-----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, m8P1jAvM95ts7MqyELJoYQQfRsrB2+UtVzsx2Jbw3SIWKAQYd3bTlFXaCSz1Uxk9 3J4tO0V5q5mXZJ7ZRWk1VA== 0000101830-94-000006.txt : 19940317 0000101830-94-000006.hdr.sgml : 19940317 ACCESSION NUMBER: 0000101830-94-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940315 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-K SEC ACT: 34 SEC FILE NUMBER: 001-04721 FILM NUMBER: 94516159 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: P O BOX 11315 STREET 2: NULL CITY: KANSAS CITY STATE: MO ZIP: 64112 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-K 1 10K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1993 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) 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 (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 11315, Kansas City, Missouri 64112 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (913) 624-3000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Preferred Stock, without par value First series, $7.50 stated value New York Stock Exchange Second series, $6.25 stated value New York Stock Exchange Common stock, $2.50 par value, and Rights (shares New York Stock Exchange outstanding at March 1, 1994, Chicago Stock Exchange 343,913,432) Pacific Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Aggregate market value of voting stock held by non-affiliates at March 1, 1994 is $12,687,759,984. Documents incorporated by reference. Registrant's definitive proxy statement filed pursuant to Regulation 14A promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 is incorporated by reference in Part III hereof. SPRINT CORPORATION SECURITIES AND EXCHANGE COMMISSION ANNUAL REPORT ON FORM 10-K Part I Item 1. Business THE CORPORATION 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. Sprint, through its subsidiaries, owns Sprint Communications Company L.P. (the Limited Partnership), the principal entity comprising the long distance division. Through December 31, 1991, GTE Corporation (GTE) owned a 19.9 percent interest in the Limited Partnership. In March 1993, Sprint's merger with Centel Corporation (Centel) was consummated, increasing Sprint's local exchange operations and greatly expanding its cellular/wireless operations. 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. The division had net operating revenues of $6.14 billion, $5.66 billion and $5.39 billion in 1993, 1992 and 1991, respectively. The 1982 Modification of Final Judgment (MFJ) entered into by American Telephone and Telegraph Company (AT&T) and the Department of Justice significantly affected the long distance communications market. The major aspects of the MFJ were (1) the divestiture of AT&T's local telephone operating companies (the Bell Operating Companies), (2) the creation of geographical areas called Local Access and Transport Areas (LATAs) within which the Bell Operating Companies and independent local exchange companies provide basic local and intra-LATA toll service, (3) the retention of long distance services by AT&T, and (4) the prohibition against the Bell Operating Companies providing inter- LATA services and information services, and manufacturing telecommunications equipment. The Bell Operating Companies and GTE local exchange companies were required by the MFJ and the GTE Consent Decree, respectively, to provide customers with access to all inter-LATA carriers' networks in a manner "equal in type, quality, and price" to that provided to AT&T (equal access). The independent local exchange companies were required by the Federal Communications Commission (FCC) to provide equal access from many of their central offices. AT&T dominates the long distance communications market and is expected to continue to dominate the market for some years into the future. MCI Communications Corporation (MCI) is the nation's second largest long distance telephone company. Sprint's long distance division competes with AT&T and MCI in all segments of the long distance communications market. Competition is based upon price and pricing plans, the types of services offered, customer service, and communications quality, reliability and availability. The opportunities for and cost of competition and, as a result, the structure of the long distance telecommunications industry are all subject to varying degrees of change by decisions of the executive, judicial and legislative branches of the federal government. The stated objective of these changes is to open the long distance market to new entrants and eventually replace regulation with competition where it best serves the public interest. Some of the major issues being addressed by the federal government to facilitate the transition to a competitive market include the full implementation of equal access (discussed above), equal charges per unit of traffic for access transport provided to long distance carriers (discussed below), lessened regulation of AT&T (including permitting individual customer offerings), and the modification of some or all of the line-of- business restrictions imposed on the Bell Operating Companies by the MFJ (also discussed below). Many of these same competitive issues are also being considered by a number of state regulators and legislators. In 1982, the FCC distinguished between carriers and found some (AT&T and the Local Exchange Carriers, or LECs) to be dominant, and others (primarily smaller competitive long distance companies) to be nondominant. The FCC found it was in the public interest to continue to regulate dominant carriers but, because of market forces, it was appropriate to significantly lessen the amount of regulation applied to nondominant domestic carriers; thus, for instance, nondominant carriers were allowed to choose not to file interstate tariffs. This policy of "permissive detariffing" for nondominant carriers was found by the U.S. Court of Appeals for the D.C. Circuit, in November 1992, to violate the requirement in the Communications Act that all carriers "shall" file tariffs. In response to the Court's decision, the FCC adopted rules streamlining tariff filings for nondominant carriers. The U.S. Supreme Court subsequently agreed to hear an appeal of the Circuit Court decision. In February 1993, AT&T filed lawsuits in federal District Court in Washington, D.C. against the Limited Partnership, MCI and WilTel, Inc. alleging unspecified damages for providing competitive service at rates not contained in tariffs filed with the FCC. In November 1993, the court granted Sprint's motion to dismiss AT&T's lawsuit; however, AT&T has appealed the decision to the D.C. Circuit Court. Although it is impossible to predict the outcome of these proceedings with certainty, Sprint believes that the Limited Partnership has at all times complied with applicable laws and regulations and that its rates are proper and enforceable. In 1989, the FCC replaced regulation of AT&T's rate of return with a system of price caps, giving AT&T increased pricing flexibility. In 1991, the FCC adopted partial "streamlined" regulation of certain competitive business services provided by AT&T. Specifically, the FCC removed these services (primarily WATS and private line) from price caps regulation, reduced the related tariff filing requirements and permitted contracts with individual customers if the terms are generally available to other business users. The FCC subsequently extended "streamlined" regulation to most 800 services provided by AT&T. Also in 1991, the FCC extended the provision of the MFJ requiring the Bell Operating Companies (and all other LECs) to apply "equal charges per unit of traffic" for access transport to all interexchange carriers, which otherwise would have expired, and instituted a comprehensive proceeding to determine new access transport rules. In October 1992, the FCC adopted a new rate structure and new pricing rules for LEC-provided switched transport. LECs filed new access transport tariffs with the FCC in September 1993, which contain rates that will purportedly reduce the costs of the largest interexchange carrier by less than 1 percent and increase the costs of the smaller interexchange carriers (including Sprint's long distance division) by less than 2 percent. The new rates went into effect on December 30, 1993. In 1991, a series of decisions by the U.S. District Court and Circuit Court of Appeals in Washington, D.C. resulted in the MFJ's restriction against participation by the Bell Operating Companies in information services being removed. Legislation has been introduced in Congress, however, to place some safeguards on the provision of those services. Legislation also has been introduced in both Houses of Congress in 1994 to substantially modify the restrictions in the MFJ. The bill in the U.S. House would require the Justice Department, instead of the District Court, to determine whether the provision of long distance service by the Bell Operating Companies would substantially harm competition, but there are significant exceptions to this rule. The bill in the U.S. Senate would require the FCC to determine that the Bell Operating Companies can provide competitive long distance service only after local telephone competition has diminished their monopoly power. The Clinton Administration has also indicated that it favors legislation which promotes local telephone competition and the national information infrastructure. Although federal legislation to modify the MFJ has been introduced several times in recent years but has not passed, there appears to be a greater likelihood that Congress will act during the Clinton Administration. LOCAL COMMUNICATIONS SERVICES The local division is comprised of rate-regulated local exchange operating companies which serve approximately 6.1 million access lines in 19 states. In addition to furnishing local exchange services, the division provides intra-LATA toll