-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sSgtFJ9Ht4ufIjV8ryfQd2EH1RpaAj0XrEqmj4Tc9IesgsNXsGE0BwA42o/7Z6qt O+T+bkfE7l3NDCP0eyF4pw== 0000101830-94-000038.txt : 19941116 0000101830-94-000038.hdr.sgml : 19941116 ACCESSION NUMBER: 0000101830-94-000038 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: MSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPRINT CORP CENTRAL INDEX KEY: 0000101830 STANDARD INDUSTRIAL CLASSIFICATION: 4813 IRS NUMBER: 480457967 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04721 FILM NUMBER: 94559230 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 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1994 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 incorporation (I.R.S. Employer 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 September 30, 1994 -- 348,522,395 PART 1. Item 1. SPRINT CORPORATION CONSOLIDATED BALANCE SHEETS (In Millions) As of As of September December 30, 1994 31, 1993 (Unaudited) Assets Current assets Cash and equivalents $ 92.6 $ 76.8 Accounts receivable, net of allowance for doubtful accounts of $137.5 million ($121.9 million in 1993) 1,435.5 1,230.6 Investment in equity securities -- 130.2 Inventories 201.0 182.3 Deferred income taxes 68.1 81.1 Prepaid expenses 142.7 120.7 Other 145.0 156.1 Total current assets 2,084.9 1,977.8 Investments in equity securities 177.9 173.1 Property, plant and equipment Long distance communications services 5,755.0 5,492.7 Local communications services 11,757.5 11,226.4 Cellular and wireless communications services 721.4 569.6 Other 455.3 433.7 18,689.2 17,722.4 Less accumulated depreciation 8,118.5 7,407.6 10,570.7 10,314.8 Cellular minority partnership interests 299.4 284.9 Excess of cost over net assets acquired 712.0 739.5 Other assets 632.1 658.8 $ 14,477.0 $ 14,148.9 See accompanying condensed notes to consolidated financial statements. PART 1. Item 1. SPRINT CORPORATION CONSOLIDATED BALANCE SHEETS (continued) (In Millions) As of As of September December 30, 1994 31, 1993 (Unaudited) Liabilities and Shareholders' Equity Current liabilities Current maturities of long-term debt $ 278.9 $ 523.4 Accounts payable 819.0 875.2 Accrued interconnection costs 530.7 537.7 Accrued taxes 352.2 307.2 Advance billings 164.7 150.6 Other 671.3 674.5 Total current liabilities 2,816.8 3,068.6 Long-term debt 4,580.0 4,571.0 Deferred credits and other liabilities Deferred income taxes and investment tax credits 1,212.8 1,229.9 Postretirement and other benefit obligations 844.8 793.1 Other 579.0 529.4 2,636.6 2,552.4 Redeemable preferred stock 37.2 38.6 Common stock and other shareholders' equity Common stock, par value $2.50 per share, authorized 500.0 million shares, issued and outstanding 348.5 million (343.4 million in 1993) 871.3 858.5 Capital in excess of par or stated value 941.9 827.4 Retained earnings 2,602.0 2,184.2 Other (8.8) 48.2 4,406.4 3,918.3 $ 14,477.0 $ 14,148.9 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 Nine Months Ended Ended September 30, September 30, 1994 1993 1994 1993 Net operating revenues $ 3,233.8 $ 2,867.6 $ 9,417.4 $8,386.5 Operating expenses Costs of services and products 1,615.0 1,435.1 4,717.8 4,225.9 Selling, general and administrative 781.7 690.8 2,258.7 2,008.5 Depreciation and amortization 366.8 338.5 1,085.5 1,013.7 Merger, integration and restructuring costs -- 44.5 -- 292.5 Total operating expenses 2,763.5 2,508.9 8,062.0 7,540.6 Operating income 470.3 358.7 1,355.4 845.9 Interest expense (98.6) (114.2) (299.7) (345.1) Other income (expense), net (9.3) (11.4) 10.6 (20.2) Income from continuing operations before income taxes 362.4 233.1 1,066.3 480.6 Income tax provision (132.3) (96.4) (389.2) (190.1) Income from continuing operations 230.1 136.7 677.1 290.5 Discontinued operations, net -- -- -- (12.3) Extraordinary losses on early extinguishments of debt, net -- (14.5) -- (28.2) Cumulative effect of changes in accounting principles, net -- -- -- (384.2) Net income (loss) 230.1 122.2 677.1 (134.2) Preferred stock dividends (0.6) (0.6) (2.0) (2.1) Earnings (loss) applicable to common stock $ 229.5 $ 121.6 $ 675.1 $(136.3) Earnings (loss) per common share Continuing operations $ 0.66 $ 0.39 $ 1.94 $0.84 Discontinued operations -- -- -- (0.04) Extraordinary item -- (0.04) -- (0.08) Cumulative effect of changes in accounting principles -- -- -- (1.12) Total $ 0.66 $ 0.35 $ 1.94 $(0.40) Weighted average number of common shares 349.4 344.6 348.0 343.1 Dividends per common share $ 0.25 $ 0.25 $ 0.75 $ 0.75 See accompanying condensed notes to consolidated financial statements. PART I. Item 1. SPRINT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Millions) Nine Months Ended September 30, 1994 1993 Operating activities Net income (loss) $ 677.1 $ (134.2) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization 1,085.5 1,013.7 Gain on sale of investment in equity securities (34.7) -- Extraordinary losses on early extinguishments of debt -- 28.0 Cumulative effect of changes in accounting principles -- 384.2 Deferred income taxes and investment tax credits 20.4 5.5 Changes in operating assets and liabilities Accounts receivable, net (204.9) (129.2) Inventories and other current assets (31.9) (4.8) Accounts payable, accrued expenses and other current liabilities 2.9 200.9 Noncurrent assets and liabilities, net 120.5 99.3 Other, net 51.7 70.4 Net cash provided by operating activities 1,686.6 1,533.8 Investing activities Capital expenditures (1,327.4) (1,084.6) Proceeds from sale of investment in equity securities 117.7 -- Other, net (30.4) 35.4 Net cash used by investing activities (1,240.1) (1,049.2) Financing activities Proceeds from long-term debt 103.2 840.4 Retirements of long-term debt (447.9) (1,171.6) Net increase (decrease) in notes payable and commercial paper 109.2 (5.5) Proceeds from common stock issued 41.7 59.8 Proceeds from employees stock purchase installments 21.1 20.1 Dividends paid (261.6) (260.5) Other, net 3.6 (15.3) Net cash used by financing activities (430.7) (532.6) Increase (decrease) in cash and equivalents 15.8 (48.0) Cash and equivalents at beginning of period 76.8 128.8 Cash and equivalents at end of period $ 92.6 $ 80.8 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) For the Nine Months Ended September 30, 1994 Capital in Excess of Par or Common Stated Retained Stock Value Earnings Other Total Balance as of January 1, 1994 (343.4 million shares issued and outstanding) $858.5 $827.4 $ 2,184.2 $ 48.2 $ 3,918.3 Net income -- -- 677.1 -- 677.1 Common stock dividends -- -- (259.6) -- (259.6) Preferred stock dividends -- -- (2.0) -- (2.0) Employee stock purchase and other installments received, net -- -- -- 23.1 23.1 Common stock issued 12.7 111.0 -- (53.1) 70.6 Change in unrealized holding gains on investments in equity securities, net -- -- -- (27.0) (27.0) Other, net 0.1 3.5 2.3 -- 5.9 Balance as of September 30, 1994 (348.5 million shares issued and outstanding) $871.3 $941.9 $ 2,602.0 $ (8.8) $ 4,406.4 See accompanying condensed notes to consolidated financial statements. PART I. Item 1. SPRINT CORPORATION CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The information contained in this Form 10-Q for the three and nine-month interim periods ended September 30, 1994 and 1993 has been prepared in accordance with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments considered necessary, consisting only of normal recurring and certain nonrecurring accruals (see Notes 2, 3, and 5), 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 (GAAP) have been condensed or omitted. The results of operations for the nine months ended September 30, 1994 are not necessarily indicative of the operating results that may be expected for the year ended December 31, 1994. 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 less than 50 percent- owned partnerships or joint ventures 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 rate-regulated telephone companies have not been eliminated in the accompanying consolidated financial statements. Intercompany revenues of such entities amounted to $74 million and $63 million for the three months ended September 30, 1994 and 1993, respectively, and $224 million and $178 million for the nine months ended September 30, 1994 and 1993, respectively. All other significant intercompany transactions have been eliminated. Classification of Operations The long distance communications services division provides domestic voice and data communications services across certain specified geographical boundaries, as well as international long distance communications services. Rates charged for such services sold to the public are subject to different levels of state and federal regulation, but are generally not subject to rate-base regulation. The local communications services division consists principally of the operations of Sprint's rate-regulated telephone companies. These operations 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. Postretirement Benefits Effective January 1, 1993, Sprint changed or modified its method of accounting for certain postretirement benefits by adopting Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The resulting nonrecurring, noncash charge of $341 million ($1.00 per share), net of related income tax benefits, is reflected in the 1993 consolidated statement of income as a cumulative effect of change in accounting principle. Postemployment Benefits Effective January 1, 1993, Sprint adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits." The resulting nonrecurring, noncash charge of $11 million ($0.03 per share), net of related income tax benefits, is reflected in the 1993 consolidated statement of income as a cumulative effect of change in accounting principle. Accounting for Circuit Activity Costs Effective January 1, 1993, Sprint's long distance communications services division changed its method of accounting for certain costs related to connecting new customers to its network. The resulting nonrecurring, noncash charge of $32 million ($0.09 per share), net of related income tax benefits, is reflected in the 1993 consolidated statement of income as a cumulative effect of change in accounting principle. 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. Sprint/Centel Merger Effective March 9, 1993, Sprint consummated its merger with Centel Corporation (Centel), creating a diversified telecommunications enterprise with operations in long distance, local exchange and cellular/wireless communications services. The merger was accounted for as a pooling of interests. The transaction costs associated with the merger (consisting primarily of investment banking and legal fees) and the estimated expenses of integrating and restructuring the operations of the two companies (consisting primarily of employee severance and relocation expenses and costs of eliminating duplicative facilities) were recognized upon consummation of the merger, resulting in a nonrecurring charge of $248 million. During the three months ended September 30, 1993, an additional charge of $11 million was recognized in association with the continuing integration and restructuring efforts within the local communications services division. Such nonrecurring charges reduced income from continuing operations by $7 million ($0.02 per share) and $172 million ($0.50 per share) for the three and nine-month periods ended September 30, 1993, respectively. 3. Realignment and Restructuring Charge During the three months ended September 30, 1993, Sprint initiated a realignment and restructuring of its long distance communications services division, including the elimination of approximately 1,000 positions and the closure of two facilities. These actions were designed to improve market focus, lower costs and streamline operations within the division, and resulted in a nonrecurring charge of $34 million, which reduced net income by $21 million ($0.06 per share) for the three and nine-month periods ended September 30, 1993. 4. 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 September 30, 1994 and December 31, 1993, the cost of such investments was $119 million and $202 million, respectively, with gross unrealized holding gains of $59 million and $101 million, respectively, reflected as additions to other shareholders' equity, net of related income taxes. During the nine months ended September 30, 1994, Sprint sold an investment in common stock, realizing a gain of $35 million, which increased income from continuing operations by $22 million ($0.06 per share). 5. 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 nine months ended September 30, 1994 and 1993, are as follows (in millions): Nine Months Ended September 30, 1994 1993 Income tax provision at the statutory rate $ 373.2 $ 168.2 Effect of: Investment tax credits included in income (16.4) (18.7) State income taxes, net of federal income tax effect 39.5 17.6 Merger related costs -- 14.5 Other, net (7.1) 8.5 Income tax provision, including investment tax credits $ 389.2 $ 190.1 Effective income tax rate 36.5% 39.6% On August 10, 1993, the Revenue Reconciliation Act of 1993 was enacted which, among other changes, raised the federal income tax rate for corporations to 35 percent from 34 percent, retroactive to January 1, 1993. Accordingly, upon enactment, Sprint adjusted its deferred income tax assets and liabilities to reflect the revised rate. The resulting adjustment related to Sprint's non- regulated subsidiaries increased the income tax provisions for the three and nine-month periods ended September 30, 1993 by $13 million ($0.04 per share). Adjustments of the net deferred income tax liabilities associated with the local communications services division were generally recorded as reductions to regulatory liabilities, and accordingly, had no immediate effect on Sprint's net income. 6. Contingencies Litigation, Claims and Assessments Following announcement of Sprint's merger with 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 and seek damages for alleged violations of securities laws. These and 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 September 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. Receivables sold that remained uncollected as of September 30, 1994 aggregated $600 million. 7. Supplemental Cash Flows Information Nine Months Ended September 30, 1994 1993 Cash paid for (in millions): Interest $ 302.1 $ 326.5 Income taxes $ 326.7 $ 242.5 During the nine months ended September 30, 1994 and 1993, Sprint contributed previously unissued shares of its common stock with market values of $31 million and $27 million, respectively, to the employee savings plans. 8. Subsequent Events In October 1994, Sprint's Board of Directors declared a common stock dividend of $0.25 per share payable on December 29, 1994. On October 25, 1994, Sprint, along with Tele-Communications Inc. (TCI), Comcast Corporation (Comcast) and Cox Cable (Cox), announced the formation of a venture that will provide wireless communications services and local telephone services on a broad geographic basis within the United States. The joint venture will be owned 40 percent by Sprint, 30 percent by TCI and 15 percent each by Comcast and Cox. The parties have signed definitive agreements and created partnerships to bid jointly for Personal Communications Services (PCS) licenses to be auctioned by the Federal Communications Commission. The parties have also entered into a joint venture formation agreement, which provides the basis upon which they will develop definitive agreements for their local telephone activities. PART I. Item 2. SPRINT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Sprint Corporation (Sprint), incorporated in 1938 under the laws of Kansas, is a holding company. Sprint's principal subsidiaries provide local exchange, cellular/wireless and domestic and international long distance telecommunications services. Other subsidiaries are engaged in the wholesale distribution of telecommunications products and the publishing and marketing of white and yellow page telephone directories. Long Distance Communications Services. The long distance division is the nation's third largest long distance telephone company, operating a nationwide all-digital long distance communications network utilizing state-of-the-art fiber-optic and electronic technology. The division provides domestic voice and data communications services across certain specified geographical boundaries, as well as international long distance communications services. Rates charged by the division for its services sold to the public are subject to different levels of state and federal regulation, but are generally not subject to rate-base regulation. Local Communications Services. The local division is comprised of rate-regulated local exchange carriers (LECs) which serve approximately 6.4 million access lines in 19 states. The companies in the division operate in geographical areas called Local Access Transport Areas (LATAs) in which they provide basic local exchange and intra-LATA toll service. The division also is a reseller of interexchange long distance services and provides other carriers access to Sprint's local exchange facilities. Cellular and Wireless Communications Services. The cellular and wireless division, which serves over 882,000 cellular subscribers, primarily consists of Sprint Cellular Company and its subsidiaries. The division has operating control of 87 markets in 15 states and minority interests in 64 markets for a total population of 20.6 million, as adjusted for proportional ownership interests. Product Distribution and Directory Publishing. North Supply Company (North Supply), a wholesale distributor of telecommunications, security and alarm, and electrical products, distributes products of more than 1,200 manufacturers to approximately 9,500 customers. Products range from basics, such as wire and cable, telephones and repair parts, to complete private branch exchange (PBX) systems, transmission systems and security and alarm equipment. Sprint Publishing & Advertising along with Centel Directory Company publish and market white and yellow page telephone directories in certain of Sprint's local exchange territories, as well as in the greater metropolitan areas of Milwaukee, Wisconsin and Chicago, Illinois. The companies publish approximately 335 directories in 20 states with a circulation of 16.1 million copies. Strategic Developments On October 25, 1994, Sprint, along with Tele-Communications Inc. (TCI), Comcast Corporation (Comcast) and Cox Cable (Cox), announced the formation of a venture that will provide wireless communications services and local telephone services on a broad geographic basis within the United States. The joint venture will be owned 40 percent by Sprint, 30 percent by TCI and 15 percent each by Comcast and Cox. The parties have signed definitive agreements and created partnerships to bid jointly for Personal Communications Services (PCS) licenses to be auctioned by the Federal Communications Commission (FCC). The parties have also entered into a joint venture formation agreement, which provides the basis upon which they will develop definitive agreements for their local telephone activities. On June 14, 1994, Sprint announced that it had entered into a Memorandum of Understanding (the MOU) with Deutsche Telekom and France Telecom to form a global partnership which will offer telecommunications services to business, consumer and carrier markets worldwide. The MOU provides that Deutsche Telekom and France Telecom together will purchase approximately 42.9 million shares of a new class of Sprint common stock at a price of $47.225 per share. Deutsche Telekom and France Telecom will also purchase approximately 42.9 million shares of the new class of Sprint common stock at a price of $51.00 per share two years after the initial acquisition. As part of the transaction, Deutsche Telekom and France Telecom will be entitled to representation on Sprint's board, such representation to be based on their actual percentage ownership interest, with a minimum of two directors serving on Sprint's board so long as the two companies own at least 10 percent of the outstanding common stock of Sprint, subject to the approval of the New York Stock Exchange. The formation of the partnership and the acquisition of Sprint stock are subject to conditions, including the negotiation and execution of definitive agreements, approval by Sprint's board of directors and its shareholders, approval by the governing bodies of Deutsche Telekom and France Telecom and government and regulatory approvals. Liquidity and Capital Resources Cash flows from operating activities, which are Sprint's primary source of liquidity, were $1.7 billion during the first nine months of 1994, compared to $1.5 billion during the first nine months of 1993. This increase reflects improved operating results in all divisions. Sprint's investing activities used cash of $1.2 billion and $1.0 billion during the first nine months of 1994 and 1993, respectively. Capital expenditures, which represent Sprint's most significant investing activity, were $1.3 billion and $1.1 billion during the first nine months of 1994 and 1993, respectively. Long distance capital expenditures totaled $425 million for the first nine months of 1994 compared to $281 million for the same period in 1993. The 1994 expenditures were incurred primarily to enhance network capabilities for providing new products and services and to meet increased customer demand. Capital expenditures for the local division totaled $707 million for the first nine months of 1994 compared to $669 million for the same period in 1993. The 1994 expenditures were made to accommodate access line growth, to continue the conversion to digital technologies, and to expand the division's capabilities for providing enhanced telecommunications services. Capital expenditures for the cellular and wireless division totaled $164 million for the first nine months of 1994 compared to $106 million for the same period in 1993. The 1994 expenditures were made to support the increase in the number of cellular subscribers. Sprint anticipates total capital expenditures for the year to be approximately $2.0 billion. Investing activities in the first nine months of 1994 also include $118 million received in connection with the sale of an investment in equity securities, as well as investments made in a joint venture established to construct a satellite-based wireless messaging system. Investing activities in the first nine months of 1993 included cash received from the sale of certain assets. Financing activities used cash of $431 million in the first nine months of 1994 and $533 million in the comparable 1993 period. During the first nine months of 1994, Sprint reduced outstanding debt by $236 million. This reduction was funded by cash flows from operating activities in excess of capital expenditures and dividends, as well as proceeds received from the sale of an investment in equity securities. During the first nine months of 1993, a significant level of debt refinancing occurred to take advantage of lower interest rates. While management believes that Sprint will end 1994 having fully funded capital expenditures and dividends with cash flows from operating activities, some level of additional borrowings may be required during the 1994 fourth quarter to meet such commitments. Exclusive of cash commitments associated with the recently- announced joint venture which are discussed below, Sprint expects its external cash requirements for the remainder of the year to be approximately $150 million to $250 million. This amount includes funds which will be used to meet scheduled long-term debt maturities. The external cash requirements will be financed primarily with debt, the source of which will depend on prevailing market conditions during the remainder of the year. As discussed in "Strategic Developments," Sprint has entered into a joint venture with certain cable companies to provide wireless communications services on a broad geographic basis within the United States to consumers and businesses. The joint venture will bid on certain PCS licenses to be auctioned by the FCC beginning in the 1994 fourth quarter. In order to fund the deposit required by the FCC from all auction participants, Sprint will contribute approximately $50 million to the joint venture in November 1994. The results of the FCC's auction will likely cause the joint venture, and ultimately its partners, to enter into significant cash commitments. The amount of such commitments cannot be determined until the completion of the auction, which is anticipated to occur during the first quarter of 1995. The formation of the joint venture is not expected to require any additional significant cash contributions from Sprint in the 1994 fourth quarter. However, Sprint expects cash requirements associated with investing activities to increase significantly in 1995 due to commitments associated with the PCS auction and with the continued development of the infrastructure and presence in the communications marketplace of the joint venture, together with the planned joint venture to provide local telephone service in competition with non-Sprint LECs. Sprint expects to ultimately fund such increased cash requirements with a portion of the proceeds from the purchase of a new class of Sprint common stock by Deutsche Telekom and France Telecom. As of September 30, 1994, Sprint had the ability to borrow $626 million under a revolving credit agreement with a syndicate of domestic and international banks and other bank commitments. Other available financing sources include a Medium-Term Note program, under which Sprint may offer for sale up to $175 million of unsecured senior debt securities. In addition, Sprint may offer for sale approximately $1.3 billion of debt securities pursuant to shelf registration statements filed with the Securities and Exchange Commission. The aggregate