADDRESS: STREET 1: 2330 SHAWNEE MISSION PKWY STREET 2: P O BOX 11315 CITY: WESTWOOD STATE: KS ZIP: 66205 BUSINESS PHONE: 9136243000 MAIL ADDRESS: STREET 1: 2330 SHAWNEE MISSION PKWY STREET 2: NULL CITY: WESTWOOD STATE: KS ZIP: 66205 FORMER COMPANY: FORMER CONFORMED NAME: UNITED TELECOMMUNICATIONS INC DATE OF NAME CHANGE: 19920316 FORMER COMPANY: FORMER CONFORMED NAME: UNITED UTILITIES INC DATE OF NAME CHANGE: 19731011 10-Q/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 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 1-4721 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) (913) 624-3000 (Registrant's telephone number, including area code) (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 such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No SHARES OF COMMON STOCK OUTSTANDING AT June 30, 1995 - 348,639,522 SPRINT CORPORATION FORM 10-Q/A FOR THE QUARTER ENDED JUNE 30, 1995 Explanation for amended filing: To correct the year designations on balance sheet column headings from June 30, 1994 and December 31, 1995 to June 30, 1995 and December 31, 1994, respectively. This is the only change. The following information is resubmitted: Part I - Financial Information Item 1. Financial Statements Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Cash Flows Consolidated Statements of Common Stock and Other Shareholders' Equity Condensed Notes to Consolidated Financial Statements Signatures PART 1. Item 1. SPRINT CORPORATION CONSOLIDATED BALANCE SHEETS (In Millions) As of As of June 30, December 31, 1995 1994 (Unaudited) Assets Current assets Cash and equivalents $ 286.9 $ 123.3 Accounts receivable, net of allowance for doubtful accounts of $178.2 million ($128.9 million in 1994) 1,517.1 1,469.8 Inventories 191.2 215.8 Deferred income taxes 62.3 54.2 Prepaid expenses 166.4 144.5 Other 181.1 180.9 Total current assets 2,405.0 2,188.5 Investments in equity securities 218.9 177.6 Property, plant and equipment Long distance communications services 6,383.1 6,056.3 Local communications services 12,212.8 11,827.4 Cellular and wireless communications services 993.0 818.5 Other 500.5 498.6 20,089.4 19,200.8 Less accumulated depreciation 8,927.0 8,322.2 11,162.4 10,878.6 Investments in affiliates 1,379.9 500.3 Excess of cost over net assets acquired 694.7 706.7 Other assets 463.7 492.0 $ 16,324.6 $ 14,943.7 See accompanying condensed Notes to Consolidated Financial Statements. PART 1. Item 1. SPRINT CORPORATION CONSOLIDATED BALANCE SHEETS (continued) (In Millions) As of As of June 30, December 31, 1995 1994 (Unaudited) Liabilities and shareholders' equity Current liabilities Current maturities of long-term debt $ 273.6 $ 332.4 Accounts payable 915.1 1,072.2 Accrued interconnection costs 548.6 527.6 Accrued taxes 270.2 268.5 Advance billings 168.9 167.6 Other 668.4 686.3 Total current liabilities 2,844.8 3,054.6 Long-term debt 5,791.8 4,604.8 Deferred credits and other liabilities Deferred income taxes and investment tax credits 1,256.7 1,266.4 Postretirement and other benefit obligations 877.9 850.3 Other 672.3 605.7 2,806.9 2,722.4 Redeemable preferred stock 34.7 37.1 Common stock and other shareholders' equity Common stock, par value $2.50 per share, authorized 500.0 million shares, issued 348.6 million (348.6 million in 1994) and outstanding 348.6 million (348.3 million in 1994) 871.6 871.4 Capital in excess of par or stated value 943.5 942.9 Retained earnings 3,017.5 2,730.9 Other 13.8 (20.4) 4,846.4 4,524.8 $ 16,324.6 $ 14,943.7 See accompanying condensed Notes to Consolidated Financial Statements. PART I. Item 1. SPRINT CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In Millions, Except Per Share Data) Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 Net operating revenues $ 3,365.6 $ 3,150.4 $ 6,637.1 $ 6,183.6 Operating expenses Costs of services and products 1,673.4 1,574.4 3,313.3 3,102.8 Selling, general and administrative 799.7 752.8 1,568.4 1,477.0 Depreciation and amortization 387.0 366.4 773.8 718.7 Total operating expenses 2,860.1 2,693.6 5,655.5 5,298.5 Operating income 505.5 456.8 981.6 885.1 Interest expense (100.0) (100.0) (199.2) (201.1) Other income (expense), net (14.5) (9.3) (35.0) 19.9 Income before income taxes 391.0 347.5 747.4 703.9 Income tax provision (145.3) (127.9) (277.4) (256.9) Net income 245.7 219.6 470.0 447.0 Preferred stock dividends (0.6) (0.7) (1.3) (1.4) Earnings applicable to common stock $ 245.1 $ 218.9 $ 468.7 $ 445.6 Earnings per common share $ 0.70 $ 0.63 $ 1.34 $ 1.28 Weighted average number of common shares 350.2 347.6 349.6 347.1 Dividends per common share $ 0.25 $ 0.25 $ 0.50 $ 0.50 See accompanying condensed Notes to Consolidated Financial Statements. PART I. Item 1. SPRINT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Millions) Six Months