service and access by other carriers to Sprint's local exchange facilities. The division had net operating revenues of $4.13 billion, $3.86 billion and $3.75 billion in 1993, 1992 and 1991, respectively. Florida and North Carolina were the only jurisdictions in which 10 percent or more of the division's total 1993 net operating revenues were generated. The following table reflects major revenue categories as a percentage of the division's total net operating revenues: 1993 1992 1991 Local service 39.4% 39.0% 38.3% Network access 37.1 36.9 37.2 Toll service 12.2 12.6 13.0 Other 11.3 11.5 11.5 Total 100.0% 100.0% 100.0% AT&T, as the dominant long distance telephone company, is the division's largest customer for network access services. In 1993, 17.3 percent of the division's net operating revenues (6.3 percent of Sprint's consolidated net operating revenues) was derived from services provided to AT&T, primarily network access services, compared to 18.7 percent (6.9 percent of Sprint's consolidated net operating revenues) in 1992. While AT&T is a significant customer, Sprint does not believe the division's revenues are dependent upon AT&T, as customers' demand for inter- LATA long distance telephone service is not tied to any one long distance carrier. Historically, as the market share of AT&T's long distance competitors increases, the percent of revenues derived from network access services provided to AT&T decreases. Effective January 1, 1991, the FCC adopted a price caps regulatory format for the Bell Operating Companies and the GTE local exchange companies. Other LECs could volunteer to become subject to price caps regulation. Under price caps, prices for network access service must be adjusted annually to reflect industry average productivity gains (as specified by the FCC), inflation and certain allowed cost changes. Sprint elected to be subject to price caps regulation, and under the form of the plan adopted, Sprint's LECs generally have an opportunity to earn up to a 14.25 percent rate of return on investment. Some of Sprint's LECs have committed to produce higher than industry average productivity gains, and as a result have an opportunity to earn up to a 15.25 percent rate of return on investment. The LECs owned by Centel did not originally elect price caps, but as a result of the merger, these LECs adopted price caps effective July 1, 1993. Prior to price caps, under rate of return regulation, the Centel companies' authorized rate of return on investment was 11.25 percent, with the ability to earn 0.25 percent above the authorized return. The FCC is conducting a scheduled review of all aspects of the price caps plan; changes to the plan may be proposed by interested parties and the FCC may implement changes in 1995. Without further action by the FCC, the current price caps plan would expire in 1995 and would be replaced by rate of return regulation. The potential for more direct competition with Sprint's LECs is increasing. Many states, including most of the states in which Sprint's LECs operate, allow competitive entry into the intra-LATA long distance service market. State regulators are also increasingly confronted with requests to permit resale of local exchange services, with such resale now existing in a number of states in which Sprint's LECs operate, including Pennsylvania, Kansas, Illinois and Missouri. Illinois law also allows alternative telecommunications providers to obtain certificates of local exchange service authority in direct competition with existing LECs if certain showings are made to the satisfaction of the Illinois Commerce Commission. At the interstate level, the FCC has revised its rules to permit connection of customer-owned coin telephones to the local network, exposing LECs to direct coin telephone competition. Additionally, the FCC has assisted Competitive Access Providers (CAPs) in providing access to interexchange carriers and end users by mandating that all Tier 1 (over $100 million annual operating revenues) LECs allow collocation of CAP equipment in LEC central offices. The FCC's decision regarding collocation is under appeal to the U.S. Court of Appeals for the D.C. Circuit. The extent and ultimate impact of competition for LECs will continue to depend, to a considerable degree, on FCC and state regulatory actions, court decisions and possible federal or state legislation. Legislation designed to stimulate local competition between local exchange service providers and cable programming service providers, in both markets, is presently pending in both houses of the U.S. Congress. It is uncertain if any of the bills will be enacted. CELLULAR AND WIRELESS COMMUNICATIONS SERVICES The cellular and wireless division primarily consists of Sprint Cellular Company and its subsidiaries. In addition, Sprint's LECs hold FCC licenses for Rural Service Areas. For management and financial reporting purposes, these operations have been combined with Sprint Cellular