amount of additional borrowings which can be incurred is ultimately limited by certain covenants contained in existing debt agreements. As of September 30, 1994, Sprint had borrowing capacity of approximately $4.0 billion under the most restrictive of its debt covenants. The most restrictive covenant applicable to dividends results from Sprint's revolving credit agreement. Among other restrictions, the agreement requires Sprint to maintain specified levels of consolidated net worth, as defined. As a result of this requirement, $1.6 billion of Sprint's $2.6 billion consolidated retained earnings were effectively restricted from the payment of dividends as of September 30, 1994. Sprint is in compliance with all restrictive or financial covenants relating to its debt arrangements at September 30, 1994. Financial Condition Current Assets The increase in accounts receivable as of September 30, 1994 compared to December 31, 1993 was generally due to a 12 percent increase in revenue and the timing of sales activities and cash collections. The investment in equity securities classified as a current asset as of December 31, 1993 was sold during the nine months ended September 30, 1994 (see Note 4 of the "Condensed Notes to Consolidated Financial Statements"). Current Liabilities Current maturities of long-term debt as of September 30, 1994 decreased compared to December 31, 1993 due to scheduled debt payments. The increase in accrued taxes reflects the improved operating results. Results Of Operations Consolidated Income from continuing operations of $230 million, or $0.66 per share, for the three months ended September 30, 1994 represented a 68 percent increase over income from continuing operations of $137 million, or $0.39 per share, for the corresponding period in 1993. The results for the third quarter of 1993 include a $7 million ($0.02 per share) charge related to the merger with Centel Corporation (see Note 2 of the "Condensed Notes to Consolidated Financial Statements"), a $21 million ($0.06 per share) charge related to the realignment and restructuring of Sprint's long distance division (see Note 3 of the "Condensed Notes to Consolidated Financial Statements") and a $13 million ($0.04 per share) charge associated with the enactment of the Revenue Reconciliation Act of 1993 (see Note 5 of the "Condensed Notes to Consolidated Financial Statements"). For the nine months ended September 30, 1994, income from continuing operations was $677 million, or $1.94 per share, compared with $291 million, or $0.84 per share, for the same period in 1993. Results for the first nine months of 1994 included a $22 million ($0.06 per share) gain related to the sale of an investment in common stock (see Note 4 of the "Condensed Notes to Consolidated Financial Statements"). Results for the first nine months of 1993 included a $172 million ($0.50 per share) charge related to merger and integration costs associated with the Centel merger and the aforementioned charges related to both the realignment and restructuring of Sprint's long distance division and tax law change. Total net operating revenues for the quarter ended September 30, 1994 were $3.2 billion, a 13 percent increase over net operating revenues of $2.9 billion for the same period in 1993. For the year-to-date period ended September 30, 1994, total net operating revenues increased 12 percent to $9.4 billion from $8.4 billion for the nine months ended September 30, 1993. Such increases primarily resulted from strong growth in the long distance and cellular divisions. A detailed discussion of the components of operating income by Sprint's operating segments follows. Long Distance Communications Services Selected Operating Results (In Millions) Three Months Ended September 30, Variance 1994 1993 Dollar Percent Net operating revenues $ 1,739.8 $ 1,540.5 $ 199.3 12.9% Operating expenses Interconnection 741.3 674.4 66.9 9.9% Operations 242.0 218.5 23.5 10.8% Selling, general and administrative 451.8 394.2 57.6 14.6% Depreciation and amortization 139.7 127.8 11.9 9.3% Total operating expenses 1,574.8 1,414.9 159.9 11.3% Operating income $ 165.0 $125.6 $ 39.4 31.4% Operating margin 9.5% 8.2% Selected Operating Results (In Millions) Nine Months Ended September 30, Variance 1994 1993 Dollar Percent Net operating revenues $ 5,095.7 $ 4,541.7 $ 554.0 12.2% Operating expenses Interconnection 2,237.0 2,021.0 216.0 10.7% Operations 676.8 616.9 59.9 9.7% Selling, general and administrative 1,305.2 1,144.3 160.9 14.1% Depreciation and amortization 410.4 391.9 18.5 4.7% Total operating expenses 4,629.4 4,174.1 455.3 10.9% Operating income $ 466.3 $ 367.6 $ 98.7 26.9% Operating margin 9.2% 8.1% Net operating revenues for the third quarter and first nine months of 1994 increased 13 percent and 12 percent, respectively, over the comparable 1993 periods. The increases were generally due to traffic volume growth of 13 percent and 12 percent for the third quarter and first nine months of 1994, respectively. Average revenue per minute received from customers was relatively constant. The increases in net operating revenues and traffic volumes reflect continuing growth in the business, international, and residential markets. Growth in the business market was primarily attributable to "800" services, reflecting the continued opportunities generated by "800" portability, while growth in the international and residential markets reflects ongoing sales and marketing efforts. Maintaining growth rates in the future for both net operating revenues and traffic volumes may be influenced by both domestic and international economic conditions and price levels in the intensely competitive long distance marketplace. Interconnection costs increased during the third quarter and first nine months of 1994 relative to the comparable 1993 periods primarily as a result of traffic volume growth; however, as a percentage of net operating revenues, interconnection costs decreased from 43.8 percent to 42.6 percent and from 44.5 percent to 43.9 percent for the third quarter and first nine months of 1994, respectively, compared to the same periods one year ago. Interconnection costs decreased as a percentage of related net operating revenues due to reductions in interconnection charges paid to local exchange companies, partially offset by increased costs related to settlements on international revenues. The annual interconnection rate filings of domestic local exchange carriers, which became effective July 1, 1994, did not have a material impact on the operations of the long distance division. Operations expense consists of costs related to operating and maintaining the long distance network; costs of providing various services such as operator services, public payphones, telecommunications services for the hearing impaired, and video teleconferencing; and costs of data system sales. Operations expense for the third quarter and first nine months of 1994 increased $24 million and $60 million, respectively, from the comparable 1993 periods, primarily due to expanded service offerings as well as providing services to new customers. Selling, general and administrative expense for the third quarter and first nine months of 1994 increased $58 million and $161 million, respectively, from the comparable 1993 periods, generally as a result of sales and marketing efforts. During the first nine months of 1994, marketing efforts, which resulted in increased advertising expense, were primarily directed at The Most (sm) and The Most WORLDWIDE (sm) calling plans, the voice- activated FONCARD (sm) product, the Sprint Business Real Solutions (sm) campaign, and the Be There Now (sm), World Cup Soccer, and the Sprint International golf tournament corporate imaging campaigns. Depreciation and amortization increased $12 million and $19 million for the third quarter and first nine months of 1994, respectively, relative to the comparable 1993 periods primarily due to an increase in the asset base. Local Communications Services Selected Operating Results (In Millions) Three Months Ended September 30, Variance 1994 1993 Dollar Percent Net operating revenues Local service $ 445.6 $ 413.5 $ 32.1 7.8% Network access 393.5 379.0 14.5 3.8% Toll service 131.9 126.8 5.1 4.0% Other 141.2 116.9 24.3 20.8% Total net operating revenues 1,112.2 1,036.2 76.0 7.3% Operating expenses Plant operations 326.6 297.6 29.0 9.7% Depreciation and amortization 195.2 184.6 10.6 5.7% Customer operations 142.6 134.2 8.4 6.3% Other 195.7 171.0 24.7 14.4% Total operating expenses 860.1 787.4 72.7 9.2% Operating income $ 252.1 $ 248.8 $ 3.3 1.3% Operating margin 22.7% 24.0% Selected Operating Results (In Millions) Nine Months Ended September 30, Variance 1994 1993 Dollar Percent Net operating revenues Local service $ 1,306.1 $1,203.9 $ 102.2 8.5% Network access 1,175.6 1,127.3 48.3 4.3% Toll service 398.6 378.2 20.4 5.4% Other 383.8 338.1 45.7 13.5% Total net operating revenues 3,264.1 3,047.5 216.6 7.1% Operating expenses Plant operations 955.4 904.4 51.0 5.6% Depreciation and amortization 580.1 547.7 32.4 5.9% Customer operations 406.0 391.4 14.6 3.7% Other 559.6 501.2 58.4 11.7% Total operating expenses 2,501.1 2,344.7 156.4 6.7% Operating income $ 763.0 $ 702.8 $ 60.2 8.6% Operating margin 23.4% 23.1% The division's net operating revenues for both the third quarter and first nine months of 1994 increased 7 percent over the comparable 1993 periods. Growth in local service revenues reflected continued increases in the number of access lines served and growth in add-on services, such as custom calling features. The number of access lines served grew 4.9 percent during the past twelve months. Network access revenues, derived from interexchange long distance carriers' use of the local network to complete calls, increased as a result of increased traffic volumes, partially offset by periodic reductions in network access rates charged. Annual access rate filings became effective July 1, 1994, resulting in decreased access rates; however, the impact of such decreases on Sprint's consolidated results was not material. Toll service revenues, related to the provision of long distance services within specified geographical areas and the reselling of interexchange long distance services, increased 4 percent and 5 percent for the third quarter and first nine months of 1994, respectively. Other revenues, including revenues from directory publishing fees, billing and collection, operator services, and sales of telecommunications equipment, increased 21 percent and 14 percent for the third quarter and first nine months of 1994, respectively, generally due to higher equipment sales. Plant operations expense includes network operations costs; repair and maintenance costs of property, plant and equipment; and other expenses associated with the cost of providing services. The $29 million and $51 million increases in the third quarter and first nine months of 1994, respectively, over the comparable 1993 periods were primarily due to increases in the costs of providing services resulting from access line growth. Also contributing to the increases were the effects in certain states of revised toll plans requiring payment of access charges for calls terminating in the service areas of other local exchange carriers. The increases in depreciation and amortization expense for the third quarter and first nine months of 1994 relative to the comparable 1993 periods were generally due to plant additions. Customer operations expense includes costs associated with business office operations and billing services, marketing costs, and expenses related to providing operator and directory assistance and other customer services. The $8 million and $15 million increases in the third quarter and first nine months of 1994, respectively, over the comparable 1993 periods were primarily due to higher business office costs. Other operating expenses increased $25 million and $58 million in the third quarter and first nine months of 1994, respectively, over the comparable 1993 periods generally due to increases in the cost of equipment sales. Consistent with most LECs, the division accounts for the economic effects of regulation pursuant to Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation." The application of SFAS No. 71 requires the accounting recognition of the rate actions of regulators where appropriate, including the recognition of depreciation and amortization based on estimated useful lives prescribed by regulatory commissions rather than those that might be utilized by non-regulated enterprises. Sprint currently believes the division's rate-regulated operations meet the criteria for the continued application of the provisions of SFAS No. 71. However, the division operates in an evolving environment in which the regulatory framework is changing and the level of competition is increasing. Accordingly, Sprint constantly monitors and evaluates the ongoing applicability of SFAS No. 71 by assessing the likelihood that prices which provide for the recovery of specific costs can continue to be charged to customers. In the event Sprint determines that the division's rate-regulated operations no longer qualify for the application of the provisions of SFAS No. 71, Sprint would eliminate from its financial statements the effects of any actions of regulators that had been recognized as assets and liabilities, resulting in the recognition of a material, extraordinary, noncash charge, the amount of which is not known at the present time. Cellular and Wireless Communications Services Selected Operating Results (In Millions) Three Months Ended September 30, Variance 1994 1993 Dollar Percent Net operating revenues $ 184.9 $ 122.4 $ 62.5 51.1% Operating expenses Costs of services and products 57.5 40.1 17.4 43.4% Selling, general and administrative 72.4 51.4 21.0 40.9% Depreciation and amortization 22.6 19.1 3.5 18.3% Total operating expenses 152.5 110.6 41.9 37.9% Operating income $ 32.4 $ 11.8 $ 20.6 -- Operating margin 17.5% 9.6% Selected Operating Results (In Millions) Nine Months Ended September 30, Variance 1994 1993 Dollar Percent Net operating revenues $ 499.8 $ 327.1 $ 172.7 52.8% Operating expenses Costs of services and products 159.1 108.6 50.5 46.5% Selling, general and administrative 203.4 142.9 60.5 42.3% Depreciation and amortization 67.9 54.5 13.4 24.6% Total operating expenses 430.4 306.0 124.4 40.7% Operating income $ 69.4 $ 21.1 $ 48.3 -- Operating margin 13.9% 6.5% Net operating revenues for the third quarter and first nine months of 1994 increased 51 percent and 53 percent, respectively, over the comparable 1993 periods, primarily due to growth in the number of cellular subscribers. Over the past 12 months, the number of cellular subscribers has increased 64 percent. The effect of growth in the number of cellular subscribers was partially offset by a decline in service revenue per subscriber, reflecting an industry-wide trend that has occurred as a result of increased general consumer market penetration. Maintaining growth rates in the future for net operating revenues and the number of cellular subscribers may be influenced by economic conditions and price levels in the competitive cellular marketplace. Excluding the costs and revenues related to equipment sales, costs of services as a percent of net operating revenues decreased from 26.6 percent to 24.1 percent and from 27.4 percent to 24.4 percent for the third quarter and first nine months of 1994, respectively, compared to the same periods in 1993. These decreases generally reflected economies of scale gained from serving additional subscribers. Selling, general and administrative (SG&A) costs for the third quarter and first nine months of 1994 increased $21 million and $61 million, respectively, over the 1993 comparable periods as a result of increased commissions and customer service expenses due to the growth in the number of cellular subscribers. However, SG&A expense as a percentage of net operating revenues (excluding revenues from equipment sales) declined to 42.0 percent and 43.9 percent for the third quarter and first nine months of 1994, respectively, from 45.2 percent and 46.9 percent for the third quarter and first nine months of 1993, respectively. Equipment sales are subject to significant discounting in an effort to obtain new customers; accordingly, revenues and costs related to these sales have been excluded from the above calculations. Depreciation and amortization increased 18 percent and 25 percent for the three and nine months ended September 30, 1994, respectively, compared to the same periods in 1993. These increases were primarily due to the additional investment in property, plant and equipment required to accommodate the growth in the number of cellular subscribers. Product Distribution and Directory Publishing Businesses Selected Operating Results (In Millions) Three Months Ended September 30, Variance 1994 1993 Dollar Percent Net operating revenues $ 290.5 $ 252.9 $ 37.6 14.9% Operating expenses 269.7 235.9 33.8 14.3% Operating income $ 20.8 $ 17.0 $ 3.8 22.4% Operating margin 7.2% 6.7% Selected Operating Results (In Millions) Nine Months Ended September 30, Variance 1994 1993 Dollar Percent Net operating revenues $ 830.5 $ 707.6 $ 122.9 17.4% Operating expenses 773.8 660.7 113.1 17.1% Operating income $ 56.7 $ 46.9 $ 9.8 20.9% Operating margin 6.8% 6.6% North Supply, Sprint's product distribution subsidiary, had net operating revenues of $221 million and $625 million for the third quarter and first nine months of 1994, respectively, reflecting 20 percent and 23 percent increases from the comparable 1993 periods. These increases primarily reflect increased sales due to the addition of new markets for non-affiliated sales and increased sales to the local communications services division. As a percentage of net operating revenues, operating expenses declined to 94.5 percent and 95.1 percent for the third quarter and first nine months of 1994, respectively, from 96.6 percent and 96.7 percent for both the comparable 1993 periods, respectively. Sprint's directory publishing subsidiaries had net operating revenues of $69 million and $68 million for the three months ended September 30, 1994 and 1993, respectively, and $205 million and $199 million for the nine months ended September 30, 1994 and 1993, respectively. As a percentage of net operating revenues, operating expenses increased to 87.6 percent and 87.4 percent for the third quarter and first nine months of 1994, respectively, compared to 84.2 percent and 84.9 percent for the comparable 1993 periods, respectively. Interest Expense Interest expense for the third quarter and first nine months of 1994 decreased $16 million and $45 million, respectively, from the comparable 1993 periods, generally due to a decrease in average levels of debt outstanding and lower interest rates which primarily reflect debt refinancings during 1993. During the nine months ended September 30, 1994, Sprint's average debt outstanding decreased $348 million as compared to the same period in 1993, and the effective interest rate decreased 60 basis points. Other Income (Expense), Net The components of other income (expense), net are as follows (in millions): Three Months Nine Months Ended Ended September 30, September 30, 1994 1993 1994 1993 Gain on sale of investment in equity securities $ -- $ -- $ 34.7 $ -- Equity in earnings of cellular minority partnership interests 8.7 6.0 16.7 14.5 Loss on sales of accounts receivable (7.6) (5.4) (20.1) (16.3) Write-down of assets held for sale -- (10.6) -- (10.6) Minority interests (7.6) (4.6) (17.1) (7.1) Other (2.8) 3.2 (3.6) (0.7) Total other income (expense), net $ (9.3) $(11.4) $ 10.6 $(20.2) Other income (expense), net for the third quarter and first nine months of 1994 contributed $2 million and $31 million more to income, respectively, than in the comparable 1993 periods. For the nine months ended September 30, 1994, a $35 million gain on the sale of an investment in common stock during the first quarter of 1994 was the major contributor to the increase in other income over the comparable 1993 period. Income Tax Provision See Note 5 of "Condensed Notes to Consolidated Financial Statements" for information regarding the differences which cause the effective income tax rate to vary from the statutory federal income tax rate. General Hedging Policies Sprint utilizes certain derivative instruments in an effort to manage exposure to interest rate risk and foreign exchange risk. Sprint's utilization of such derivative instruments related to hedging activities is limited to interest rate swap agreements, interest rate caps and forward contracts and options in foreign currencies. As is customary for these types of derivative instruments, Sprint does not require collateral or other security from the counterparties to such agreements. However, because Sprint controls its exposure to credit risk through credit approvals, credit limits, and internal monitoring procedures, Sprint believes that its credit risk exposure is limited. Sprint will in no circumstance take speculative positions and create an exposure to benefit from market fluctuations. All hedging activity is in accordance with board-approved policies. Any potential loss or exposure related to Sprint's use of derivative instruments is immaterial to its overall operations, financial condition and liquidity. Impact of Recently Issued Accounting Pronouncements During October 1994, the Financial Accounting Standards Board (FASB) issued SFAS No. 119, "Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments." SFAS No. 119 requires disclosures about amounts, nature, and terms of derivative financial instruments. A derivative financial instrument is defined as a futures, forward, swap, or option contract, or other financial instrument with similar characteristics. Such instruments generally derive their value or contractually required cash flows from the prices of some other security or from an index. SFAS No. 119 requires that a distinction be made between financial instruments held or issued for trading purposes (including dealing and other trading activities measured at fair value with gains and losses recognized in earnings) and financial instruments held or issued for purposes other than trading. SFAS No. 119 is effective for financial statements issued for fiscal years ending after December 15, 1994. Management does not anticipate that the disclosures required by SFAS No. 119 will have a significant impact on Sprint's financial statements for the year ending December 31, 1994. The American Institute of Certified Public Accountants (AICPA) has issued Statement of Position (SOP) 93-7, "Reporting on Advertising Costs." SOP 93-7 provides guidance on financial reporting of advertising costs in annual financial statements. In general, the SOP requires reporting the costs of all advertising as expenses in the periods in which the costs are incurred, or the first time the advertising takes place. There is an exception for reporting the costs of direct-response advertising, the primary purpose of which is to elicit sales to customers who could be shown to have responded specifically to the advertising and which results in probable future benefits. Such direct-response advertising costs should be recorded as assets and amortized over the estimated period of the benefits. SOP 93-7 is effective for financial statements for years beginning after June 15, 1994. Management does not anticipate that it will have a material impact on Sprint's operations. PART II. Other Information Item 1. Legal Proceedings There were no reportable events during the quarter ended September 30, 1994. Item 2. Changes in Securities There were no reportable events during the quarter ended September 30, 1994. Item 3. Defaults Upon Senior Securities There were no reportable events during the quarter ended September 30, 1994. Item 4. Submission of Matters to a Vote of Security Holders There were no reportable events during the quarter ended September 30, 1994. Item 5. Other Information Sprint's ratios of earnings to fixed charges were 3.76 and 2.58 for the three months ended and 3.71 and 2.07 for the nine months ended September 30, 1994 and 1993, respectively. These ratios have been computed by dividing fixed charges into the sum of (a) income from continuing operations less capitalized interest included in income, (b) income taxes, and (c) fixed charges. Fixed charges consist of interest on all indebtedness (including amortization of debt issuance expenses), the interest factor of operating rents and the pre-tax cost of preferred stock dividends of subsidiaries. In the absence of the nonrecurring merger, integration and restructuring costs of $44.5 million and $292.5 million recorded during the three and nine months ended September 30, 1993, respectively, the ratios of earnings to fixed charges for those periods would have been 2.88 and 2.73, respectively. Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are filed as part of this report: (10) Material Agreements (a) Memorandum of Understanding between Sprint Corporation and France Telecom and Deutsche Bundespost Telekom dated June 14, 1994 (filed as Exhibit 10(a) to Sprint Corporation Quarterly Report on Form 10-Q for the Quarter ended June 30, 1994, and incorporated herein by reference). (10) Material Agreements - Executive Compensation Plans and Arrangements: (b) Executive Deferred Compensation Plan, as amended. (c) Summary of Sprint Supplemental Executive Retirement Plan. (d) Agreements regarding Special Compensation and Post Employment Restrictive Covenants between Sprint Corporation and four of its executive officers. (e) Description of agreement regarding Supplemental Pension Benefits between Sprint Corporation and one of its executive officers. (11) Computation of earnings per common share. (12) Computation of ratio of earnings to fixed charges. (27) Financial data schedule. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended September 30, 1994. 