Ended June 30, 1995 1994 Operating activities Net income $ 470.0 $ 447.0 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 773.8 718.7 Deferred income taxes and investment tax credits (8.9) 44.8 Gain on sale of investment -- (34.7) Changes in operating assets and liabilities Accounts receivable, net (47.3) (140.0) Inventories and other current assets 2.5 (18.6) Accounts payable, accrued expenses and other current liabilities (146.8) (8.5) Noncurrent assets and liabilities, net 106.6 69.6 Other, net 1.5 41.6 Net cash provided by operating activities 1,151.4 1,119.9 Investing activities Capital expenditures (1,068.5) (848.0) Proceeds from sale of investment in equity securities -- 117.7 Investments in affiliates (890.1) (14.3) Distributions from affiliates 30.4 15.0 Other, net (0.8) (16.6) Net cash used by investing activities (1,929.0) (746.2) Financing activities Proceeds from long-term debt 209.8 100.2 Retirements of long-term debt (226.2) (380.3) Net increase in notes payable and commercial paper 1,144.6 73.5 Proceeds from common stock issued 3.2 28.7 Proceeds from employees stock purchase installments -- 10.5 Dividends paid (175.6) (172.0) Other, net (14.6) 10.3 Net cash provided (used) by financing activities 941.2 (329.1) Increase in cash and equivalents 163.6 44.6 Cash and equivalents at beginning of period 123.3 76.8 Cash and equivalents at end of period $ 286.9 $ 121.4 Supplemental cash flows information Cash paid for interest $ 201.1 $ 218.1 Cash paid for income taxes $ 284.6 $ 224.9 Noncash financing activities Common stock contributed to employee savings plans, at market $ -- $ 26.3 See accompanying condensed Notes to Consolidated Financial Statements. PART I. Item 1. SPRINT CORPORATION CONSOLIDATED STATEMENTS OF COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY (UNAUDITED) (In Millions) Six Months Ended June 30, 1995 Capital in Excess of Par or Common Stated Retained Stock Value Earnings Other Total Balance as of January 1, 1995 (348.6 million shares issued and 348.3 million shares outstanding) $871.4 $942.9 $ 2,730.9 $(20.4) $4,524.8 Net income -- -- 470.0 -- 470.0 Common stock dividends -- -- (174.3) -- (174.3) Preferred stock dividends -- -- (1.3) -- (1.3) Common stock issued 0.2 2.0 -- -- 2.2 Change in unrealized holding gains on investments in equity securities, net -- -- -- 26.5 26.5 Other, net -- (1.4) (7.8) 7.7 (1.5) Balance as of June 30, 1995 (348.6 million shares issued and 348.6 million shares outstanding) $871.6 $943.5 $ 3,017.5 $ 13.8 $4,846.4 See accompanying condensed Notes to Consolidated Financial Statements. PART I. Item 1. SPRINT CORPORATION CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, 1995 and 1994 The information contained in this Form 10-Q for the three and six month interim periods ended June 30, 1995 and 1994 has been prepared in accordance with instructions to Form 10-Q and Rule 1001 of Regulation S-X. In the opinion of management, all adjustments considered necessary, consisting only of normal recurring accruals, to present fairly the consolidated financial position, results of operations, and cash flows for such interim periods have been made. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The results of operations for the six months ended June 30, 1995 are not necessarily indicative of the operating results that may be expected for the year ended December 31, 1995. 1. Accounting Policies Basis of Consolidation The accompanying consolidated financial statements include the accounts of Sprint Corporation and its wholly-owned and majority owned subsidiaries (Sprint). Investments in affiliates which represent 50 percent or less ownership are accounted for using the equity method. In accordance with industry practice, revenues and related net income of non-regulated operations attributable to transactions with Sprint's regulated local exchange telephone companies have not been eliminated in the accompanying consolidated financial statements. Intercompany revenues of such entities amounted to $74 million and $85 million for the three months ended June 30, 1995 and 1994, respectively, and $145 million and $150 million for the six months ended June 30, 1995 and 1994, respectively. All other significant intercompany transactions have been eliminated. Classification of Operations The long distance communications services division provides domestic voice, video, and data communications services across certain specified geographical boundaries, as well as international long distance communications services. The terms under which the division offers its services to the public are subject to different levels of state and federal regulation, but rates are generally not subject to rate-base regulation. The local communications services division consists principally