Company's operations. Approximately 50 percent of Sprint's local communications services customers are located in areas served by the cellular and wireless division of Sprint. The division has operating control of 88 markets in 15 states and a minority interest in 64 markets. The division had net operating revenues of $464 million in 1993 and served more than 652,000 customers as of year end. In 1992 and 1991, the division had revenues of $322 million and $242 million, respectively. Prior to the November 1992 decision by the U.S. Court of Appeals for the D.C. Circuit rejecting permissive detariffing discussed above under "Long Distance Communications Services", cellular carriers had not filed tariffs with the FCC. In February 1993, resale of domestic interstate toll tariffs for Sprint's cellular and wireless operations were filed. The FCC, pursuant to authority conferred by the Revenue Reconciliation Act of 1993, has adopted rules to pre-empt all state regulation of commercial mobile radio services, including cellular, and to forbear from enforcing tariffing requirements with respect to commercial mobile radio services. The FCC licenses two carriers in each cellular market area and these carriers compete directly with each other to provide cellular service to end users and resellers. Each carrier is licensed to operate on frequencies set aside for its cellular operation. Licensees also encounter retail competition from resale carriers in their market. Sprint Cellular Company also sells cellular equipment in the competitive retail market. Competition is based on quality of service, price and product quality. The FCC has announced that it will award additional radio spectrum for the provision of personal communications services (PCS). The FCC is expected to auction spectrum licenses during 1994. The FCC expects that PCS will result in additional competition for existing cellular carriers. 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 900 manufacturers to approximately 12,000 customers. Products range from basics, such as wire and cable, telephones and repair parts, to complete PBX systems and security and alarm equipment. North Supply also provides material management services to several of its affiliates and to several subsidiaries of the Regional Bell Holding Companies. The nature of competition in North Supply's markets demands a high level of customer service to succeed, as a number of competitors, including other national wholesale distributors, sell the same products. North Supply sells to telephone companies and other users of telecommunications products, including Sprint's local and long distance divisions, other local and long distance telephone companies, and companies with large private networks. Other North Supply customers include original equipment manufacturers, interconnect companies, security and alarm dealers and local, state and federal governments. Sales to affiliates represented 39.3 percent of North Supply's total sales in 1993 and 1992 and 36.5 percent in 1991. North Supply's net operating revenues were $677 million, $594 million and $569 million in 1993, 1992 and 1991, respectively. Sprint Publishing & Advertising publishes and markets 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 company publishes approximately 277 directories in 19 states with a circulation of 12.6 million copies. Sprint Publishing & Advertising's net operating revenues were $268 million, $257 million, and $245 million in 1993, 1992 and 1991, respectively. In addition, Centel Directory Company, another Sprint subsidiary, publishes and markets approximately 59 directories in 5 states with a circulation of 3.5 million copies through The CenDon Partnership, a general partnership between Centel Directory Company and The Reuben H. Donnelley Corporation. Revenues of Sprint Publishing & Advertising and The CenDon Partnership are principally derived from selling directory advertisements. The companies compete with publishers of telephone directories and others for advertising revenues. ENVIRONMENT Sprint's subsidiaries are involved in the remediation of certain sites, primarily relating to leakage from tanks used for the storage of gasoline for vehicles and diesel fuel for standby power generators. Compliance with federal, state and local provisions relating to the protection of the environment has had no significant effect on the capital expenditures or earnings of Sprint or any of its subsidiaries, and future effects are not expected to be material. PATENTS, TRADEMARKS AND LICENSES Sprint and its subsidiaries own numerous patents, patent applications and trademarks in the United States and other countries. Sprint and its subsidiaries are also licensed under domestic and foreign patents owned by others. In the aggregate, these patents, patent applications, trademarks and licenses are of material importance to Sprint's businesses. EMPLOYEE RELATIONS As of December 31, 1993, Sprint and its