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: November 14, 1994 EXHIBIT INDEX EXHIBIT NUMBER (10) Material Agreements (a) Memorandum of Understanding between Sprint Corporation and France Telecom and Deutsche Bundespost Telekom dated June 14, 1994 (filed as Exhibit 10(a) to Sprint Corporation Quarterly Report on Form 10-Q for the Quarter ended June 30, 1994, and incorporated herein by reference). (10) Material Agreements - Executive Compensation Plans and Arrangements: (b) Executive Deferred Compensation Plan, as amended. (c) Summary of Sprint Supplemental Executive Retirement Plan. (d) Agreements regarding Special Compensation and Post Employment Restrictive Covenants between Sprint Corporation and four of its executive officers. (e) Description of agreement regarding Supplemental Pension Benefits between Sprint Corporation and one of its executive officers. (11) Computation of earnings per common share. (12) Computation of ratio of earnings to fixed charges. (27) Financial data schedule. EX-10 2 EXECUTIVE DEFERRED COMPENSATION PLAN Exhibit 10(b) Executive Deferred Compensation Plan ARTICLE I PURPOSE The purpose of the Sprint Corporation Executive Deferred Compensation Plan (hereinafter referred to as the "Plan") is to provide funds for retirement or death for executive employees (and their beneficiaries) of Sprint Corporation and its subsidiaries. It is intended that the Plan will aid in retaining and attracting employees of exceptional ability by providing such employees with a means to supplement their standard of living at retirement. ARTICLE II DEFINITIONS For the purposes of this Plan, the following words and phrases shall have the meanings indicated, unless the context clearly indicates otherwise: 2.1 Account Transfer Request. "Account Transfer Request" means a written notice, in a form prescribed by the Company, by a Participant to transfer all or any portion of one Deferred Benefit Account to another Deferred Benefit Account as provided for in paragraph 6.7. 2.2 Beneficiary. "Beneficiary" means the person, persons or entity designated by the Participant, or as provided in Article VIII, to receive any benefits payable under the Plan. Any Participant Beneficiary Designation shall be made in a written instrument filed with the Company and shall become effective only when received, accepted and acknowledged in writing by the Company. 2.3 Board. "Board" means the Board of Directors of the Company. 2.4 Committee. "Committee" means Deferred Compensation Committee appointed to review the Plan decisions pursuant to Article III. 2.5 Company. "Company" means Sprint Corporation, or any successor thereto. 2.6 Compensation. "Compensation" means the Base Salary and Incentive Compensation payable to a Participant during a Plan Year other than a distribution under this plan. (a) Base Salary. "Base Salary" means all regular cash remuneration for services, other than such items as Incentive Compensation, payable by the Employer to a Participant in cash during a Plan Year, but before reduction for amounts deferred pursuant to this Plan or any other Plan of the Employer. (b) Incentive Compensation. "Incentive Compensation" means any annual cash incentive compensation payable by the Employer to a Participant in a Plan Year. 2.7 Deferral Benefit. "Deferral Benefit" means the benefit payable to a Participant on his retirement, death, disability, or termination of employment as calculated in Article VII hereof. 2.8 Deferred Benefit Account. "Deferred Benefit Account" means the accounts maintained on the books of account of the Employer for each Participant pursuant to Article VI. Separate Deferred Benefit Accounts shall be maintained for each Participant. More than one Deferred Benefit Account shall be maintained for each Participant to reflect (a) Termination and Retirement Interest Yields, (b) separate deferral elections, and (c) Account A, Account B, Account AA, and Account BB elections. For Account AA two sub-accounts (a Retirement Deferred Benefit Account and a Termination Deferred Benefit Account) shall be maintained to reflect the difference in Interest Yields as provided in Article VI, paragraph 6.4. For Account BB two sub-accounts (a Retirement Deferred Benefit Account and a Termination Deferred Benefit Account) shall be maintained to reflect, in the event of a transfer from Account AA to Account BB pursuant to paragraph 6.7, the difference in values of the two sub-accounts of Account AA transferred to Account BB. A Participant's Deferred Benefit Accounts shall be utilized solely as a device for the measurement and determination of the amounts to be paid to the Participant pursuant to this Plan. A Participant's Deferred Benefit Account shall not constitute or be treated as a trust fund of any kind. Unless the context requires otherwise, "Deferred Benefit Account" shall mean the aggregate balance of all accounts of a Participant. 2.9 Determination Date. "Determination Date" means the date on which the amount of a Participant's Deferred Benefit Account is determined as provided in Article VI hereof. The last day of each calendar month shall be a Determination Date. 2.10 Disability. "Disability" or "Disabled Participant" means a physical or mental condition of a Participant resulting in a determination of disability for purposes of receiving benefits under the Employer Long-Term Disability Insurance Plan. 2.11 Early Retirement Date. "Early Retirement Date" means the date on which the Participant actually terminates employment following the first day of the month coincidental with or next following a Participant's attainment of age fifty-five (55), but prior to his Normal Retirement Date. 2.12 Employer. "Employer" means Sprint Corporation, any successor to the business thereof or any affiliate or subsidiary designated by the Board. 2.13 Internal Revenue Code. "Internal Revenue Code" means Internal Revenue Code of 1986, as amended or supplemented from time to time. References to any section of the Internal Revenue Code shall be to that section as it is renumbered, amended, supplemented or re-enacted. 2.14 Interest Yield. "Interest Yield" means with respect to any calendar month the Termination Interest Yield or the Retirement Interest Yield as defined below: (a) Termination Interest Yield. The "Termination Interest Yield" means (1)in the case of balances in Account AA, the composite yield on Moody's Seasoned Corporate Bond Yield Index for the preceding calendar month as determined from Moody's Bond Record published by Moody's Investors Services, Inc. (or any successor thereto), or, if such monthly yield is no longer published, a substantially similar average selected by the Company, and (2) in the case of balances in Account A, the greater of (i) the prime rate in effect at Citibank, N.A. at the opening of business on the first business day of the month, or if said bank, for any reason, no longer publishes its prime rate, the prime rate similarly determined of another major bank selected by the Company and (ii) six percent per annum. (b) Retirement Interest Yield. The "Retirement Interest Yield" means (1) in the case of balances in Account AA, three percentage points over the Termination Interest Yield, and (2) in the case of balances in Account A, the Termination Interest Yield. 2.15 Normal Retirement Age. "Normal Retirement Age" means the time at which a Participant attains age sixty- five (65). 2.16 Normal Retirement Date. "Normal Retirement Date" means the first day of the month coincidental with or next following a Participant's Normal Retirement Age. 2.17 Participant. "Participant" means any individual who is designated by the Company in accordance with paragraph 4.1 to participate in this Plan and who elects to participate by filing a Participation Agreement as provided in Article IV. 2.18 Participation Agreement. "Participation Agreement" means the agreement, in a form prescribed by the Company, filed by a Participant prior to the beginning of the first period in which the Participant's Compensation is to be deferred pursuant to the Plan and the Participation Agreement. A new Participation Agreement shall be filed by the Participant for each separate Base Salary deferral election and for each Incentive Compensation deferral election not accompanying a Base Salary deferral election. 2.19 Pension Make-Up Benefit. "Pension Make-Up Benefit means the benefit provided under paragraph 5.2(b). 2.20 Pension Make-Up Compensation. "Pension Make-Up Compensation" means the sum of (a) compensation as determined under the Retirement Plan and (b) Base Salary which are actually deferred under this Plan. 2.21 Plan. "Plan" means the Sprint Corporation Executive Deferred Compensation Plan as set forth in this document. This Plan is the successor to, and comprises an amendment and revision of, the United Telecommunications, Inc. 1985 Executive Deferred Compensation Plan adopted February 12, 1985. 2.22 Plan Administrator. "Plan Administrator" means the person appointed by the Company to represent the Company in the administration of this Plan. 2.23 Plan Year. "Plan Year" means a twelve month period commencing May 1st and ending the following April 30th. The first Plan Year shall commence on May 1, 1985. 2.24 Retirement Plan. "Retirement Plan" means the Sprint Retirement Pension Plan, as amended from time to time. 2.25 Share Unit. "Share Unit" means a measure of participation under the Plan having a value based on the market value of a share of common stock of the Company. 2.26 Spouse. "Spouse" means a Participant's wife or husband who was lawfully married to the Participant upon the Participant's retirement, death or severance from service. 2.27 Transition Date. "Transition Date" means May 1, 1990. ARTICLE III ADMINISTRATION 3.1 Plan Administrator; Company and Committee; Duties. This Plan shall be administered by the Committee. The Committee shall consist of not more than five persons appointed by the Board. The Committee may be a consolidated Committee administering other benefit plans of the Company in addition to this Plan. The Committee shall have the authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan. The Committee may appoint a Benefit Administrative Committee and a Plan Administrator. The Committee may delegate its duties for the day-to-day operations of the Plan to the Plan Administrator and other duties to the Benefit Administrative Committee. Members of the Committee, the Benefit Administrative Committee and the Plan Administrator may be Participants under this Plan. 3.2 Claim for Benefits. Any claim for benefits under this Plan shall be made in writing to the Plan Administrator. If a claim for benefits is wholly or partially denied, the Plan Administrator shall so notify the Participant or Beneficiary within 90 days after receipt of the claim. The notice of denial shall be written in a manner calculated to be understood by the Participant or Beneficiary and shall contain (a) the specific reason or reasons for denial of the claim, (b) specific references to the pertinent Plan provisions upon which the denial is based, (c) a description of any additional material or information necessary to perfect the claim together with an explanation of why such material or information is necessary and (d) an explanation of the claims review procedure. The decision or action of the Plan Administrator shall be final, conclusive and binding on all persons having any interest in the Plan, unless a written appeal is filed as provided in Section 3.3 hereof. 3.3 Review of Claim. Within 60 days after the receipt by the Participant or Beneficiary of notice of denial of a claim, the Participant or Beneficiary may (a) file a request with the Benefit Administrative Committee that it conduct a full and fair review of the denial of the claim, (b) review pertinent documents and (c) submit questions and comments to the Committee in writing. 3.4 Decision After Review. Within 60 days after the receipt of a request for review under Section 3.3, the Committee shall deliver to the Participant or Beneficiary a written decision with respect to the claim, except that if there are special circumstances (such as the need to hold a hearing) which require more time for processing, the 60-day period shall be extended to 120 days upon notice to the Participant or Beneficiary to that effect. The decision shall be written in a manner calculated to be understood by the Participant or Beneficiary and shall (a) include the specific reason or reasons for the decision and (b) contain a specific reference to the pertinent Plan provisions upon which the decision is based. ARTICLE IV PARTICIPATION 4.1 Participation. Participation in the Plan shall be limited to executives having a job grade level of E14 or above who elect to participate in the Plan by filing a Participation Agreement with the Company. Except as provided below, a Participation Agreement must be filed prior to the April 15th immediately preceding the Plan Year in which the Participant's participation under the agreement will commence, and the election to participate shall be effective on the first day of the Plan Year following receipt by the Company of a properly completed and executed Participation Agreement. A Participant in the Plan, who is also a participant in the Employer's 1975 Executive Deferred Compensation Plan, may elect to transfer to this Plan all, and not less than all, of the dollar value of his Account A and the dollar value of his Account B under the 1975 Plan. Such election shall be made by delivering to the Company a properly executed Participation Agreement; such an election must be made when the Participant is first eligible for the 1985 Plan. 4.2 Minimum and Maximum Deferral and Length of Participation. A Participant may elect in any Participation Agreement to defer a portion of his Base Salary and Incentive Compensation. However, a Participant may not defer his Incentive Compensation unless the Participant also defers a portion of his Base Salary. The minimum and maximum amounts that may be deferred under any single Participation Agreement shall be in $100 units and shall be as follows:
Minimum Deferral Maximum Deferral With respect to initial Base Salary Deferrals $300 per month 50% of Base Salary Subsequent Base Salary Deferrals $100 per month 50% of Base Salary With respect to Incentive Compensation 25% of Incentive 100% of Incentive Compensation Compensation
(a) With respect to Base Salary deferrals, the dollar amount of deferral elected in each Participation Agreement shall be the amount of Base Salary that will be deferred in each month subject to the Participation Agreement. Each Participation Agreement shall apply to the Participant's Base Salary payable over a period (1) for Participation Agreements first effective before the Transition Date, of either four or eight Plan Years, or (2) for Participation Agreements first effective on or after the Transition Date, one Plan Year (or, in either case, until the Participant's retirement, whichever occurs first), commencing with the Plan Year immediately following the Plan Year in which the respective Participation Agreement is filed. The fixed dollar amount of Base Salary deferral applicable over a deferral period shall not be changed by virtue of a change in Base Salary alone. (b) With respect to Incentive Compensation deferrals, the deferral percentage selected in each Participation Agreement shall apply only to the Participant's Incentive Compensation earned in the Plan Year immediately following receipt of the respective Participation Agreement. (c) From time to time, the Company may increase or decrease the minimum and maximum deferrals set forth above as well as the period for which the deferrals are effective by giving reasonable written notice to the affected Participants. Such changes shall be effective for all Participation Agreements filed thereafter. (d) A Participant's election to defer Compensation shall be irrevocable upon the filing of the respective Participation Agreement; provided, however, that the deferral of Compensation under any Participation Agreement may be suspended or amended as provided in paragraphs 7.5 or 9.1. 4.3 Additional Participation Agreements. A Participant may enter into additional Participation Agreements by filing a Participation Agreement with the Company prior to April 15th of any calendar year, stating the amount that the Participant elects to have deferred. Such additional agreements shall be effective as to Compensation paid in Plan Years beginning after the last day of the Plan Year in which the respective agreement is filed with the Company. Each additional Participation Agreement is subject to all of the provisions and requirements set forth in paragraph 4.2, including without limitation, the provisions relating to minimum and maximum deferral amounts and duration of the agreements; provided, that the minimum Base Salary deferral for each additional Participation Agreement shall be $1,200 per year. In addition, the aggregate amount of Base Salary that a Participant may have deferred under this Plan out of his Base Salary for any single Plan Year under all applicable Participation Agreements shall not exceed 50% of his Base Salary, excluding Incentive Compensation. In the event a Participant elects to defer Compensation for a new period, the new election shall be treated as an arrangement for which a separate Deferred Benefit Account shall be maintained and separate Deferred Benefits shall be payable. ARTICLE V DEFERRED COMPENSATION 5.1 Elective Deferred Compensation. The amount of Compensation that a Participant elects to defer in the Participation Agreement executed by the Participant, with respect to each Plan Year of participation in the Plan, shall be credited by the Company to the Participant's Deferred Benefit Account throughout each Plan Year as the Participant is paid the non-deferred portion of Compensation for such Plan Year. The amount credited to a Participant's Deferred Benefit Account shall equal the amount deferred. To the extent that the Employer is required to withhold any taxes or other amounts from the employees' deferred wages pursuant to any state, federal or local law, such amounts shall be taken out of the portion of the Participant's Compensation which is not deferred under this Plan. 5.2 Additional Amounts Under Savings Plan and Retirement Plan. (a) Savings Plan. Except for Participants who are officers of the Company subject to Section 16 of the Securities Exchange Act of 1934, to the extent a Participant's deferral of Compensation under this Plan causes a reduction in the Company's contribution for the Participant under the Sprint Retirement Savings Plan, the Company shall credit the amount of any such reduction to the Participant's Deferred Benefit Account B. For such officers, such reduction shall be credited to Account A. (b) Retirement Plan. A Participant shall receive a Pension Make-Up Benefit if his deferral of compensation under this Plan causes a reduction in his benefit under the Retirement Plan. (1) For purposes of determining a Participant's Pension Make-Up Benefit, the benefit which would be payable under the Retirement Plan had the Participant's Pension Make-Up Compensation been his compensation under the Retirement Plan shall be calculated as follows: (A) The participant's Pension Make-Up Compensation shall be determined. (B) The benefit computed under Section 5.2(b)(1) shall be determined taking into account the limitations of Sections 401(a)(17) and 415 of the Internal Revenue Code. (2) The Pension Make-Up Benefit shall be equal to the excess, if any, of (I) the benefit computed under Section 5.2(b)(1) over (II) the benefit payable under the Retirement Plan. For purposes of this Section 5.2(b)(2), it shall be assumed that the benefit computed under Section 5.2(b)(1) and the benefit under the Retirement Plan shall be paid in the form of a single life annuity commencing at the Participant's normal retirement date under the Retirement Plan. (3) Distribution of a Participant's Pension Make-Up Benefit shall commence on the first day of the month following a Participant's termination of employment which occurs on or after attaining age fifty-five with ten years of service, or upon a termination of employment on or after his Normal Retirement Date. If a Participant becomes disabled and is paid a disability pension under the Retirement Plan, distributions under this Plan (A) shall commence within sixty days after the commencement of disability payments under the Retirement Plan, (B) shall cease when disability benefits cease under the Retirement Plan and (C) if ceased, shall recommence at a later date if the Participant is otherwise entitled to receive benefits hereunder. If distribution under this Plan commences before a Participant's normal retirement date under the Retirement Plan, his Pension Make-up Benefit shall be reduced in accordance with the early retirement reduction factors that would apply to him under the Retirement Plan at the time such distribution commences. (4) Subject to paragraph 5.2(b)(5), retirement benefits under this Plan shall be payable to Participants who are married at the time payment commences in the form of a joint and 50% survivor annuity and to Participants who are not married at that time in the form of a straight life annuity. The joint and 50% survivor annuity and life annuity referred to in this paragraph 5.2(b)(4) shall be actuarially equivalent in value to the Participant's Pension Make-Up Benefit. (5) In the event that the Committee determines that, under the Federal gift tax law in effect at the time payment of a married Participant's retirement benefit under this plan commences, his receipt of a joint and survivor annuity as provided in paragraph 5.2(b)(4) would result in a gift to his spouse which does not qualify in full for the gift tax marital deduction, his retirement benefit under this law shall not be payable as a joint and 50% survivor annuity. Instead, his retirement benefit under this plan shall be payable in monthly installments over his life expectancy, determined on the date distribution of benefits commences, where the value of those installments are actuarially equivalent to the Pension Make-Up Benefit. In such case, if the Participant dies after distribution of the Pension Make-Up Benefit has commenced and before all of the installments are paid, his spouse shall receive the remaining installments. Thereafter, if his spouse dies after installments have commenced, the spouse's estate shall receive the remaining installments. If his spouse is not then alive, his designated beneficiary, as provided in paragraph 8.1, shall receive the remaining installments. (6) If a married Participant (A) dies in the service of the Company and before distribution of benefits under this Plan commences and (B) is vested under the Retirement Plan, his spouse shall receive a survivor benefit payable at the earliest date that the Participant could have received benefits under paragraph 5.2(b)(3) had he lived. The survivor benefit shall be the survivor annuity for his spouse's life payable under a joint and 50% survivor annuity where the joint and survivor annuity is actuarially equivalent in value to the Pension Make-Up Benefit under paragraph 5.2(b)(2). 5.3 Additional Payments. The Company also intends that supplemental payments shall be made at death, disability or termination of employment, as the case may be, for any reduction in benefits due to deferrals of Compensation under this Plan in respect of any of the Employer's life insurance or disability plans or Employee Stock Purchase Plan now in existence or adopted after the effective date of this Plan. 5.4 Vesting of Deferred Benefit Account. A Participant shall be 100% vested in his/her Deferred Benefit Account. ARTICLE VI DEFERRED BENEFIT ACCOUNT 6.1 Determination of Account. Each Participant's Deferred Benefit Account, as of each Determination Date, shall consist of the balance of the Participant's Deferred Benefit Account as of the immediately preceding Determination Date, plus the Participant's elective deferred compensation withheld since the immediately preceding Determination Date pursuant to paragraph 5.1 and plus amounts credited to the Participant's Deferred Benefit Account pursuant to paragraphs 6.4 and 6.5. The Deferred Benefit Account of each Participant shall be reduced by the amount of all distributions, if any, made from such Deferred Benefit Account since the preceding Determination Date. 6.2 Type of Deferral. A Participant may elect to have any portion of the amount deferred credited to either Account A (fixed income return) or to Account B (Share Units). The initial election shall be made by a properly executed Participation Agreement. With respect to a Participation Agreement first effective before the Transition Date, an election to defer any amount to Account A shall be treated as an election to defer to Account AA, except as set forth below. A separate Deferred Benefit Account shall be maintained for a Participant's Account A, B, AA, and BB. An election to change the apportionment of deferred amounts between Accounts A and B may be made by a Participant filing with the Plan Administrator a revised Participation Agreement indicating such change on or before April 15th of each calendar year. The revised Participation Agreement shall be deemed a continuation of the initial Participation Agreement to which it relates for purposes of complying with the provisions of paragraphs 4.2 and 4.3 relating to the minimum and maximum deferrals and duration of the Participation Agreement. The revised Participation Agreement shall be effective for Plan Years beginning after the date it is filed. Deferrals in such Plan Years shall be credited in accordance with the election of the revised Participation Agreement, provided, however, that an election to allocate a portion of deferrals to Account A in excess of the portion allocated in the Participation Agreement to be deferred into the fixed income account as of May 1, 1989, shall be deemed to be an election by the Participant to allocate to Account AA a portion of deferrals equal to the portion so allocated to the fixed income account on May 1, 1989, and to allocate to Account A the portion in excess of such portion. 