of the operations of Sprint's regulated telephone companies which provide local exchange services, access by telephone customers and other carriers to local exchange facilities and long distance services within specified geographical areas. The cellular and wireless communications services division consists of wholly-owned and majority-owned interests in partnerships and corporations operating cellular and wireless communications properties in various metropolitan and rural service area markets. The product distribution and directory publishing businesses include the wholesale distribution of telecommunications products and the publishing and marketing of white and yellow page telephone directories. Reclassifications Certain amounts previously reported for prior periods have been reclassified to conform to the current period presentation in the accompanying consolidated financial statements. Such reclassifications had no effect on the results of operations or shareholders' equity as previously reported. 2. Investments in Equity Securities Investments in equity securities are classified as available for sale and reported at fair value (estimated based on quoted market prices). As of June 30, 1995 and December 31, 1994, the cost of such investments was $109 million, with gross unrealized holding gains of $110 million and $69 million, respectively, reflected as additions to other shareholders' equity, net of related income taxes. During the six months ended June 30, 1994, Sprint sold an investment in equity securities, realizing a gain of $35 million, which increased net income by $22 million ($0.06 per share). 3. Long-Term Debt Long-term debt increased $1.19 billion as of June 30, 1995 compared to December 31, 1994 primarily reflecting borrowings to support commitments associated with the Sprint Telecommunications Venture. This increase in borrowings was primarily comprised of notes payable and commercial paper which are classified as long-term debt due to Sprint's intent and ability to refinance such borrowings on a long-term basis. 4. Income Taxes The differences which cause the effective income tax rate to vary from the statutory federal income tax rate of 35 percent for the six months ended June 30, 1995 and 1994, respectively, are as follows (in millions): Six Months Ended June 30, 1995 1994 Income tax provision at the statutory rate $ 261.6 $ 246.4 Effect of: Investment tax credits included in income (7.6) (11.2) State income taxes, net of federal income tax effect 27.0 27.4 Other, net (3.6) (5.7) Income tax provision $ 277.4 $ 256.9 Effective income tax rate 37.1% 36.5% 5. Contingencies Litigation, Claims and Assessments Following announcement in 1992 of Sprint's merger agreement with Centel Corporation (Centel), class action suits were filed against Centel and certain of its officers and directors in federal and state courts. The state suits have been dismissed, while the federal suits have been consolidated into a single action which seeks damages for alleged violations of securities laws. In January 1995, a purported class action suit was filed against Centel's financial advisors in state court in New York in connection with the Sprint/Centel merger. Sprint may have indemnification obligations to the financial advisors in connection with this suit. Various other suits arising in the ordinary course of business are pending against Sprint. Management cannot predict the ultimate outcome of these actions but believes they will not result in a material effect on Sprint's consolidated financial statements. Accounts Receivable Sold with Recourse Under an agreement available through December 1995, Sprint may sell on a continuous basis, with recourse, up to $600 million of undivided interests in a designated pool of its accounts receivable. Subsequent collections of receivables sold to investors are typically reinvested in the pool. Sprint is required to repurchase the designated pool of accounts receivable only upon the occurrence of specified events involving non-collectibility of accounts. As of June 30, 1995, Sprint had not been required to repurchase receivables under this recourse provision. Because Sprint retains credit losses associated with its accounts receivable, any exposure related to this retention is estimated in conjunction with Sprint's calculation of its reserve for uncollectible accounts. On an annual basis, subject to the approval of the investors, Sprint may extend the agreement for an additional year. Receivables sold that remained uncollected as of June 30, 1995 aggregated $600 million. 6. Subsequent Event In August 1995, Sprint's board of directors declared a common stock dividend of $0.25 per share payable on September 29, 1995. 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 14, 1995