subsidiaries had approximately 50,500 employees, of whom approximately 25 percent are members of unions. During 1993, Sprint and its subsidiaries had no material work stoppages caused by labor controversies. INFORMATION AS TO INDUSTRY SEGMENTS Sprint's net operating revenues from affiliates and non- affiliates, by segment, for the three years ended December 31, 1993, 1992 and 1991, are as follows (in millions): Net Operating Revenues 1993 1992 1991 Long Distance Communications Services Non-affiliates $ 6,088.4 $ 5,612.1 $ 5,344.2 Affiliates 50.8 46.1 43.4 6,139.2 5,658.2 5,387.6 Local Communications Services Non-affiliates 3,911.5 3,662.4 3,564.6 Affiliates 214.5 199.8 189.1 4,126.0 3,862.2 3,753.7 Cellular and Wireless Communications Services Non-affiliates 464.0 322.2 242.1 Product Distribution and Directory Publishing Non-affiliates 679.2 629.7 618.5 Affiliates 266.0 233.2 207.5 945.2 862.9 826.0 Subtotal 11,674.4 10,705.5 10,209.4 Intercompany revenues (306.6) (285.2) (276.1) Net operating revenues $ 11,367.8 $ 10,420.3 $ 9,933.3 For additional information as to industry segments of Sprint, refer to "Business Segment Information" within the Financial Statements, Financial Statement Schedules and Supplementary Data filed as part of this report. Item 2. Properties The aggregate cost of Sprint's property, plant and equipment was $17.72 billion as of December 31, 1993, of which $11.23 billion relates to local communications services, $5.49 billion relates to long distance communications services and $570 million relates to cellular/wireless communications services. These properties consist primarily of land, buildings, digital fiber-optic network, switching equipment, cellular radio, microwave radio and cable and wire facilities and are in good operating condition. Certain switching equipment and several general office facilities are located on leased premises. The long distance division has been granted easements, rights-of-way and rights-of-occupancy, primarily by railroads and other private landowners, for its fiber-optic network. The properties of the product distribution and directory publishing businesses consist primarily of office and warehouse facilities to support the business units in the distribution of telecommunications products and publication of telephone directories. Sprint owns its corporate headquarters building and certain other property located in the greater Kansas City metropolitan area. Property, plant and equipment with an aggregate cost of approximately $10.36 billion is either pledged as security for first mortgage bonds and certain notes or is restricted for use as mortgaged property. Item 3. Legal Proceedings In September 1993, a memorandum of agreement setting forth settlement terms was executed in connection with the class action lawsuit originally filed in 1990 by certain Sprint shareholders against Sprint and certain of its executive officers and directors in the United States District Court for the District of Kansas. An amended class action complaint was filed in January 1992 after dismissal without prejudice of the original complaint. The plaintiffs in the class action alleged violations of various federal securities laws and related state laws and, among other relief, sought unspecified compensatory damages. A related shareholders' derivative complaint was dismissed without prejudice by the same court in March 1993. Pursuant to the settlement, which includes settlement of the derivative claims, Sprint will pay $28.5 million. Sprint admits no wrongdoing, but settled the case to avoid the costs and uncertainties of further litigation and the disruption of business activities that would result from trial. Approximately 60 percent of the settlement will be recovered from Sprint's insurance carriers. The net settlement did not have a significant effect on Sprint's 1993 results of operations. The settlement agreement is subject to the approval of the court. Following announcement of the Sprint/Centel merger agreement in May 1992, a class action suit was filed by certain Centel shareholders against Centel and certain of its officers and directors. The suit was consolidated in the United States District Court for the Northern District of Illinois in July 1992. The complaint alleges violations of federal securities laws by failing to disclose pertinent information regarding the value of Centel common stock. The plaintiffs seek damages in an unspecified amount. Other suits arising in the ordinary course of business are pending against Sprint and its subsidiaries. Sprint cannot predict the ultimate outcome of these actions or the above- described litigation, but believes they will not result in a material effect on Sprint's consolidated financial statements. Item 4. Submission of Matters to a Vote of Security Holders No matter was submitted to a vote of security holders during the fourth quarter of 1993. Item 10(b). Executive Officers of the Registrant Office Name