6.3 Accounts AA and BB. As of the start of business on the Transition Date, all amounts standing to the credit of each Participant in Account A shall be transferred to an Account AA. As of the start of business on the Transition Date, amounts standing to the credit of each Participant in Account B that are attributable to prior transfers from Account A into Account B shall be transferred to an Account BB. The amount of such transfers shall be an amount equal to the sum of the dollar amount of all transfers from Account A to Account B during the period beginning on the effective date of the Participation Agreement and ending on the Transition Date. For all purposes of this Plan, except as otherwise noted in this Plan, Account AA shall be treated in the same manner as Account A, and Account BB shall be treated in the same manner as Account B. Compensation earned by employees on or after the Transition Date subject to deferral under a Participation Agreement first effective before the Transition Date shall be credited to Accounts AA and B (in accordance with the Participant's election to allocate such deferrals to Accounts A or B, respectively, in such Participation Agreements) for such Participation Agreement. 6.4 Accounts A and AA. As of each Determination Date, the Participant's Deferred Benefit Accounts A and AA shall be increased by the amount of interest earned since the preceding Determination Date. Interest on Accounts A and AA shall be based upon the Interest Yield defined in paragraph 2.14. For Account AA, a Retirement Deferred Benefit Account shall be maintained and increased at the rate specified by the Retirement Interest Yield and a Termination Deferred Benefit Account shall be maintained and increased at the rate specified by the Termination Interest Yield. Interest shall be credited on the mean average of the balances of the Deferred Benefit Account on the Determination Date (before crediting the interest) and on the last preceding Determination Date, but after the Deferred Benefit Account has been adjusted for any contributions or distributions to be credited or deducted for each such day. 6.5 Accounts B and BB. The monthly amount to be credited to the Participant's Deferred Benefit Account B or BB shall be converted into Share units, or fractions thereof, by dividing the amount to be credited by the market value of a share of the Employer's common stock on the Determination Date. Two sub-accounts shall be maintained for Account BB: a Retirement Deferred Benefit Account shall include the transfer from Account B into Account BB described in paragraph 6.3 plus amounts transferred from the Account AA Retirement Deferred Benefit Account, if any, plus additions pursuant to subparagraphs (a) and (b) of this paragraph; a Termination Deferred Benefit Account shall include the transfer from Account B into Account BB described in paragraph 6.3 plus amounts transferred from the Account AA Termination Deferred Benefit Account, if any, plus additions pursuant to subparagraphs (a) and (b) of this paragraph. The market value of a share of the Company's common stock for purposes other than distributions from Accounts B and BB shall be the closing price for such stock as reported by the New York Stock Exchange on the Determination Date. If no common shares were traded on that date, the immediately preceding day on which trading occurred shall be used. (a) For all Participants except Participants subject to liability under Section 16 of the Securities Exchange Act of 1934, when a dividend is declared and paid by the Company on its common stock, an amount shall be credited to the Participant's Accounts B and BB as though the same dividend had been paid on the Share Units in such accounts as of the Determination Date immediately preceding the declaration of the dividend, and such amount shall be converted to Share Units. Such amount shall be valued as of the Determination Date immediately preceding the declaration of the dividend. (b) For Participants subject to liability under Section 16 of the Securities Exchange Act of 1934, subparagraph (a) of this paragraph 6.5 shall apply to balances in Accounts B and BB as of April 30, 1991. With respect to Share Units resulting from deferrals or transfers from Account A or Account AA into Account B or Account BB on or after May 1, 1991 ("Post May 1, 1991 Share Units"), when a cash dividend is declared and paid by the Company on its common stock, an amount shall be credited to the Participant's Account A or Account AA, as appropriate, as though the same dividend had been paid on the Post May 1, 1991 Share Units as of the Determination Date immediately preceding the declaration of the dividend. (c) In the event of a stock dividend, stock split or other corporate reorganization involving the Employer's common stock, the Company shall make equitable adjustment to the number of Share units credited to a Participant's Accounts B and BB as may be necessary to give effect to such change in the Employer's capital structure. (d) Share Units in Accounts B and BB shall be converted to an equivalent dollar amount prior to any distribution thereof to a Participant pursuant to Article VII. For purposes of distribution, the value of a Share Unit shall be based upon the average market value of a share of the Company's common stock. Such average market value shall be based upon the closing price of the Company's common stock on the New York Stock Exchange on the last day (or, if no share traded on such day, the immediately preceding day on which shares traded) for each of the twelve calendar months preceding the date of distribution. If a Participant elects payment in other than a lump sum, Share Units shall be converted to a dollar amount only with respect to each distribution. During the period of distribution, dividends and other equitable adjustments shall be credited to the Participant's Accounts B and BB in accordance with paragraphs 6.5(a). 6.5(b) and 6.5(c). For such purposes, a Participant subject to liability under Section 16 of the Securities Exchange Act of 1934 immediately prior to the event that entitles the Participant to distribution shall be deemed subject to such liability during the period of distribution. 6.6 Statement of Accounts. The Company shall submit to each Participant, within 120 days after the close of each Plan Year, a statement in such form as the Company deems desirable, setting forth the balance to the credit of such Participant in his Deferred Benefit Accounts A and B and in his Deferred Benefit Accounts AA and BB (showing separate calculations for each Interest Yield), and in each case, as of the last day of the preceding Plan Year. 6.7 Transfer Between Accounts. Within the limitations of this paragraph 6.7, a Participant may elect, by executing an Account Transfer Request: (1) to transfer all or any portion of his Account A to Account B, (2) to transfer all or any portion of his Account B to Account A, (3) to transfer all or any portion of his Account AA to Account BB, and (4) to transfer all or any portion of his Account BB to Account AA. Such election shall be effective on the last day of the calendar month in which the Plan Administrator timely receives the Participant's executed Account Transfer Request. (a) Participants subject to liability under Section 16 of the Securities Exchange Act of 1934 may request any combination of the foregoing transfers no more than twice in any Plan Year, provided, however, that no such transfer may be made unless a period of at least six months shall have elapsed from the effective date of the most recent such transfer (whether it occurred in the current Plan Year or not) to the effective date of the current transfer. (b) Participants not described in paragraph 6.7(a) may make any combination of the foregoing transfers no more than four times in any Plan Year provided, however, that no such transfer may be made unless a period of at least three months shall have elapsed from the effective date of the most recent such transfer (whether it occurred in the current Plan Year or not) to the effective date of the current transfer. ARTICLE VII BENEFITS 7.1 Benefit for Normal or Early Retirement and Termination After Age 55. Subject to paragraph 7.6 below, upon a Participant's (i) retirement after reaching the Normal Retirement Date, or (ii) retirement after reaching the Early Retirement Date, or (iii) termination of employment after attaining age 55, he shall be entitled to a Deferral Benefit equal to the amount of his Retirement Deferred Benefit Account determined under paragraph 6.1 hereof as of the Determination Date coincidental with or immediately following such event. 7.2 Termination of Employment Before Age 55. Upon any termination of service of the Participant before age 55 for reasons other than death or Disability, the Employer shall pay to the Participant, as compensation earned for services rendered prior to his termination of service, a Deferral Benefit equal to the amount of his Termination Deferred Benefit Account determined under paragraph 6.1 hereof. The Termination Deferred Benefit Account of a Participant whose employment has terminated shall be paid in a single sum to the terminated Participant within 30 days following termination of employment, if the aggregate balance of the Deferred Benefit Account(s) of such Participant is $20,000 or less. If such aggregate balance of a Participant's Deferred Benefit Account(s) is more than $20,000, payment shall commence pursuant to the Participant's election in the Participation Agreement. 7.3 Death. If a Participant dies after the commencement of payments of his Deferral Benefit, his Beneficiary shall continue to receive the remaining installments of his Deferred Benefit Account in accordance with the Participant's election pursuant to paragraph 7.6. If a Participant dies while employed, prior to any payments of a Deferral Benefit, the aggregate amounts deferred under all Participation Agreements shall be determined as follows: (a) In the case of deferrals pursuant to a Participation Agreement first effective before the Transition Date: (1) Deferrals of Incentive Compensation shall be the Retirement Deferred Benefit Account value thereof. (2) Deferrals of Base Salary pursuant to Participation Agreements requiring a total deferral of less than $15,000 per year allocated to Accounts A and AA pursuant to the Participation Agreement as revised on the date of the Participant's death shall be the greater of (i) the Retirement Deferred Benefit Account value thereof or (ii) ten times the amount of the elected annual Base Salary deferral. (3) Deferrals of Base Salary pursuant to Participation Agreements requiring a total deferral of $15,000 or more per year allocated to Accounts A and AA pursuant to the Participation Agreement as revised on the date of the Participant's death shall be determined as follows: (i) that portion of the deferral which totals $15,000 per year shall be the greater of (x) the Retirement Deferred Benefit Account value thereof and (y) ten times the amount of the elected annual Base Salary deferral, and (ii) the portion of such deferral which is in excess of $15,000 per year shall be the Retirement Deferred Benefit Account value of such excess. (4) Deferrals allocated to Accounts B and BB shall be the Retirement Deferred Benefit Account value thereof. (b) In the case of deferrals pursuant to a Participation Agreement first effective on or after the Transition Date, the aggregate amount of all deferrals shall be the Retirement Deferred Benefit Account value of Accounts A and B. The Deferral Benefit shall be payable as provided for in paragraph 7.6. The Deferral Benefit provided above shall be in lieu of all other benefits under this Plan. 7.4 Disability. In the event of Disability, as defined in paragraph 2.10, while employed by the Employer, prior to the completion of all deferrals provided for under a Participation Agreement, the Employer shall credit to the disabled Participant's Deferred Benefit Account an amount equal to the amount of the Participant's Agreement to defer during such period of Disability, but not beyond the period elected. In the event of Disability prior to termination of employment or the Normal Retirement Date, the disabled Participant, unless he otherwise elects under this paragraph, shall be entitled to the amount in his Retirement Deferred Benefit Account (rather than his Termination Deferred Benefit Account) determined under paragraph 6.1 as of the Determination Date next following such Disability, with payments to commence upon attainment of the Participant's Normal Retirement Date in the form specified in paragraph 7.6(a)(2) and/or 7.6(a)(3) over a 15 year period. Before payments commence under the preceding sentence, a Disabled Participant may elect, subject to Committee approval upon good cause shown: (i) to accelerate commencement of the payments to any earlier date, but not sooner than 60 days after the onset of Disability and/or (ii) to change the form of payment permitted under paragraph 7.6(a). 7.5 Suspension of Participation/Failure to Continue Participation. The Committee, in its sole discretion, may suspend the deferral of a Participant's Compensation upon the advanced written request of a Participant on account of financial hardship suffered by that Participant. A Participant must file any request for such suspension on or before the 15th day preceding the regular payment date on which the suspension is to take effect. The Committee, in its sole discretion, shall determine the amount, if any, that will not be deferred by the Participant as a result of the financial hardship. The suspension of any deferrals under this paragraph shall not affect amounts deferred with respect to periods prior to the effective date of the suspension. A Participant whose deferrals are suspended may not execute a subsequent Participation Agreement that would take effect prior to the beginning of the third Plan Year following the close of the Plan Year in which the suspension first took effect. In the event the Participant ceases to remain a member of the class of employees who are eligible to participate in this Plan, the Participant may elect to suspend the amount of any remaining deferral commitment in the same manner as described for other suspensions in this paragraph, except that Committee approval shall not be required. 7.6 Form of Benefit Payment (a) Upon the happening of an event described in paragraphs 7.1, 7.2, 7.3 or 7.4 above, the Employer shall pay to the Participant or his Beneficiary the amount specified therein in one of the following forms as elected by the Participant in the Participation Agreement filed by the Participant: (1) A lump sum payment at a time designated in the Participation Agreement but no later than the Participant's Normal Retirement Date. (2) With respect to balances in Accounts A and AA, an annual payment of a fixed amount which shall amortize the Deferred Benefit Account balance in equal annual payments of principal and interest over a period from 2 to 20 years. For purposes of determining the amount of the annual payment, the assumed rate of interest on Accounts A and AA shall be the average of the applicable Interest Yield as of each Determination Date for the 60 months preceding the initial annual installment payment. (3) With respect to balances in Accounts B and BB, an annual payment over a period from 2 to 20 years. Each payment shall be the value (as determined pursuant to paragraph 6.5 [d]) of the number of Share Units equal to (i) the number of Share Units in the accounts on the Determination Date immediately following the event described in paragraph 7.1, 7.2, 7.3 or 7.4, divided by (ii) the number of annual installments elected. (4) A Participant may change the form in which his benefits shall be paid by filing a revised Participation Agreement indicating such change prior to attaining age 60 and at least 13 months prior to the date upon which the payments to be made are determined. Such revised Participation Agreement shall be deemed a continuation of the initial Participation Agreement to which it relates for purposes of complying with the provisions of paragraphs 4.2 and 4.3 relating to the minimum and maximum deferrals and duration of Participation Agreements. No such revised Participation Agreement shall change the amount elected to be deferred in the original Participation Agreement, nor the time elected for commencement of benefit payments. (b) In the absence of a Participant's election under subparagraph 7.6(a), benefits shall be paid in the form specified in subparagraph 7.6(a)(2) and/or 7.6(a)(3) over a 15 year period, except as provided in paragraph 7.2. In the event of a Disabled Participant, payment shall be in the form described in paragraph 7.4. 7.7 Withholding; Payroll Taxes. To the extent required by the law in effect at the time payments are made, the Employer shall withhold from payments made hereunder any taxes required to be withheld from an employee's wages for the federal or any state or local government. 7.8 Commencement of Payments. Unless otherwise provided, payments under this Plan shall begin within 60 days following receipt of notice by the Plan Administrator of an event which entitles a Participant (or a Beneficiary) to payments under this Plan, or at such earlier date as may be determined by the Company pursuant to the terms of the plan. All payments shall be made as of the first day of the month. ARTICLE VIII BENEFICIARY DESIGNATION 8.1 Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person or persons as his Beneficiary or Beneficiaries (both principal as well as contingent) to whom payment under this Plan shall be paid in the event of his death prior to complete distribution to the Participant of the benefits due him under the Plan. 8.2 Amendments. Any Beneficiary Designation may be changed by a participant by the written filing of such change on a form prescribed by the Company. The filing of a new Beneficiary Designation form will cancel all Beneficiary Designations previously filed. 8.3 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, then the Participant's designated Beneficiary shall be deemed to be the person or persons surviving him in the first of the following classes in which there is a survivor, share and share alike: (a) The surviving Spouse; (b) The Participant's children, except that if any of the children predecease the Participant but leave issue surviving, then such issue shall take by right of representation the share their parent would have taken if living; (c) The Participant's personal representative (executor or administrator). 8.4 Effect of Payment. The payment to the deemed Beneficiary shall completely discharge the Employer's obligations under this Plan. ARTICLE IX AMENDMENT AND TERMINATION OF PLAN 9.1 Amendment. The Board may at any time amend the Plan in whole or in part; provided, however, that no amendment shall be effective to decrease or restrict any Deferred Benefit Account at the time of such amendment. 9.2 Employer's Right to Terminate. The Board may at any time terminate the Plan with respect to new elections to defer if, in its judgment, the continuance of the Plan, the tax, accounting, or other effects thereof, or potential payments thereunder would not be in the best interests of the Company. The Board may also terminate the Plan in its entirety at any time, and upon any such termination, each Participant (a) who is then receiving a Deferral Benefit shall be paid in a lump sum, or over such period of time as determined by the Company, the then remaining balance in his Deferred Benefit Account, and (b) who has not received a Deferral Benefit shall be paid in a lump sum, or over such period of time as determined by the Company, the balance in his Deferred Benefit Account. ARTICLE X MISCELLANEOUS 10.1 Unsecured General Creditor. Participants and their Beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Employer, nor shall they be Beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Employer ('Policies'). Such Policies or other assets of the Employer shall not be held under any trust for the benefit of Participants or their Beneficiaries or held in any way as collateral security for the fulfilling of the obligations of the Employer under this Plan. Any and all of the Employer's assets and Policies shall be, and remain, the general, unpledged, unrestricted assets of the Employer. The Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Employer to pay money in the future. 10.2 Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency. 10.3 Not a Contract of Service. The terms and conditions of this Plan shall not be deemed to constitute a contract of service between the Employer and the Participant, and the Participant (or his Beneficiary) shall have no rights against the Employer except as may otherwise be specifically provided herein. Moreover, nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Employer or to interfere with the right of the Employer to discipline or discharge him at any time. 10.4 Protective Provisions. A Participant will cooperate with the Employer by furnishing any and all information requested by the Employer, in order to facilitate the payment of benefits hereunder, and by taking such physical examinations as the Employer may deem necessary and taking such other action as may be requested by the Employer. 10.5 Applicable Law. The Plan, and any Participation Agreement related thereto, shall be governed by the laws of the State of Kansas, without regard to the principles of conflicts of law. 10.6 Alcatel Employees. Employees who transferred to the joint venture with Alcatel, N.V. (the "Joint Venture") December 31, 1993, shall not be deemed a retirement or termination of employment. When such transferred employees retire or terminate employment with the Joint Venture (other than by reason of a transfer to employment with the Company or an affiliate of the Company), or if prior to such retirement or termination of employment, the Company ceases to own at least a 49 percent interest in the Joint Venture (or such lesser percentage as determined by the Organization and Compensation Committee of the Company), the transferred employees shall be considered to have retired or terminated employment. EX-10 3 DESCRIPTION SPRINT SERP Exhibit 10(c) DESCRIPTION OF SPRINT SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN The Sprint Supplemental Executive Retirement Plan (SERP) supplements the benefits of certain executives whose retirement income under the Sprint Retirement Pension Plan (the "Qualified Plan") is limited in accordance with Sections 415 or 401(a)(17) of the Internal Revenue Code of 1986 (the "Code"). The SERP restores a participant's overall retirement income to a level which would have been payable under the Qualified Plan absent either such limitation. Accordingly, the benefit paid under the SERP equals the excess of the monthly retirement income benefit payable under the Qualified Plan without regard to the restrictions on retirement income benefits under Sections 415 and 401(a)(17) of the Code over the participant's actual retirement income benefit under the Qualified Plan. The SERP also provides for a mid-career pension enhancement for certain participants. Subject to the approval of the Organization and Compensation Committee of Sprint's Board of Directors, Sprint's Chief Executive Officer may recommend that an executive (who is Senior Vice President or above) be credited with additional years of service based on his or her relevant business experience with another company prior to his or her employment with Sprint or a subsidiary. If approved for a mid-career pension enhancement, a participant's overall retirement income will be determined in accordance with the benefit formula for calculating benefits under the Qualified Plan including the additional years of service granted. Accordingly, the benefit paid under the SERP equals the excess of the monthly retirement income benefit payable under the Qualified Plan including the additional years granted over the participant's actual retirement income benefit under the Qualified Plan. This benefit is further reduced by any retirement benefits actually received by the participant by his or her former employers. EX-10 4 ESREY NONCOMPETE AGREEMENT Exhibit 10(d) AGREEMENT REGARDING SPECIAL COMPENSATION AND POST EMPLOYMENT RESTRICTIVE COVENANTS THIS AGREEMENT made this 8th day of August, 1994, by and among SPRINT CORPORATION, a Kansas corporation ("Sprint"), SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and subsidiary of Sprint ("SUMC") (Sprint, SUMC and the subsidiaries of Sprint are collectively referred to herein as "Employer"), and WILLIAM T. ESREY ("Executive"). W I T N E S S E T H: WHEREAS, Employer and its parent and affiliates are engaged in the telecommunications business; WHEREAS, Executive has expertise, experience and capability in the business of Employer and the telecommunications business in general; WHEREAS, SUMC provides services for Sprint, its subsidiaries and affiliates, including providing all personnel to Sprint and Sprint's Long Distance Division; and WHEREAS, Employee is employed by SUMC to provide such services to Sprint; WHEREAS, Executive has been, and now is serving as Chairman, President and Chief Executive Officer of Sprint; WHEREAS, Employer desires to enter into this Agreement to provide severance and other benefits for Executive and obtain Executive's agreements regarding confidentiality and post- employment restrictive covenants for Employer; and WHEREAS, Executive is willing to provide such agreements to Employer. NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which consideration are mutually acknowledged by the parties, it is hereby agreed as follows: 1. Recitals. The recitals hereinbefore set forth constitute an integral part of this Agreement, evidencing the intent of the parties in executing this Agreement, and describing the circumstances surrounding its execution. Said recitals are by express reference made a part of the covenants hereof, and this Agreement shall be construed in light thereof. 2. Duties and Responsibilities. The duties and responsibilities of Executive are and shall continue to be of an executive nature as shall be required by Employer in the conduct of its business. Executive's powers and authority shall include all those presently delegated to him or such other duties and responsibilities as from time to time may be assigned to him. Executive recognizes, that during his employment hereunder, he owes an undivided duty of loyalty to Employer, and agrees to devote his entire business time and attention to the performance of said duties and responsibilities and to use his best efforts to promote and develop the business of Employer. 3. Employment Term. Executive's employment may be terminated by either party in accordance with Sections 5, 6, 7, or 8 herein. 4. Compensation and Benefits. During employment, Executive shall be entitled to receive a base annual salary, shall be reimbursed for reasonable expenses incurred and accounted for in accordance with the policies and procedures of Employer, and shall be entitled to vacation pay and other benefits applicable to employees generally, each as may from time to time be established, amended or terminated. In addition, upon execution of this Agreement, Executive (a) shall be entitled to 30,000 restricted shares of common stock as set forth in a restricted stock option agreement of even-date herewith, attached hereto and incorporated herein (the "Restricted Stock Agreement"), and (b) shall be entitled to the Special Compensation set forth in Section 5 hereof in accordance with the terms of this Agreement. 5. Termination by Employer: Special Compensation. At any time, Employer may terminate Executive's employment for any reason. If Executive's termination is other than pursuant to Section 6, Executive shall, subject to the other provisions of this Section 5, be entitled to the following Special Compensation (as that term is defined in this Section 5) in lieu of any benefits available under any and all Employer separation plans or policies, except as noted in Section 17. If Executive's termination is pursuant to Sections 5, 6 or 7, Executive's obligations under Sections 11, 12, 13, and 14 hereof shall continue. For purposes of this Agreement, "Special Compensation" shall entitle Executive: (a) to continue to receive for a period of eighteen (18) months from the date of termination (the "Severance Period") biweekly compensation at the rate equal to the biweekly amount of his base annual salary in effect at the date of termination of employment, provided, however, that the Board of Directors shall not be precluded from enhancing the Severance Period at some future date; (b) to receive a bonus, based on actual performance results, up to the target amount, under the Management Incentive Plan ("MIP") throughout the Severance Period provided that the amount, if any, payable under such Plan for the award period including the last day of the Severance Period shall be pro rated based upon the number of months of the Severance Period that fall within the award period and the total number of months in such award period; (c) to receive an award under the Long Term Incentive Plan, pro rated based on the Executive's last day worked, exclusive of any Severance Period, determined in accordance with the terms of said Plan; (d) to an acceleration of restricted shares of common stock in accordance with the relevant provisions of the Restricted Stock Agreement; (e) to continue to receive throughout the Severance Period any executive medical, dental, life, and qualified or nonqualified retirement benefits which the Executive was receiving or was entitled to receive at the time of termination, except that long term disability and short term disability benefits cease on the last day worked; (f) to receive outplacement counseling by a firm selected by Employer to continue until Executive becomes employed; and (g) to continue to receive throughout the Severance Period all applicable executive perquisites (including automobile allowance, long distance services and all miscellaneous services) except country club membership dues and accrual of vacation. Employer shall pay or cause to be paid the amounts payable under paragraph (a) above in equal installments, bi-weekly in arrears, and the amount payable under paragraphs (b) and (c) in accordance with the terms of the Plans. All payments pursuant to this Section shall be subject to applicable federal and state income and other withholding taxes. In addition to the Special Compensation described above, Executive shall also be entitled to any vacation pay for vacation accrued by Executive in the calendar year of termination but not taken at the time of termination. In the event Executive becomes employed full time during the Severance Period, Executive's entitlement to continuation of the benefits described in paragraph (e) shall immediately cease, however, Executive shall retain any rights to continue medical insurance coverage under the COBRA continuation provisions of the group medical insurance plan by paying the applicable premium therefor. The payments and benefits provided for in this Section shall be in addition to all other sums then payable and owing to Executive hereunder and, except as expressly provided herein, shall not be subject to reduction for any amounts received by Executive for employment or services provided after termination of employment hereunder, and shall be in full settlement and satisfaction of all of Executive's claims and demands. In all events, Executive's right to receive severance and/or other benefits pursuant to this Section shall cease immediately in the event Executive is re-employed by Employer or an affiliate or Executive breaches his Confidential Information Covenant (as defined in Section 11 hereof), or breaches Sections 12, 13 or 14 hereof. In all cases, Employer's rights under Section 15 shall continue. 6. Voluntary Resignation by Executive; Termination for Cause: Total Disability. Upon termination of Executive's employment by either Voluntary Resignation, Termination for Cause (as those terms are defined in this Section 6), or Total Disability, as that term is defined in the Long Term Disability Plan, Executive shall have no right to compensation, severance pay or other benefits described herein but Executive's obligations under Sections 11, 12, 13 and 14 hereof shall continue. (a) Voluntary Resignation by Executive. At any time, Executive has the right, by written notice to Employer, to terminate his services hereunder ("Voluntary Resignation"), effective as of thirty (30) days after such notice. (b) Termination for Cause by Employer. At any time, Employer has the right to terminate Executive's employment. Termination upon the occurrence of any of the following shall be deemed termination for cause ("Termination for Cause"): (i) Conduct by the Executive which reflects adversely on the Executive's honesty, trustworthiness or fitness as an Executive, or (ii) Executive's willful engagement in conduct which is demonstrably and materially injurious to the Employer. Termination for failure to meet performance expectations, unless willful, continuing and substantial, shall not be deemed a Termination for Cause. For Termination for Cause, written notice of the termination of Executive's employment by Employer shall be served upon Executive and shall be effective as of the date of such service. Such notice given by Employer shall specify the act or acts of Executive underlying such termination. (c) Total Disability. Upon the total disability of the Executive, as that term is defined in the Long Term Disability Plan, Executive shall have no right to compensation or severance pay described herein but shall be entitled to long term disability and other such benefits afforded under the applicable policies and plans. 7. Resignation Following Constructive Discharge. If at any time, except in connection with a termination pursuant to Section 5, 6, or 8 Executive is Constructively Discharged (as that term is defined in this Section 7) then Executive shall have the right, by written notice to Employer within sixty (60) days of such Constructive Discharge, to terminate his services hereunder, effective as of thirty (30) days after such notice. Executive shall in such event be entitled to the compensation and benefits as if such employment were terminated pursuant to Section 5 of this Agreement. For purposes of this Agreement, the Executive shall be "Constructively Discharged" upon the occurrence of any one of the following events: (a) Executive is removed from his position with Employer other than as a result of Executive's appointment to positions of equal or superior scope and responsibility; or (b) Executive's targeted total compensation is reduced by more than 10% (other than across-the-board reductions similarly affecting all officers of Sprint Corporation). 8. Effect of Change in Control. In the event that within one year of a Change in Control (as that term is defined in this Section 8) Executive's employment is terminated: (a) by the Employer other than pursuant to Section 6, (b) by Executive pursuant to Section 7 hereof, (c) by Executive if Executive is required to be based anywhere other than his location at the time or the Kansas City metropolitan area, except for required travel on business to an extent substantially consistent with Executive's business travel obligations immediately prior the Change in Control; then Executive shall be entitled to the Special Compensation described in Section 5 and shall be bound by Section 11, but shall not have any continuing obligations under Sections 12, 13, and 14, except as otherwise required by common law or statute. For purposes of this Agreement, a "Change in Control" shall be deemed to have occurred if: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")) other than a trustee or other fiduciary holding securities under an employee benefit plan of Sprint or any of its affiliates, and other than Sprint or a corporation owned, directly or indirectly, by the stockholders of Sprint in substantially the same proportions as their ownership of stock of Sprint, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Sprint representing 20% or more of the combined voting power of Sprint's then outstanding securities, or (ii) during any period of two consecutive years (not including any period prior to the date of this Agreement), incumbent members cease for any reason to constitute a majority of the members of the Board of Directors of Sprint; provided, however, that a transaction among Employer, France Telecom and Deutsche Bundespost Telekom commonly known as Project Phoenix shall not constitute a Change in Control for this Agreement and the related Restricted Stock Agreement. A member of the Board of Directors of Sprint shall be an "incumbent member" if such individual is as of the date of this Agreement or at the beginning of the applicable two consecutive year period a member of the Board of Directors of Sprint, and any new director after the date of this Agreement (other than a director designated by person who has entered into an agreement to effect a transaction described in subparagraph (i) above) whose election to the Board or nomination for election by the stockholders of Sprint was approved by a vote of at least two- thirds (2/3) of the directors still in office who either were directors as of the date hereof or as of the first day of the applicable two consecutive year period or whose election or nomination for election was previously so approved. 9. Dispute Resolution. All disputes arising under this Agreement, other than those disputes relating to Executive's alleged violations of Sections 11 through 14 herein, shall be submitted to arbitration by the American Arbitration Association of Kansas City, Missouri. Costs of arbitration shall be borne equally by the parties. The decision of the arbitrators shall be final and there shall be no appeal from any award rendered. Any award rendered may be entered as a judgment in any court of competent jurisdiction. In any judicial enforcement proceeding, the losing party shall reimburse the prevailing party for its reasonable costs and attorneys' fees for enforcing its rights under this Agreement, in addition to any damages or other relief granted. This Section 9 does not apply to any action by Employer to enforce Sections 11 through 14 of this Agreement and does not in any way restrict Employer's rights under Section 15 herein. 10. Enforcement. In the event Employer shall fail to pay any amounts due to Executive under this Agreement as they come due, Employer agrees to pay interest on such amounts at a rate of prime plus two percent (2%) per annum. Employer agrees that Executive and any successor shall be entitled to recover all costs of successfully enforcing any provision of this Agreement, including reasonable attorney fees and costs of litigation. 11. Confidential Information. Executive acknowledges that during the course of his employment he has learned or will learn or develop Confidential Information (as that term is defined in this Section 11). Executive further acknowledges that unauthorized disclosure or use of such Confidential Information, other than in discharge of Executive's duties, will cause Employer irreparable harm. For purposes of this Section, Confidential Information means trade secrets (such as technical and non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process) and other proprietary information concerning the products, processes or services of Employer or its parent, and/or affiliates, including but not limited to: computer programs; unpatented inventions, discoveries or improvements; marketing, manufacturing, or organizational research and development; business plans; sales forecasts; personnel information, including the identity of other employees of Employer, their responsibilities, competence, abilities, and compensation; pricing and financial information; current and prospective customer lists and information on customers or their employees; information concerning planned or pending acquisitions or divestitures; and information concerning purchases of major equipment or property, which information: (a) has not been made generally available to the public; and (b) is useful or of value to the current or anticipated business, or research or development activities of Employer or of any customer or supplier of Employer, or (c) has been identified to Employee as confidential by Employer, either orally or in writing. Except in the course of his employment and in the pursuit of the business of Employer or any of its subsidiaries or affiliates, Executive shall not, during the course of his employment, or for a period of eighteen (18) months following termination of his employment for any reason, directly or indirectly, disclose, publish, communicate or use on his behalf or another's behalf, any proprietary information or data of Employer or any of its subsidiaries or affiliates. Executive acknowledges that Employer operates and competes nationally, and that Employer will be harmed by unauthorized disclosure or use of Confidential Information regardless of where such disclosure or use occurs, and that therefore this confidentiality agreement is not limited to any single state or other jurisdiction. 12. Non-Competition. Executive acknowledges that use or disclosure of Confidential Information described in Section 11 is likely if Executive were to perform telecommunications functions on behalf of a competitor of Employer. Therefore, Executive shall not, for eighteen (18) months following termination of employment for any reason (the "Non-Compete Period"), accept any position, including but not limited to a position in the long distance operations of AT&T or MCI, where Executive dedicates his time and efforts principally to managing, controlling, participating in, investing in, acting as consultant or advisor to, rendering services for, or otherwise assisting any person or entity in the long distance, local telephony or wireless businesses and performing functions relating to long distance, local telephony or wireless services. Executive acknowledges that Employer operates and competes nationally, and that therefore this non-competition agreement is not limited to any single state or other jurisdiction. 13. Inducement of Other Employees. For a eighteen (18) month period following termination of employment, Executive will not directly or indirectly solicit, induce or encourage any employee or agent of Employer to terminate his relationship with Employer. 14. Return of Employer's Property. All notes, reports, sketches, plans, published memoranda or other documents created, developed, generated or held by Executive during employment, concerning or related to Employer's business, and whether containing or relating to Confidential Information or not, are the property of Employer and will be promptly delivered to Employer upon termination of Executive's employment for any reason whatsoever. During the course of employment, Executive shall not remove any of the above property containing Confidential Information, or reproductions or copies thereof, or any apparatus from Employer's premises without authorization. 15. Remedies. Executive acknowledges that the restraints and agreements herein provided are fair and reasonable, that enforcement of the provisions of Sections 11, 12, 13 and 14 will not cause him undue hardship and that said provisions are reasonably necessary and commensurate with the need to protect Employer and its legitimate and proprietary business interests and property from irreparable harm. Executive acknowledges that failure to comply with the terms of this Agreement will cause irreparable damage to Employer. Therefore, Executive agrees that, in addition to any other remedies at law or in equity available to Employer for Executive's breach or threatened breach of this Agreement, Employer is entitled to specific performance or injunctive relief, without bond, against Executive to prevent such damage or breach, and the existence of any claim or cause of action Executive may have against Employer will not constitute a defense thereto. Executive further agrees to pay reasonable attorney fees and costs of litigation incurred by Employer in any proceeding relating to the enforcement of the Agreement or to any alleged breach thereof in which Employer shall prevail in whole or those reasonable fees and costs attributable to the extent that Employer prevails in part. In the event of a breach or a violation by Executive of any of the covenants and provisions of this Agreement, the running of the Non-Compete Period (but not of Executive's obligation thereunder), shall be tolled during the period of the continuance of any actual breach or violation. 16. Confidentiality of Agreement. As a specific condition to Executive's right to Special Compensation or other benefits described herein, Executive agrees that he will not disclose or discuss: the existence of this Agreement; the Special Compensation provided hereunder; or any other terms of the Agreement except: (1) to members of his immediate family; (2) to his financial advisor or attorney but then only to the extent necessary for them to assist him; (3) to a potential employer on a strictly confidential basis and then only to the extent necessary for reasonable disclosure in the course of serious negotiations; or (4) as required by law or to enforce legal rights. 17. Entire Understanding. This Agreement constitutes the entire understanding between the parties relating to Executive's employment hereunder and supersedes and cancels all prior written and oral understandings and agreements with respect to such matters, except for the terms and provisions of the Key Management Benefit Plan and any other employee benefit or other compensation plans (or any agreements or awards thereunder) referred to in or contemplated by this Agreement and except for the Executive's Contingency Employment Agreement and the SPRINT UNITED EMPLOYEE AGREEMENT REGARDING PROPERTY RIGHTS AND BUSINESS PRACTICES which the Executive has signed and by which Executive continues to be bound. 18. Binding Effect. This Agreement shall be binding upon and inure to the benefit of Executive's executors, administrators, legal representatives, heirs and legatees and the successors and assigns of Employer. 19. Partial Invalidity. The various provisions of this Agreement are intended to be severable and to constitute independent and distinct binding obligations. Should any provision of this Agreement be determined to be void and unenforceable, in whole or in part, it shall not be deemed to affect or impair the validity of any other provision or part thereof, and such provision or part thereof shall be deemed modified to the extent required to permit enforcement. Without limiting the generality of the foregoing, if the scope of any provision contained in this Agreement is too broad to permit enforcement to its full extent, but may be made enforceable by limitations thereon, such provision shall be enforced to the maximum extent permitted by law, and Executive hereby agrees that such scope may be judicially modified accordingly. 20. Strict Construction. The language used in this Agreement will be deemed to be the language chosen by Employer and Executive to express their mutual intent and no rule of strict construction shall be applied against any person. 21. Waiver. The waiver of any party hereto of a breach of any provision of this Agreement by any other party shall not operate or be construed as a waiver of any subsequent breach. 22. Notices. Any notice or other communication required or permitted to be given hereunder shall be determined to have been duly given to any party (a) upon delivery to the address of such party specified below if delivered personally or by courier; (b) upon dispatch if transmitted by telecopy or other means of facsimile, provided a copy thereof is also sent by regular mail or courier; or (c) within forty-eight (48) hours after deposit thereof in the U.S. mail, postage prepaid, for delivery as certified mail, return receipt requested, addressed, in any case to the party at the following address(es) or telecopy numbers: If to Executive: William T. Esrey Sprint Corporation 2330 Shawnee Mission Parkway Westwood, KS 66205 If to Employer: Sprint Corporation 2330 Shawnee Mission Parkway Westwood, KS 66205 Attention: Corporate Secretary or to such other address(es) or telecopy number(s) as any party may designate by Written Notice in the aforesaid manner. 23. Governing Law. This Agreement shall be governed by, and interpreted, construed and enforced in accordance with, the laws of the State of Kansas. 24. Gender. Wherever from the context it appears appropriate, each term stated in either the singular of plural shall include the singular and the plural, and the pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine or neuter. 25. Headings. The headings of the Sections of this Agreement are for reference purposes only and do not define or limit, and shall not be used to interpret or construe the contents of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the date above set forth. WILLIAM T. ESREY SPRINT/UNITED MANAGEMENT COMPANY /s/ W. T. ESREY By: /s/ B. WATSON Authorized Officer SPRINT CORPORATION By: /s/ DON A. JENSEN Authorized Officer AGREEMENT REGARDING SPECIAL COMPENSATION AND POST EMPLOYMENT RESTRICTIVE COVENANTS THIS AGREEMENT made this 8th day of August, 1994, by and among SPRINT CORPORATION, a Kansas corporation ("Sprint"), SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and subsidiary of Sprint ("SUMC") (Sprint, SUMC and the subsidiaries of Sprint are collectively referred to herein as "Employer"), and ARTHUR B. KRAUSE ("Executive"). W I T N E S S E T H: WHEREAS, Employer and its parent and affiliates are engaged in the telecommunications business; WHEREAS, Executive has expertise, experience and capability in the business of Employer and the telecommunications business in general; WHEREAS, SUMC provides services for Sprint, its subsidiaries and affiliates, including providing all personnel to Sprint and Sprint's Long Distance Division; and WHEREAS, Employee is employed by SUMC to provide such services to Sprint; WHEREAS, Executive has been, and now is serving Employer as Executive Vice President and Chief Financial Officer of Sprint; WHEREAS, Employer desires to enter into this Agreement to provide severance and other benefits for Executive and obtain Executive's agreements regarding confidentiality and post- employment restrictive covenants for Employer; and WHEREAS, Executive is willing to provide such agreements to Employer. NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which consideration are mutually acknowledged by the parties, it is hereby agreed as follows: 1. Recitals. The recitals hereinbefore set forth constitute an integral part of this Agreement, evidencing the intent of the parties in executing this Agreement, and describing the circumstances surrounding its execution. Said recitals are by express reference made a part of the covenants hereof, and this Agreement shall be construed in light thereof. 2. Duties and Responsibilities. The duties and responsibilities of Executive are and shall continue to be of an executive nature as shall be required by Employer in the conduct of its business. Executive's powers and authority shall include all those presently delegated to him or such other duties and responsibilities as from time to time may be assigned to him. Executive recognizes, that during his employment hereunder, he owes an undivided duty of loyalty to Employer, and agrees to devote his entire business time and attention to the performance of said duties and responsibilities and to use his best efforts to promote and develop the business of Employer. 3. Employment Term. Executive's employment may be terminated by either party in accordance with Sections 5, 6, 7, or 8 herein. 4. Compensation and Benefits. During employment, Executive shall be entitled to receive a base annual salary, shall be reimbursed for reasonable expenses incurred and accounted for in accordance with the policies and procedures of Employer, and shall be entitled to vacation pay and other benefits applicable to employees generally, each as may from time to time be established, amended or terminated. In addition, upon execution of this Agreement, Executive (a) shall be entitled to 10,000 shares of restricted stock as set forth in a restricted stock agreement dated August 8, 1994 (the "Restricted Stock Agreement"), and (b) shall be entitled to the Special Compensation set forth in Section 5 hereof in accordance with the terms of this Agreement. 5. Termination by Employer: Special Compensation. At any time, Employer may terminate Executive's employment for any reason. If Executive's termination is other than pursuant to Section 6, Executive shall, subject to the other provisions of this Section 5, be entitled to the following Special Compensation (as that term is defined in this Section 5) in lieu of any benefits available under any and all Employer separation plans or policies, except as noted in Section 17. If Executive's termination is pursuant to Sections 5, 6 or 7, Executive's obligations under Sections 11, 12, 13, and 14 hereof shall continue. For purposes of this Agreement, "Special Compensation" shall entitle Executive: (a) to continue to receive for a period of eighteen (18) months from the date of termination (the "Severance Period") biweekly compensation at the rate equal to the biweekly amount of his base annual salary in effect at the date of termination of employment; (b) to receive a bonus, based on actual performance results, up to the target amount, under the Management Incentive Plan ("MIP") throughout the Severance Period provided that the amount, if any, payable under such Plan for the award period including the last day of the Severance Period shall be pro rated based upon the number of months of the Severance Period that fall within the award period and the total number of months in such award period; (c) to receive an award under the Long Term Incentive Plan, pro rated based on the Executive's last day worked, exclusive of any Severance Period, determined in accordance with the terms of said Plan; (d) to an acceleration of vesting of restricted stock in accordance with the relevant provisions of the Restricted Stock Agreement; (e) to continue to receive throughout the Severance Period any executive medical, dental, life, and qualified or nonqualified retirement benefits which the Executive was receiving or was entitled to receive at the time of termination, except that long term disability and short term disability benefits cease on the last day worked; (f) to receive outplacement counseling by a firm selected by Employer to continue until Executive becomes employed; and (g) to continue to receive throughout the Severance Period all applicable executive perquisites (including automobile allowance, long distance services and all miscellaneous services) except country club membership dues and accrual of vacation. Employer shall pay or cause to be paid the amounts payable under paragraph (a) above in equal installments, bi-weekly in arrears, and the amount payable under paragraphs (b) and (c) in accordance with the terms of the Plans. All payments pursuant to this Section shall be subject to applicable federal and state income and other withholding taxes. In addition to the Special Compensation described above, Executive shall also be entitled to any vacation pay for vacation accrued by Executive in the calendar year of termination but not taken at the time of termination. In the event Executive becomes employed full time during the Severance Period, Executive's entitlement to continuation of the benefits described in paragraph (e) shall immediately cease, however, Executive shall retain any rights to continue medical insurance coverage under the COBRA continuation provisions of the group medical insurance plan by paying the applicable premium therefor. The payments and benefits provided for in this Section shall be in addition to all other sums then payable and owing to Executive hereunder and, except as expressly provided herein, shall not be subject to reduction for any amounts received by Executive for employment or services provided after termination of employment hereunder, and shall be in full settlement and satisfaction of all of Executive's claims and demands. In all events, Executive's right to receive severance and/or other benefits pursuant to this Section shall cease immediately in the event Executive is re-employed by Employer or an affiliate or Executive breaches his Confidential Information Covenant (as defined in Section 11 hereof), or breaches Sections 12, 13 or 14 hereof. In all cases, Employer's rights under Section 15 shall continue. 6. Voluntary Resignation by Executive; Termination for Cause: Total Disability. Upon termination of Executive's employment by either Voluntary Resignation, Termination for Cause (as those terms are defined in this Section 6), or Total Disability, as that term is defined in the Long Term Disability Plan, Executive shall have no right to compensation, severance pay or other benefits described herein but Executive's obligations under Sections 11, 12, 13 and 14 hereof shall continue. (a) Voluntary Resignation by Executive. At any time, Executive has the right, by written notice to Employer, to terminate his services hereunder ("Voluntary Resignation"), effective as of thirty (30) days after such notice. (b) Termination for Cause by Employer. At any time, Employer has the right to terminate Executive's employment. Termination upon the occurrence of any of the following shall be deemed termination for cause ("Termination for Cause"): (i) Conduct by the Executive which reflects adversely on the Executive's honesty, trustworthiness or fitness as an Executive, or (ii) Executive's willful engagement in conduct which is demonstrably and materially injurious to the Employer. Termination for failure to meet performance expectations, unless willful, continuing and substantial, shall not be deemed a Termination for Cause. For Termination for Cause, written notice of the termination of Executive's employment by Employer shall be served upon Executive and shall be effective as of the date of such service. Such notice given by Employer shall specify the act or acts of Executive underlying such termination. (c) Total Disability. Upon the total disability of the Executive, as that term is defined in the Long Term Disability Plan, Executive shall have no right to compensation or severance pay described herein but shall be entitled to long term disability and other such benefits afforded under the applicable policies and plans. 7. Resignation Following Constructive Discharge. If at any time, except in connection with a termination pursuant to Section 5, 6, or 8 Executive is Constructively Discharged (as that term is defined in this Section 7) then Executive shall have the right, by written notice to Employer within sixty (60) days of such Constructive Discharge, to terminate his services hereunder, effective as of thirty (30) days after such notice. Executive shall in such event be entitled to the compensation and benefits as if such employment were terminated pursuant to Section 5 of this Agreement. For purposes of this Agreement, the Executive shall be "Constructively Discharged" upon the occurrence of any one of the following events: (a) Executive is removed from his position with Employer other than as a result of Executive's appointment to positions of equal or superior scope and responsibility; or (b) Executive's targeted total compensation is reduced by more than 10% (other than across-the-board reductions similarly affecting all officers of Sprint Corporation). 8. Effect of Change in Control. In the event that within one year of a Change in Control (as that term is defined in this Section 8) Executive's employment is terminated: (a) by the Employer other than pursuant to Section 6, (b) by Executive pursuant to Section 7 hereof, (c) by Executive if Executive is required to be based anywhere other than his location at the time or the Kansas City metropolitan area, except for required travel on business to an extent substantially consistent with Executive's business travel obligations immediately prior the Change in Control; then Executive shall be entitled to the Special Compensation described in Section 5 and shall be bound by Section 11, but shall not have any continuing obligations under Sections 12, 13, and 14, except as otherwise required by common law or statute. For purposes of this Agreement, a "Change in Control" shall be deemed to have occurred if: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")) other than a trustee or other fiduciary holding securities under an employee benefit plan of Sprint or any of its affiliates, and other than Sprint or a corporation owned, directly or indirectly, by the stockholders of Sprint in substantially the same proportions as their ownership of stock of Sprint, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Sprint representing 20% or more of the combined voting power of Sprint's then outstanding securities, or (ii) during any period of two consecutive years (not including any period prior to the date of this Agreement), incumbent members cease for any reason to constitute a majority of the members of the Board of Directors of Sprint; provided, however, that a transaction among Employer, France Telecom and Deutsche Bundespost Telekom commonly known as Project Phoenix shall not constitute a Change in Control for this Agreement and the related Restricted Stock Agreement. A member of the Board of Directors of Sprint shall be an "incumbent member" if such individual is as of the date of this Agreement or at the beginning of the applicable two consecutive year period a member of the Board of Directors of Sprint, and any new director after the date of this Agreement (other than a director designated by person who has entered into an agreement to effect a transaction described in subparagraph (i) above) whose election to the Board or nomination for election by the stockholders of Sprint was approved by a vote of at least two- thirds (2/3) of the directors still in office who either were directors as of the date hereof or as of the first day of the applicable two consecutive year period or whose election or nomination for election was previously so approved. 9. Dispute Resolution. All disputes arising under this Agreement, other than those disputes relating to Executive's alleged violations of Sections 11 through 14 herein, shall be submitted to arbitration by the American Arbitration Association of Kansas City, Missouri. Costs of arbitration shall be borne equally by the parties. The decision of the arbitrators shall be final and there shall be no appeal from any award rendered. Any award rendered may be entered as a judgment in any court of competent jurisdiction. In any judicial enforcement proceeding, the losing party shall reimburse the prevailing party for its reasonable costs and attorneys' fees for enforcing its rights under this Agreement, in addition to any damages or other relief granted. This Section 9 does not apply to any action by Employer to enforce Sections 11 through 14 of this Agreement and does not in any way restrict Employer's rights under Section 15 herein. 10. Enforcement. In the event Employer shall fail to pay any amounts due to Executive under this Agreement as they come due, Employer agrees to pay interest on such amounts at a rate of prime plus two percent (2%) per annum. Employer agrees that Executive and any successor shall be entitled to recover all costs of successfully enforcing any provision of this Agreement, including reasonable attorney fees and costs of litigation. 11. Confidential Information. Executive acknowledges that during the course of his employment he has learned or will learn or develop Confidential Information (as that term is defined in this Section 11). Executive further acknowledges that unauthorized disclosure or use of such Confidential Information, other than in discharge of Executive's duties, will cause Employer irreparable harm. For purposes of this Section, Confidential Information means trade secrets (such as technical and non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process) and other proprietary information concerning the products, processes or services of Employer or its parent, and/or affiliates, including but not limited to: computer programs; unpatented inventions, discoveries or improvements; marketing, manufacturing, or organizational research and development; business plans; sales forecasts; personnel information, including the identity of other employees of Employer, their responsibilities, competence, abilities, and compensation; pricing and financial information; current and prospective customer lists and information on customers or their employees; information concerning planned or pending acquisitions or divestitures; and information concerning purchases of major equipment or property, which information: (a) has not been made generally available to the public; and (b) is useful or of value to the current or anticipated business, or research or development activities of Employer or of any customer or supplier of Employer, or (c) has been identified to Employee as confidential by Employer, either orally or in writing. Except in the course of his employment and in the pursuit of the business of Employer or any of its subsidiaries or affiliates, Executive shall not, during the course of his employment, or for a period of eighteen (18) months following termination of his employment for any reason, directly or indirectly, disclose, publish, communicate or use on his behalf or another's behalf, any proprietary information or data of Employer or any of its subsidiaries or affiliates. Executive acknowledges that Employer operates and competes nationally, and that Employer will be harmed by unauthorized disclosure or use of Confidential Information regardless of where such disclosure or use occurs, and that therefore this confidentiality agreement is not limited to any single state or other jurisdiction. 12. Non-Competition. Executive acknowledges that use or disclosure of Confidential Information described in Section 11 is likely if Executive were to perform telecommunications functions relating to long distance services on behalf of a competitor of Employer. Therefore, Executive shall not, for eighteen (18) months following termination of employment for any reason (the "Non-Compete Period"), accept any position, including but not limited to a position in the long distance operations of AT&T or MCI, where Executive dedicates his time and efforts principally to managing, controlling, participating in, investing in, acting as consultant or advisor to, rendering services for, or otherwise assisting any person or entity in the long distance business or the wireless business and performing functions relating to long distance or wireless services. Executive acknowledges that Employer operates and competes nationally, and that therefore this non-competition agreement is not limited to any single state or other jurisdiction. 13. Inducement of Other Employees. For a eighteen (18) month period following termination of employment, Executive will not directly or indirectly solicit, induce or encourage any employee or agent of Employer to terminate his relationship with Employer. 14. Return of Employer's Property. All notes, reports, sketches, plans, published memoranda or other documents created, developed, generated or held by Executive during employment, concerning or related to Employer's business, and whether containing or relating to Confidential Information or not, are the property of Employer and will be promptly delivered to Employer upon termination of Executive's employment for any reason whatsoever. During the course of employment, Executive shall not remove any of the above property containing Confidential Information, or reproductions or copies thereof, or any apparatus from Employer's premises without authorization. 15. Remedies. Executive acknowledges that the restraints and agreements herein provided are fair and reasonable, that enforcement of the provisions of Sections 11, 12, 13 and 14 will not cause him undue hardship and that said provisions are reasonably necessary and commensurate with the need to protect Employer and its legitimate and proprietary business interests and property from irreparable harm. Executive acknowledges that failure to comply with the terms of this Agreement will cause irreparable damage to Employer. Therefore, Executive agrees that, in addition to any other remedies at law or in equity available to Employer for Executive's breach or threatened breach of this Agreement, Employer is entitled to specific performance or injunctive relief, without bond, against Executive to prevent such damage or breach, and the existence of any claim or cause of action Executive may have against Employer will not constitute a defense thereto. Executive further agrees to pay reasonable attorney fees and costs of litigation incurred by Employer in any proceeding relating to the enforcement of the Agreement or to any alleged breach thereof in which Employer shall prevail in whole or those reasonable fees and costs attributable to the extent that Employer prevails in part. In the event of a breach or a violation by Executive of any of the covenants and provisions of this Agreement, the running of the Non-Compete Period (but not of Executive's obligation thereunder), shall be tolled during the period of the continuance of any actual breach or violation. 16. Confidentiality of Agreement. As a specific condition to Executive's right to Special Compensation or other benefits described herein, Executive agrees that he will not disclose or discuss: the existence of this Agreement; the Special Compensation provided hereunder; or any other terms of the Agreement except: (1) to members of his immediate family; (2) to his financial advisor or attorney but then only to the extent necessary for them to assist him; (3) to a potential employer on a strictly confidential basis and then only to the extent necessary for reasonable disclosure in the course of serious negotiations; or (4) as required by law or to enforce legal rights. 17. Entire Understanding. This Agreement constitutes the entire understanding between the parties relating to Executive's employment hereunder and supersedes and cancels all prior written and oral understandings and agreements with respect to such matters, except for the terms and provisions of the Key Management Benefit Plan and any other employee benefit or other compensation plans (or any agreements or awards thereunder) referred to in or contemplated by this Agreement and except for Executive's Contingency Employment Agreement and the SPRINT UNITED EMPLOYEE AGREEMENT REGARDING PROPERTY RIGHTS AND BUSINESS PRACTICES which the Executive has signed and by which Executive continues to be bound. 18. Binding Effect. This Agreement shall be binding upon and inure to the benefit of Executive's executors, administrators, legal representatives, heirs and legatees and the successors and assigns of Employer. 19. Partial Invalidity. The various provisions of this Agreement are intended to be severable and to constitute independent and distinct binding obligations. Should any provision of this Agreement be determined to be void and unenforceable, in whole or in part, it shall not be deemed to affect or impair the validity of any other provision or part thereof, and such provision or part thereof shall be deemed modified to the extent required to permit enforcement. Without limiting the generality of the foregoing, if the scope of any provision contained in this Agreement is too broad to permit enforcement to its full extent, but may be made enforceable by limitations thereon, such provision shall be enforced to the maximum extent permitted by law, and Executive hereby agrees that such scope may be judicially modified accordingly. 20. Strict Construction. The language used in this Agreement will be deemed to be the language chosen by Employer and Executive to express their mutual intent and no rule of strict construction shall be applied against any person. 21. Waiver. The waiver of any party hereto of a breach of any provision of this Agreement by any other party shall not operate or be construed as a waiver of any subsequent breach. 22. Notices. Any notice or other communication required or permitted to be given hereunder shall be determined to have been duly given to any party (a) upon delivery to the address of such party specified below if delivered personally or by courier; (b) upon dispatch if transmitted by telecopy or other means of facsimile, provided a copy thereof is also sent by regular mail or courier; or (c) within forty-eight (48) hours after deposit thereof in the U.S. mail, postage prepaid, for delivery as certified mail, return receipt requested, addressed, in any case to the party at the following address(es) or telecopy numbers: If to Executive: Arthur B. Krause Sprint Corporation 2330 Shawnee Mission Parkway Westwood, KS 66205 If to Employer: Sprint Corporation 2330 Shawnee Mission Parkway Westwood, KS 66205 Attention: Corporate Secretary or to such other address(es) or telecopy number(s) as any party may designate by Written Notice in the aforesaid manner. 23. Governing Law. This Agreement shall be governed by, and interpreted, construed and enforced in accordance with, the laws of the State of Kansas. 24. Gender. Wherever from the context it appears appropriate, each term stated in either the singular of plural shall include the singular and the plural, and the pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine or neuter. 25. Headings. The headings of the Sections of this Agreement are for reference purposes only and do not define or limit, and shall not be used to interpret or construe the contents of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the date above set forth. ARTHUR B. KRAUSE SPRINT/UNITED MANAGEMENT COMPANY /s/ ARTHUR B. KRAUSE By: /s/ B. WATSON Authorized Officer SPRINT CORPORATION By: /s/ DON A. JENSEN Authorized Officer AGREEMENT REGARDING SPECIAL COMPENSATION AND POST EMPLOYMENT RESTRICTIVE COVENANTS THIS AGREEMENT made this 8th day of August, 1994, by and among SPRINT CORPORATION, a Kansas corporation ("Sprint"), SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and subsidiary of Sprint ("SUMC") (Sprint, SUMC and the subsidiaries of Sprint are collectively referred to herein as "Employer"), and J. RICHARD DEVLIN ("Executive"). W I T N E S S E T H: WHEREAS, Employer and its parent and affiliates are engaged in the telecommunications business; WHEREAS, Executive has expertise, experience and capability in the business of Employer and the telecommunications business in general; WHEREAS, SUMC provides services for Sprint, its subsidiaries and affiliates, including providing all personnel to Sprint and Sprint's Long Distance Division; and WHEREAS, Employee is employed by SUMC to provide such services to Sprint; WHEREAS, Executive has been, and now is serving Employer as Executive Vice President - Law and External Affairs of Sprint; WHEREAS, Employer desires to enter into this Agreement to provide severance and other benefits for Executive and obtain Executive's agreements regarding confidentiality and post- employment restrictive covenants for Employer; and WHEREAS, Executive is willing to provide such agreements to Employer. NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which consideration are mutually acknowledged by the parties, it is hereby agreed as follows: 1. Recitals. The recitals hereinbefore set forth constitute an integral part of this Agreement, evidencing the intent of the parties in executing this Agreement, and describing the circumstances surrounding its execution. Said recitals are by express reference made a part of the covenants hereof, and this Agreement shall be construed in light thereof. 2. Duties and Responsibilities. The duties and responsibilities of Executive are and shall continue to be of an executive nature as shall be required by Employer in the conduct of its business. Executive's powers and authority shall include all those presently delegated to him or such other duties and responsibilities as from time to time may be assigned to him. Executive recognizes, that during his employment hereunder, he owes an undivided duty of loyalty to Employer, and agrees to devote his entire business time and attention to the performance of said duties and responsibilities and to use his best efforts to promote and develop the business of Employer. 3. Employment Term. Executive's employment may be terminated by either party in accordance with Sections 5, 6, 7, or 8 herein. 4. Compensation and Benefits. During employment, Executive shall be entitled to receive a base annual salary, shall be reimbursed for reasonable expenses incurred and accounted for in accordance with the policies and procedures of Employer, and shall be entitled to vacation pay and other benefits applicable to employees generally, each as may from time to time be established, amended or terminated. In addition, upon execution of this Agreement, Executive (a) shall be entitled to 10,000 shares of restricted stock as set forth in a restricted stock agreement dated August 8, 1994 (the "Restricted Stock Agreement"), and (b) shall be entitled to the Special Compensation set forth in Section 5 hereof in accordance with the terms of this Agreement. 5. Termination by Employer: Special Compensation. At any time, Employer may terminate Executive's employment for any reason. If Executive's termination is other than pursuant to Section 6, Executive shall, subject to the other provisions of this Section 5, be entitled to the following Special Compensation (as that term is defined in this Section 5) in lieu of any benefits available under any and all Employer separation plans or policies, except as noted in Section 17. If Executive's termination is pursuant to Sections 5, 6 or 7, Executive's obligations under Sections 11, 12, 13, and 14 hereof shall continue. For purposes of this Agreement, "Special Compensation" shall entitle Executive: (a) to continue to receive for a period of eighteen (18) months from the date of termination (the "Severance Period") biweekly compensation at the rate equal to the biweekly amount of his base annual salary in effect at the date of termination of employment; (b) to receive a bonus, based on actual performance results, up to the target amount, under the Management Incentive Plan ("MIP") throughout the Severance Period provided that the amount, if any, payable under such Plan for the award period including the last day of the Severance Period shall be pro rated based upon the number of months of the Severance Period that fall within the award period and the total number of months in such award period; (c) to receive an award under the Long Term Incentive Plan, pro rated based on the Executive's last day worked, exclusive of any Severance Period, determined in accordance with the terms of said Plan; (d) to an acceleration of vesting of restricted stock in accordance with the relevant provisions of the Restricted Stock Agreement; (e) to continue to receive throughout the Severance Period any executive medical, dental, life, and qualified or nonqualified retirement benefits which the Executive was receiving or was entitled to receive at the time of termination, except that long term disability and short term disability benefits cease on the last day worked; (f) to receive outplacement counseling by a firm selected by Employer to continue until Executive becomes employed; and (g) to continue to receive throughout the Severance Period all applicable executive perquisites (including automobile allowance, long distance services and all miscellaneous services) except country club membership dues and accrual of vacation. Employer shall pay or cause to be paid the amounts payable under paragraph (a) above in equal installments, bi-weekly in arrears, and the amount payable under paragraphs (b) and (c) in accordance with the terms of the Plans. All payments pursuant to this Section shall be subject to applicable federal and state income and other withholding taxes. In addition to the Special Compensation described above, Executive shall also be entitled to any vacation pay for vacation accrued by Executive in the calendar year of termination but not taken at the time of termination. In the event Executive becomes employed full time during the Severance Period, Executive's entitlement to continuation of the benefits described in paragraph (e) shall immediately cease, however, Executive shall retain any rights to continue medical insurance coverage under the COBRA continuation provisions of the group medical insurance plan by paying the applicable premium therefor. The payments and benefits provided for in this Section shall be in addition to all other sums then payable and owing to Executive hereunder and, except as expressly provided herein, shall not be subject to reduction for any amounts received by Executive for employment or services provided after termination of employment hereunder, and shall be in full settlement and satisfaction of all of Executive's claims and demands. In all events, Executive's right to receive severance and/or other benefits pursuant to this Section shall cease immediately in the event Executive is re-employed by Employer or an affiliate or Executive breaches his Confidential Information Covenant (as defined in Section 11 hereof), or breaches Sections 12, 13 or 14 hereof. In all cases, Employer's rights under Section 15 shall continue. 6. Voluntary Resignation by Executive; Termination for Cause: Total Disability. Upon termination of Executive's employment by either Voluntary Resignation, Termination for Cause (as those terms are defined in this Section 6), or Total Disability, as that term is defined in the Long Term Disability Plan, Executive shall have no right to compensation, severance pay or other benefits described herein but Executive's obligations under Sections 11, 12, 13 and 14 hereof shall continue. (a) Voluntary Resignation by Executive. At any time, Executive has the right, by written notice to Employer, to terminate his services hereunder ("Voluntary Resignation"), effective as of thirty (30) days after such notice. (b) Termination for Cause by Employer. At any time, Employer has the right to terminate Executive's employment. Termination upon the occurrence of any of the following shall be deemed termination for cause ("Termination for Cause"): (i) Conduct by the Executive which reflects adversely on the Executive's honesty, trustworthiness or fitness as an Executive, or (ii) Executive's willful engagement in conduct which is demonstrably and materially injurious to the Employer. Termination for failure to meet performance expectations, unless willful, continuing and substantial, shall not be deemed a Termination for Cause. For Termination for Cause, written notice of the termination of Executive's employment by Employer shall be served upon Executive and shall be effective as of the date of such service. Such notice given by Employer shall specify the act or acts of Executive underlying such termination. (c) Total Disability. Upon the total disability of the Executive, as that term is defined in the Long Term Disability Plan, Executive shall have no right to compensation or severance pay described herein but shall be entitled to long term disability and other such benefits afforded under the applicable policies and plans. 7. Resignation Following Constructive Discharge. If at any time, except in connection with a termination pursuant to Section 5, 6, or 8 Executive is Constructively Discharged (as that term is defined in this Section 7) then Executive shall have the right, by written notice to Employer within sixty (60) days of such Constructive Discharge, to terminate his services hereunder, effective as of thirty (30) days after such notice. Executive shall in such event be entitled to the compensation and benefits as if such employment were terminated pursuant to Section 5 of this Agreement. For purposes of this Agreement, the Executive shall be "Constructively Discharged" upon the occurrence of any one of the following events: (a) Executive is removed from his position with Employer other than as a result of Executive's appointment to positions of equal or superior scope and responsibility; or (b) Executive's targeted total compensation is reduced by more than 10% (other than across-the-board reductions similarly affecting all officers of Sprint Corporation). 8. Effect of Change in Control. In the event that within one year of a Change in Control (as that term is defined in this Section 8) Executive's employment is terminated: (a) by the Employer other than pursuant to Section 6, (b) by Executive pursuant to Section 7 hereof, (c) by Executive if Executive is required to be based anywhere other than his location at the time or the Kansas City metropolitan area, except for required travel on business to an extent substantially consistent with Executive's business travel obligations immediately prior the Change in Control; then Executive shall be entitled to the Special Compensation described in Section 5 and shall be bound by Section 11, but shall not have any continuing obligations under Sections 12, 13, and 14, except as otherwise required by common law or statute. For purposes of this Agreement, a "Change in Control" shall be deemed to have occurred if: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")) other than a trustee or other fiduciary holding securities under an employee benefit plan of Sprint or any of its affiliates, and other than Sprint or a corporation owned, directly or indirectly, by the stockholders of Sprint in substantially the same proportions as their ownership of stock of Sprint, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Sprint representing 20% or more of the combined voting power of Sprint's then outstanding securities, or (ii) during any period of two consecutive years (not including any period prior to the date of this Agreement), incumbent members cease for any reason to constitute a majority of the members of the Board of Directors of Sprint; provided, however, that a transaction among Employer, France Telecom and Deutsche Bundespost Telekom commonly known as Project Phoenix shall not constitute a Change in Control for this Agreement and the related Restricted Stock Agreement. A member of the Board of Directors of Sprint shall be an "incumbent member" if such individual is as of the date of this Agreement or at the beginning of the applicable two consecutive year period a member of the Board of Directors of Sprint, and any new director after the date of this Agreement (other than a director designated by person who has entered into an agreement to effect a transaction described in subparagraph (i) above) whose election to the Board or nomination for election by the stockholders of Sprint was approved by a vote of at least two- thirds (2/3) of the directors still in office who either were directors as of the date hereof or as of the first day of the applicable two consecutive year period or whose election or nomination for election was previously so approved. 9. Dispute Resolution. All disputes arising under this Agreement, other than those disputes relating to Executive's alleged violations of Sections 11 through 14 herein, shall be submitted to arbitration by the American Arbitration Association of Kansas City, Missouri. Costs of arbitration shall be borne equally by the parties. The decision of the arbitrators shall be final and there shall be no appeal from any award rendered. Any award rendered may be entered as a judgment in any court of competent jurisdiction. In any judicial enforcement proceeding, the losing party shall reimburse the prevailing party for its reasonable costs and attorneys' fees for enforcing its rights under this Agreement, in addition to any damages or other relief granted. This Section 9 does not apply to any action by Employer to enforce Sections 11 through 14 of this Agreement and does not in any way restrict Employer's rights under Section 15 herein. 10. Enforcement. In the event Employer shall fail to pay any amounts due to Executive under this Agreement as they come due, Employer agrees to pay interest on such amounts at a rate of prime plus two percent (2%) per annum. Employer agrees that Executive and any successor shall be entitled to recover all costs of successfully enforcing any provision of this Agreement, including reasonable attorney fees and costs of litigation. 11. Confidential Information. Executive acknowledges that during the course of his employment he has learned or will learn or develop Confidential Information (as that term is defined in this Section 11). Executive further acknowledges that unauthorized disclosure or use of such Confidential Information, other than in discharge of Executive's duties, will cause Employer irreparable harm. For purposes of this Section, Confidential Information means trade secrets (such as technical and non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process) and other proprietary information concerning the products, processes or services of Employer or its parent, and/or affiliates, including but not limited to: computer programs; unpatented inventions, discoveries or improvements; marketing, manufacturing, or organizational research and development; business plans; sales forecasts; personnel information, including the identity of other employees of Employer, their responsibilities, competence, abilities, and compensation; pricing and financial information; current and prospective customer lists and information on customers or their employees; information concerning planned or pending acquisitions or divestitures; and information concerning purchases of major equipment or property, which information: (a) has not been made generally available to the public; and (b) is useful or of value to the current or anticipated business, or research or development activities of Employer or of any customer or supplier of Employer, or (c) has been identified to Employee as confidential by Employer, either orally or in writing. Except in the course of his employment and in the pursuit of the business of Employer or any of its subsidiaries or affiliates, Executive shall not, during the course of his employment, or for a period of eighteen (18) months following termination of his employment for any reason, directly or indirectly, disclose, publish, communicate or use on his behalf or another's behalf, any proprietary information or data of Employer or any of its subsidiaries or affiliates. Executive acknowledges that Employer operates and competes nationally, and that Employer will be harmed by unauthorized disclosure or use of Confidential Information regardless of where such disclosure or use occurs, and that therefore this confidentiality agreement is not limited to any single state or other jurisdiction. 12. Non-Competition. Executive acknowledges that use or disclosure of Confidential Information described in Section 11 is likely if Executive were to perform telecommunications functions relating to long distance services on behalf of a competitor of Employer. Therefore, Executive shall not, for eighteen (18) months following termination of employment for any reason (the "Non-Compete Period"), accept any position, including but not limited to a position in the long distance operations of AT&T or MCI, where Executive dedicates his time and efforts principally to managing, controlling, participating in, investing in, acting as consultant or advisor to, rendering services for, or otherwise assisting any person or entity in the long distance business or the wireless business and performing functions relating to long distance or wireless services. Executive acknowledges that Employer operates and competes nationally, and that therefore this non-competition agreement is not limited to any single state or other jurisdiction. 13. Inducement of Other Employees. For a eighteen (18) month period following termination of employment, Executive will not directly or indirectly solicit, induce or encourage any employee or agent of Employer to terminate his relationship with Employer. 14. Return of Employer's Property. All notes, reports, sketches, plans, published memoranda or other documents created, developed, generated or held by Executive during employment, concerning or related to Employer's business, and whether containing or relating to Confidential Information or not, are the property of Employer and will be promptly delivered to Employer upon termination of Executive's employment for any reason whatsoever. During the course of employment, Executive shall not remove any of the above property containing Confidential Information, or reproductions or copies thereof, or any apparatus from Employer's premises without authorization. 15. Remedies. Executive acknowledges that the restraints and agreements herein provided are fair and reasonable, that enforcement of the provisions of Sections 11, 12, 13 and 14 will not cause him undue hardship and that said provisions are reasonably necessary and commensurate with the need to protect Employer and its legitimate and proprietary business interests and property from irreparable harm. Executive acknowledges that failure to comply with the terms of this Agreement will cause irreparable damage to Employer. Therefore, Executive agrees that, in addition to any other remedies at law or in equity available to Employer for Executive's breach or threatened breach of this Agreement, Employer is entitled to specific performance or injunctive relief, without bond, against Executive to prevent such damage or breach, and the existence of any claim or cause of action Executive may have against Employer will not constitute a defense thereto. Executive further agrees to pay reasonable attorney fees and costs of litigation incurred by Employer in any proceeding relating to the enforcement of the Agreement or to any alleged breach thereof in which Employer shall prevail in whole or those reasonable fees and costs attributable to the extent that Employer prevails in part. In the event of a breach or a violation by Executive of any of the covenants and provisions of this Agreement, the running of the Non-Compete Period (but not of Executive's obligation thereunder), shall be tolled during the period of the continuance of any actual breach or violation. 16. Confidentiality of Agreement. As a specific condition to Executive's right to Special Compensation or other benefits described herein, Executive agrees that he will not disclose or discuss: the existence of this Agreement; the Special Compensation provided hereunder; or any other terms of the Agreement except: (1) to members of his immediate family; (2) to his financial advisor or attorney but then only to the extent necessary for them to assist him; (3) to a potential employer on a strictly confidential basis and then only to the extent necessary for reasonable disclosure in the course of serious negotiations; or (4) as required by law or to enforce legal rights. 17. Entire Understanding. This Agreement constitutes the entire understanding between the parties relating to Executive's employment hereunder and supersedes and cancels all prior written and oral understandings and agreements with respect to such matters, except for the terms and provisions of the Key Management Benefit Plan and any other employee benefit or other compensation plans (or any agreements or awards thereunder) referred to in or contemplated by this Agreement and except for Executive's Contingency Employment Agreement and the SPRINT UNITED EMPLOYEE AGREEMENT REGARDING PROPERTY RIGHTS AND BUSINESS PRACTICES which the Executive has signed and by which Executive continues to be bound. 18. Binding Effect. This Agreement shall be binding upon and inure to the benefit of Executive's executors, administrators, legal representatives, heirs and legatees and the successors and assigns of Employer. 19. Partial Invalidity. The various provisions of this Agreement are intended to be severable and to constitute independent and distinct binding obligations. Should any provision of this Agreement be determined to be void and unenforceable, in whole or in part, it shall not be deemed to affect or impair the validity of any other provision or part thereof, and such provision or part thereof shall be deemed modified to the extent required to permit enforcement. Without limiting the generality of the foregoing, if the scope of any provision contained in this Agreement is too broad to permit enforcement to its full extent, but may be made enforceable by limitations thereon, such provision shall be enforced to the maximum extent permitted by law, and Executive hereby agrees that such scope may be judicially modified accordingly. 20. Strict Construction. The language used in this Agreement will be deemed to be the language chosen by Employer and Executive to express their mutual intent and no rule of strict construction shall be applied against any person. 21. Waiver. The waiver of any party hereto of a breach of any provision of this Agreement by any other party shall not operate or be construed as a waiver of any subsequent breach. 22. Notices. Any notice or other communication required or permitted to be given hereunder shall be determined to have been duly given to any party (a) upon delivery to the address of such party specified below if delivered personally or by courier; (b) upon dispatch if transmitted by telecopy or other means of facsimile, provided a copy thereof is also sent by regular mail or courier; or (c) within forty-eight (48) hours after deposit thereof in the U.S. mail, postage prepaid, for delivery as certified mail, return receipt requested, addressed, in any case to the party at the following address(es) or telecopy numbers: If to Executive: J. Richard Devlin Sprint Corporation 2330 Shawnee Mission Parkway Westwood, KS 66205 If to Employer: Sprint Corporation 2330 Shawnee Mission Parkway Westwood, KS 66205 Attention: Corporate Secretary or to such other address(es) or telecopy number(s) as any party may designate by Written Notice in the aforesaid manner. 23. Governing Law. This Agreement shall be governed by, and interpreted, construed and enforced in accordance with, the laws of the State of Kansas. 24. Gender. Wherever from the context it appears appropriate, each term stated in either the singular of plural shall include the singular and the plural, and the pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine or neuter. 25. Headings. The headings of the Sections of this Agreement are for reference purposes only and do not define or limit, and shall not be used to interpret or construe the contents of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the date above set forth. J. RICHARD DEVLIN SPRINT/UNITED MANAGEMENT COMPANY /s/ J. RICHARD DEVLIN By: /s/ B. WATSON Authorized Officer SPRINT CORPORATION By: /s/ DON A. JENSEN Authorized Officer AGREEMENT REGARDING SPECIAL COMPENSATION AND POST EMPLOYMENT RESTRICTIVE COVENANTS THIS AGREEMENT made this 12th day of July, 1994, by and among SPRINT CORPORATION, a Kansas corporation ("Sprint"), SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and subsidiary of Sprint ("SUMC") (Sprint, SUMC and the subsidiaries of Sprint are collectively referred to herein as "Employer"), and JOHN R. HOFFMAN ("Executive"). W I T N E S S E T H: WHEREAS, Employer and its parent and affiliates are engaged in the telecommunications business; WHEREAS, Executive has expertise, experience and capability in the business of Employer and the telecommunications business in general; WHEREAS, SUMC provides services for Sprint, its subsidiaries and affiliates, including providing all personnel to Sprint and Sprint's Long Distance Division; and WHEREAS, Employee is employed by SUMC to provide such services to Sprint; WHEREAS, Executive has been, and now is serving as Senior Vice President - External Affairs of Sprint; WHEREAS, Employer desires to enter into this Agreement to provide severance and other benefits for Executive and obtain Executive's agreements regarding confidentiality and post- employment restrictive covenants for Employer; and WHEREAS, Executive is willing to provide such agreements to Employer. NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which consideration are mutually acknowledged by the parties, it is hereby agreed as follows: 1. Recitals. The recitals hereinbefore set forth constitute an integral part of this Agreement, evidencing the intent of the parties in executing this Agreement, and describing the circumstances surrounding its execution. Said recitals are by express reference made a part of the covenants hereof, and this Agreement shall be construed in light thereof. 2. Duties and Responsibilities. The duties and responsibilities of Executive are and shall continue to be of an executive nature as shall be required by Employer in the conduct of its business. Executive's powers and authority shall include all those presently delegated to him or such other duties and responsibilities as from time to time may be assigned to him. Executive recognizes, that during his employment hereunder, he owes an undivided duty of loyalty to Employer, and agrees to devote his entire business time and attention to the performance of said duties and responsibilities and to use his best efforts to promote and develop the business of Employer. 3. Employment Term. Executive's employment may be terminated by either party in accordance with Sections 5, 6, 7, or 8 herein. 4. Compensation and Benefits. During employment, Executive shall be entitled to receive a base annual salary, shall be reimbursed for reasonable expenses incurred and accounted for in accordance with the policies and procedures of Employer, and shall be entitled to vacation pay and other benefits applicable to employees generally, each as may from time to time be established, amended or terminated. In addition, upon execution of this Agreement, Executive (a) shall be entitled to an option to purchase 15,000 shares of common stock as set forth in a stock option agreement of even-date herewith, attached hereto and incorporated herein (the "Stock Option Agreement"), and (b) shall be entitled to the Special Compensation set forth in Section 5 hereof in accordance with the terms of this Agreement. 5. Termination by Employer: Special Compensation. At any time, Employer may terminate Executive's employment for any reason. If Executive's termination is other than pursuant to Section 6, Executive shall, subject to the other provisions of this Section 5, be entitled to the following Special Compensation (as that term is defined in this Section 5) in lieu of any benefits available under any and all Employer separation plans or policies. If Executive's termination is pursuant to Sections 5, 6 or 7, Executive's obligations under Sections 11, 12, 13, and 14 hereof shall continue. For purposes of this Agreement, "Special Compensation" shall entitle Executive: (a) to continue to receive for a period of eighteen (18) months from the date of termination (the "Severance Period") biweekly compensation at the rate equal to the biweekly amount of his base annual salary in effect at the date of termination of employment; (b) to receive a bonus, based on actual performance results, up to the target amount, under the Management Incentive Plan ("MIP") throughout the Severance Period provided that the amount, if any, payable under such Plan for the award period including the last day of the Severance Period shall be pro rated based upon the number of months of the Severance Period that fall within the award period and the total number of months in such award period; (c) to receive an award under the Long Term Incentive Plan, pro rated based on the Executive's last day worked, exclusive of any Severance Period, determined in accordance with the terms of said Plan; (d) to an acceleration of vesting of stock options in accordance with the relevant provisions of the Stock Option Agreement; (e) to continue to receive throughout the Severance Period any executive medical, dental, life, and qualified or nonqualified retirement benefits which the Executive was receiving or was entitled to receive at the time of termination, except that long term disability and short term disability benefits cease on the last day worked; (f) to receive outplacement counseling by a firm selected by Employer to continue until Executive becomes employed; and (g) to continue to receive throughout the Severance Period all applicable executive perquisites (including automobile allowance, long distance services and all miscellaneous services) except country club membership dues and accrual of vacation. Employer shall pay or cause to be paid the amounts payable under paragraph (a) above in equal installments, bi-weekly in arrears, and the amount payable under paragraphs (b) and (c) in accordance with the terms of the Plans. All payments pursuant to this Section shall be subject to applicable federal and state income and other withholding taxes. In addition to the Special Compensation described above, Executive shall also be entitled to any vacation pay for vacation accrued by Executive in the calendar year of termination but not taken at the time of termination. In the event Executive becomes employed full time during the Severance Period, Executive's entitlement to continuation of the benefits described in paragraph (e) shall immediately cease, however, Executive shall retain any rights to continue medical insurance coverage under the COBRA continuation provisions of the group medical insurance plan by paying the applicable premium therefor. The payments and benefits provided for in this Section shall be in addition to all other sums then payable and owing to Executive hereunder and, except as expressly provided herein, shall not be subject to reduction for any amounts received by Executive for employment or services provided after termination of employment hereunder, and shall be in full settlement and satisfaction of all of Executive's claims and demands. In all events, Executive's right to receive severance and/or other benefits pursuant to this Section shall cease immediately in the event Executive is re-employed by Employer or an affiliate or Executive breaches his Confidential Information Covenant (as defined in Section 11 hereof), or breaches Sections 12, 13 or 14 hereof. In all cases, Employer's rights under Section 15 shall continue. 6. Voluntary Resignation by Executive; Termination for Cause: Total Disability. Upon termination of Executive's employment by either Voluntary Resignation, Termination for Cause (as those terms are defined in this Section 6), or Total Disability, as that term is defined in the Long Term Disability Plan, Executive shall have no right to compensation, severance pay or other benefits described herein but Executive's obligations under Sections 11, 12, 13 and 14 hereof shall continue. (a) Voluntary Resignation by Executive. At any time, Executive has the right, by written notice to Employer, to terminate his services hereunder ("Voluntary Resignation"), effective as of thirty (30) days after such notice. (b) Termination for Cause by Employer. At any time, Employer has the right to terminate Executive's employment. Termination upon the occurrence of any of the following shall be deemed termination for cause ("Termination for Cause"): (i) Conduct by the Executive which reflects adversely on the Executive's honesty, trustworthiness or fitness as an Executive, or (ii) Executive's willful engagement in conduct which is demonstrably and materially injurious to the Employer. For Termination for Cause, written notice of the termination of Executive's employment by Employer shall be served upon Executive and shall be effective as of the date of such service. Such notice given by Employer shall specify the act or acts of Executive underlying such termination. (c) Total Disability. Upon the total disability of the Executive, as that term is defined in the Long Term Disability Plan, Executive shall have no right to compensation or severance pay described herein but shall be entitled to long term disability and other such benefits afforded under the applicable policies and plans. 7. Resignation Following Constructive Discharge. If at any time, except in connection with a termination pursuant to Section 5, 6, or 8 Executive is Constructively Discharged (as that term is defined in this Section 7) then Executive shall have the right, by written notice to Employer within sixty (60) days of such Constructive Discharge, to terminate his services hereunder, effective as of thirty (30) days after such notice. Executive shall in such event be entitled to the compensation and benefits as if such employment were terminated pursuant to Section 5 of this Agreement. For purposes of this Agreement, the Executive shall be "Constructively Discharged" upon the occurrence of any one of the following events: (a) Executive is removed from his position with Employer other than as a result of Executive's appointment to positions of equal or superior scope and responsibility; or (b) Executive's targeted total compensation is reduced by more than 10% (other than across-the-board reductions similarly affecting all officers of Sprint Corporation). 8. Effect of Change in Control. In the event that within one year of a Change in Control (as that term is defined in this Section 8) Executive's employment is terminated: (a) by the Employer other than pursuant to Section 6, (b) by Executive pursuant to Section 7 hereof, (c) by Executive if Executive is required to be based anywhere other than his location at the time or the Kansas City metropolitan area, except for required travel on business to an extent substantially consistent with Executive's business travel obligations immediately prior the Change in Control; then Executive shall be entitled to the Special Compensation described in Section 5 and shall be bound by Section 11, but shall not have any continuing obligations under Sections 12, 13, and 14, except as otherwise required by common law or statute. For purposes of this Agreement, a "Change in Control" shall be deemed to have occurred if: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")) other than a trustee or other fiduciary holding securities under an employee benefit plan of Sprint or any of its affiliates, and other than Sprint or a corporation owned, directly or indirectly, by the stockholders of Sprint in substantially the same proportions as their ownership of stock of Sprint, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Sprint representing 20% or more of the combined voting power of Sprint's then outstanding securities, or (ii) during any period of two consecutive years (not including any period prior to the date of this Agreement), incumbent members cease for any reason to constitute a majority of the members of the Board of Directors of Sprint; provided, however, that a transaction among Employer, France Telecom and Deutsche Bundespost Telekom commonly known as Project Phoenix shall not constitute a Change in Control for this Agreement and the related Stock Option Agreement. A member of the Board of Directors of Sprint shall be an "incumbent member" if such individual is as of the date of this Agreement or at the beginning of the applicable two consecutive year period a member of the Board of Directors of Sprint, and any new director after the date of this Agreement (other than a director designated by person who has entered into an agreement to effect a transaction described in subparagraph (i) above) whose election to the Board or nomination for election by the stockholders of Sprint was approved by a vote of at least two- thirds (2/3) of the directors still in office who either were directors as of the date hereof or as of the first day of the applicable two consecutive year period or whose election or nomination for election was previously so approved. 9. Dispute Resolution. All disputes arising under this Agreement, other than those disputes relating to Executive's alleged violations of Sections 11 through 14 herein, shall be submitted to arbitration by the American Arbitration Association of Kansas City, Missouri. Costs of arbitration shall be borne equally by the parties. The decision of the arbitrators shall be final and there shall be no appeal from any award rendered. Any award rendered may be entered as a judgment in any court of competent jurisdiction. In any judicial enforcement proceeding, the losing party shall reimburse the prevailing party for its reasonable costs and attorneys' fees for enforcing its rights under this Agreement, in addition to any damages or other relief granted. This Section 9 does not apply to any action by Employer to enforce Sections 11 through 14 of this Agreement and does not in any way restrict Employer's rights under Section 15 herein. 10. Enforcement. In the event Employer shall fail to pay any amounts due to Executive under this Agreement as they come due, Employer agrees to pay interest on such amounts at a rate of prime plus two percent (2%) per annum. Employer agrees that Executive and any successor shall be entitled to recover all costs of successfully enforcing any provision of this Agreement, including reasonable attorney fees and costs of litigation. 11. Confidential Information. Executive acknowledges that during the course of his employment he has learned or will learn or develop Confidential Information (as that term is defined in this Section 11). Executive further acknowledges that unauthorized disclosure or use of such Confidential Information, other than in discharge of Executive's duties, will cause Employer irreparable harm. For purposes of this Section, Confidential Information means trade secrets (such as technical and non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process) and other proprietary information concerning the products, processes or services of Employer or its parent, and/or affiliates, including but not limited to: computer programs; unpatented inventions, discoveries or improvements; marketing, manufacturing, or organizational research and development; business plans; sales forecasts; personnel information, including the identity of other employees of Employer, their responsibilities, competence, abilities, and compensation; pricing and financial information; current and prospective customer lists and information on customers or their employees; information concerning planned or pending acquisitions or divestitures; and information concerning purchases of major equipment or property, which information: (a) has not been made generally available to the public; and (b) is useful or of value to the current or anticipated business, or research or development activities of Employer or of any customer or supplier of Employer, or (c) has been identified to Employee as confidential by Employer, either orally or in writing. Except in the course of his employment and in the pursuit of the business of Employer or any of its subsidiaries or affiliates, Executive shall not, during the course of his employment, or for a period of eighteen (18) months following termination of his employment for any reason, directly or indirectly, disclose, publish, communicate or use on his behalf or another's behalf, any proprietary information or data of Employer or any of its subsidiaries or affiliates. Executive acknowledges that Employer operates and competes nationally, and that Employer will be harmed by unauthorized disclosure or use of Confidential Information regardless of where such disclosure or use occurs, and that therefore this confidentiality agreement is not limited to any single state or other jurisdiction. 12. Non-Competition. Executive acknowledges that use or disclosure of Confidential Information described in Section 11 is likely if Executive were to perform telecommunications functions relating to long distance services on behalf of a competitor of Employer. Therefore, Executive shall not, for eighteen (18) months following termination of employment for any reason (the "Non-Compete Period"), accept any position, including but not limited to a position in the long distance operations of AT&T or MCI, where Executive dedicates his time and efforts principally to managing, controlling, participating in, investing in, acting as consultant or advisor to, rendering services for, or otherwise assisting any person or entity in the long distance business or the wireless business and performing functions relating to long distance or wireless services. Executive acknowledges that Employer operates and competes nationally, and that therefore this non-competition agreement is not limited to any single state or other jurisdiction. This section shall not prevent Executive from using general skills and experience developed during employment with Employer or other employers; or from accepting a position of employment with another company, firm, or other organization which competes with Employer, if its business is diversified and Executive is employed in a part of the business that is not related to long distance or wireless services and provided that such position does not require or permit the disclosure or use of Confidential Information. 13. Inducement of Other Employees. For a eighteen (18) month period following termination of employment, Executive will not directly or indirectly solicit, induce or encourage any employee or agent of Employer to terminate his relationship with Employer. 14. Return of Employer's Property. All notes, reports, sketches, plans, published memoranda or other documents created, developed, generated or held by Executive during employment, concerning or related to Employer's business, and whether containing or relating to Confidential Information or not, are the property of Employer and will be promptly delivered to Employer upon termination of Executive's employment for any reason whatsoever. During the course of employment, Executive shall not remove any of the above property containing Confidential Information, or reproductions or copies thereof, or any apparatus from Employer's premises without authorization. 15. Remedies. Executive acknowledges that the restraints and agreements herein provided are fair and reasonable, that enforcement of the provisions of Sections 11, 12, 13 and 14 will not cause him undue hardship and that said provisions are reasonably necessary and commensurate with the need to protect Employer and its legitimate and proprietary business interests and property from irreparable harm. Executive acknowledges that failure to comply with the terms of this Agreement will cause irreparable damage to Employer. Therefore, Executive agrees that, in addition to any other remedies at law or in equity available to Employer for Executive's breach or threatened breach of this Agreement, Employer is entitled to specific performance or injunctive relief, without bond, against Executive to prevent such damage or breach, and the existence of any claim or cause of action Executive may have against Employer will not constitute a defense thereto. Executive further agrees to pay reasonable attorney fees and costs of litigation incurred by Employer in any proceeding relating to the enforcement of the Agreement or to any alleged breach thereof in which Employer shall prevail in whole or in part. In the event of a breach or a violation by Executive of any of the covenants and provisions of this Agreement, the running of the Non-Compete Period (but not of Executive's obligation thereunder), shall be tolled during the period of the continuance of any actual breach or violation. 16. Confidentiality of Agreement. As a specific condition to Executive's right to Special Compensation or other benefits described herein, Executive agrees that he will not disclose or discuss: the existence of this Agreement; the Special Compensation provided hereunder; or any other terms of the Agreement except: (1) to members of his immediate family; (2) to his financial advisor or attorney but then only to the extent necessary for them to assist him; or (3) as required by law or to enforce legal rights. 17. Entire Understanding. This Agreement constitutes the entire understanding between the parties relating to Executive's employment hereunder and supersedes and cancels all prior written and oral understandings and agreements with respect to such matters, except for the terms and provisions of the Key Management Benefit Plan and any other employee benefit or other compensation plans (or any agreements or awards thereunder) referred to in or contemplated by this Agreement and except for the SPRINT UNITED EMPLOYEE AGREEMENT REGARDING PROPERTY RIGHTS AND BUSINESS PRACTICES which the Executive has signed and by which Executive continues to be bound. 18. Binding Effect. This Agreement shall be binding upon and inure to the benefit of Executive's executors, administrators, legal representatives, heirs and legatees and the successors and assigns of Employer. 19. Partial Invalidity. The various provisions of this Agreement are intended to be severable and to constitute independent and distinct binding obligations. Should any provision of this Agreement be determined to be void and unenforceable, in whole or in part, it shall not be deemed to affect or impair the validity of any other provision or part thereof, and such provision or part thereof shall be deemed modified to the extent required to permit enforcement. Without limiting the generality of the foregoing, if the scope of any provision contained in this Agreement is too broad to permit enforcement to its full extent, but may be made enforceable by limitations thereon, such provision shall be enforced to the maximum extent permitted by law, and Executive hereby agrees that such scope may be judicially modified accordingly. 20. Strict Construction. The language used in this Agreement will be deemed to be the language chosen by Employer and Executive to express their mutual intent and no rule of strict construction shall be applied against any person. 21. Waiver. The waiver of any party hereto of a breach of any provision of this Agreement by any other party shall not operate or be construed as a waiver of any subsequent breach. 22. Notices. Any notice or other communication required or permitted to be given hereunder shall be determined to have been duly given to any party (a) upon delivery to the address of such party specified below if delivered personally or by courier; (b) upon dispatch if transmitted by telecopy or other means of facsimile, provided a copy thereof is also sent by regular mail or courier; or (c) within forty-eight (48) hours after deposit thereof in the U.S. mail, postage prepaid, for delivery as certified mail, return receipt requested, addressed, in any case to the party at the following address(es) or telecopy numbers: If to Executive: John R. Hoffman Sprint Corporation 8140 Ward Parkway Kansas City, MO 64114 If to Employer: Sprint Corporation 2330 Shawnee Mission Parkway Westwood, KS 66205 Attention: Corporate Secretary or to such other address(es) or telecopy number(s) as any party may designate by Written Notice in the aforesaid manner. 23. Governing Law. This Agreement shall be governed by, and interpreted, construed and enforced in accordance with, the laws of the State of Kansas. 24. Gender. Wherever from the context it appears appropriate, each term stated in either the singular of plural shall include the singular and the plural, and the pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine or neuter. 25. Headings. The headings of the Sections of this Agreement are for reference purposes only and do not define or limit, and shall not be used to interpret or construe the contents of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the date above set forth. JOHN R. HOFFMAN SPRINT/UNITED MANAGEMENT COMPANY /s/ JOHN R. HOFFMAN By: /s/ I. BENJAMIN WATSON Authorized Officer SPRINT CORPORATION By: /s/ DON A. JENSEN Authorized Officer EX-10 5 PETERSON SUPPLEMENTAL PENSION BENEFITS Exhibit 10(e) DESCRIPTION OF AGREEMENT REGARDING SUPPLEMENTAL PENSION BENEFITS BETWEEN SPRINT CORPORATION AND D. WAYNE PETERSON, PRESIDENT - LOCAL TELECOMMUNICATIONS DIVISION The agreement provides that if Mr. Peterson's employment should be discontinued, through no fault of Mr. Peterson's, after August 1, 1996, at which time he will be 60 years of age, he will not incur any early retirement pension reduction penalty. EX-11 6 EXH 11 EXHIBIT (11) SPRINT CORPORATION COMPUTATION OF EARNINGS PER COMMON SHARE (UNAUDITED) (In Millions, Except Per Share Data) Three Months Nine Months Ended Ended September 30, September 30, 1994 1993 1994 1993 PRIMARY EARNINGS PER SHARE Income from continuing operations $ 230.1 $136.7 $ 677.1 $ 290.5 Preferred stock dividends (0.6) (0.6) (2.0) (2.1) 229.5 136.1 675.1 288.4 Discontinued operations, net -- -- -- (12.3) Extraordinary losses on early extinguishments of debt, net -- (14.5) -- (28.2) Cumulative effect of changes in accounting principles, net -- -- -- (384.2) Earnings (loss) applicable to common stock $ 229.5 $121.6 $ 675.1 $(136.3) Weighted average number of common shares (1) 349.4 344.6 348.0 343.1 Primary earnings (loss) per share Continuing operations $ 0.66 $ 0.39 $ 1.94 $ 0.84 Discontinued operations -- -- -- (0.04) Extraordinary item -- (0.04) -- (0.08) Cumulative effect of changes in accounting principles -- -- -- (1.12) Total $ 0.66 $ 0.35 $ 1.94 $ (0.40) FULLY DILUTED EARNINGS PER SHARE Income from continuing operations, net of preferred stock dividends $ 229.5 $136.1 $ 675.1 $ 288.4 Convertible preferred stock dividends 0.1 0.2 0.4 0.5 229.6 136.3 675.5 288.9 Discontinued operations, net -- -- -- (12.3) Extraordinary losses on early extinguishments of debt, net -- (14.5) -- (28.2) Cumulative effect of changes in accounting principles, net -- -- -- (384.2) Earnings (loss) as adjusted for purposes of computing fully diluted earnings per share $ 229.6 $121.8 $ 675.5 $(135.8) Weighted average number of common shares 349.4 344.6 348.0 343.1 Additional dilution for common stock equivalents and dilutive securities (2) 1.3 1.9 1.4 2.5 Total 350.7 346.5 349.4 345.6 Fully diluted earnings (loss) per share Continuing operations $ 0.65 $ 0.39 $ 1.93 $ 0.84 Discontinued operations -- -- -- (0.04) Extraordinary item -- (0.04) -- (0.08) Cumulative effect of changes in accounting principles -- -- -- (1.12) Total $ 0.65 $ 0.35 $ 1.93 $ (0.39) (1) Weighted average number of common shares have been adjusted for dilutive common stock equivalents using the treasury stock method. (2) During 1993, the additional dilution for common stock equivalents and dilutive securities is not included in the computation of fully diluted earnings (loss) per share from discontinued operations, extraordinary item, cumulative effect of changes in accounting principles and net loss because the impact is anti-dilutive. Accordingly, the sum of the fully diluted earnings per share amounts may not equal the total. EX-12 7 EXH 12 EXHIBIT (12) SPRINT CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED) (Dollars in Millions) Three Months Ended Nine Months Ended September 30, September 30, 1994 1993 1994 1993 Earnings Income from continuing operations $ 230.1 $ 136.7 $ 677.1 $290.5 Capitalized interest (2.5) (1.1) (5.3) (6.1) Income tax provision 132.3 96.4 389.2 190.1 Subtotal 359.9 232.0 1,061.0 474.5 Fixed charges Interest charges 101.1 115.3 305.0 351.2 Interest factor of operating rents 29.2 31.1 85.1 90.1 Pre-tax cost of preferred stock dividends of subsidiaries 0.2 0.7 0.7 1.3 Total fixed charges 130.5 147.1 390.8 442.6 Earnings, as adjusted $ 490.4 $ 379.1 $1,451.8 $917.1 Ratio of earnings to fixed charges 3.76 2.58(1) 3.71 2.07(1) (1) Earnings as computed for the ratio of earnings to fixed charges includes the nonrecurring merger, integration and restructuring costs of $44.5 million and $292.5 million recorded during the third quarter and first nine months of 1993. In the absence of the nonrecurring costs, the ratios of earnings to fixed charges would have been 2.88 and 2.73 for the third quarter and first nine months of 1993, respectively. Note: The above ratios have been computed by dividing fixed charges into the sum of (a) income from continuing operations less capitalized interest included in income, (b) income taxes, and (c) fixed charges. Fixed charges consist of interest on all indebtedness (including amortization of debt issuance expenses), the interest factor of operating rents and the pre-tax cost of preferred stock dividends of subsidiaries. EX-27 8
5 1,000 9-MOS DEC-31-1994 SEP-30-1994 92,600 0 1,573,000 137,500 201,000 2,084,900 18,689,200 8,118,500 14,477,000 2,816,800 4,580,000 871,300 37,200 0 3,535,100 14,477,000 0 9,417,400 0 5,803,300 0 0 299,700 1,066,300 389,200 677,100 0 0 0 677,100 1.94 1.93
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