Age Chairman and Chief Executive Officer William T. Esrey (1) 54 President - Cellular and Wireless Communications Division Dennis E. Foster (2) 53 President - Long Distance Division Ronald T. LeMay (3) 48 President - Local Telecommunications Division D. Wayne Peterson (4) 58 Executive Vice President - Law and External Affairs J. Richard Devlin (5) 43 Executive Vice President - Chief Financial Officer Arthur B. Krause (6) 52 Senior Vice President - Financial Services and Taxes Gene M. Betts (7) 41 Senior Vice President - External Affairs John R. Hoffman (8) 48 Senior Vice President and Controller John P. Meyer (9) 43 Senior Vice President - Strategic Planning and Business Development Theodore H. Schell (10) 49 Senior Vice President - Quality Development and Public Relations Richard C. Smith,Jr.(11) 53 Senior Vice President - Treasurer M. Jeannine Strandjord (12) 48 Senior Vice President - Human Resources I. Benjamin Watson (13) 45 Vice President and Secretary Don A. Jensen (14) 58 (1)Mr. Esrey was elected Chairman in 1990. He was elected Chief Executive Officer and a member of the Board of Directors in 1985. In addition, he has served as Chief Executive Officer of the Limited Partnership since 1988. (2)Mr. Foster was elected President - Cellular and Wireless Communications Division in April 1993. Mr. Foster had served as Senior Vice President - Operations of a subsidiary of Sprint since 1992. From 1991 to 1992, he served as President of GTE Mobilnet in Atlanta, Georgia. Prior to that, he had served in various positions with GTE Corporation for more than five years. (3)Mr. LeMay was elected President - Long Distance Division in 1989. He had served as Executive Vice President - Corporate Affairs of Sprint since 1987. He was elected to the Board of Directors of Sprint in 1993. (4)Mr. Peterson was elected President - Local Telecommunications Division in August 1993. From 1980 to 1993, he served as President of Carolina Telephone and Telegraph Company, a subsidiary of Sprint. (5)Mr. Devlin was elected Executive Vice President - Law and External Affairs in 1989. He had served as Vice President and General Counsel - Telephone since 1987. (6)Mr. Krause was elected Executive Vice President - Chief Financial Officer in 1988. During 1990 and 1991, he also served as Chief Information Officer. (7)Mr. Betts was elected Senior Vice President - Financial Services and Taxes in 1990. He had served as Vice President - Taxes since 1988. (8)Mr. Hoffman was elected Senior Vice President - External Affairs in 1990. He had served in the same capacity at the Limited Partnership since 1986. (9)Mr. Meyer was elected Senior Vice President and Controller in April 1993. He had served as Vice President and Controller of Centel since 1989. From 1986 to 1989, he served as Controller of Centel. (10)Mr. Schell was elected Senior Vice President - Strategic Planning and Business Development of Sprint in 1990. He joined the Long Distance Division as Vice President - Strategic Planning in 1989. From 1983 to 1989, he served as President of RealCom Communications Corporation, an IBM subsidiary, whose principal business is telecommunications services. (11)Mr. Smith was elected Senior Vice President - Quality Development and Public Relations in 1991. He had served as President of the Limited Partnership's National Markets since 1989. From 1986 to 1989, he served as President of the Limited Partnership's National Accounts Division. (12)Ms. Strandjord was elected Senior Vice President - Treasurer in 1990. She had served as Vice President and Controller since 1986. (13)Mr. Watson was elected Senior Vice President - Human Resources in April 1993. Mr. Watson headed a transition team in connection with the Centel merger following announcement of the merger. He had served as Vice President - Finance and Administration of United Telephone - Eastern Group, an operating group of subsidiaries of Sprint, since 1990. From 1983 to 1990, he served as Vice President - Administration of the Midwest Group, an operating group of subsidiaries of Sprint. (14)Mr. Jensen was elected Vice President and Secretary in 1975. There are no known family relationships between any of the persons named above or between any such persons and any outside directors of Sprint. Officers are elected annually. Part II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Market Price Per Share 1993 1992 End of End of High Low Period High Low Period First Quarter 31 3/4 25 1/2 30 1/2 26 3/8 21 22 1/2 Second Quarter 35 3/8 29 1/2 35 1/8 25 20 3/4 21 3/4 Third Quarter 37 1/2 33 1/2 36 3/4 24 3/8 21 1/2 24 3/8 Fourth Quarter 40 1/4 31 3/8 34 3/4 26 3/4 23 3/8 25 1/2 As of March 1, 1994, there were approximately 105,000 record holders of Sprint's common stock. The principal trading market for Sprint's common stock is the New York Stock Exchange. The common stock is also traded on the Chicago and Pacific Stock Exchanges. Sprint has declared dividends of $0.25 per quarter during each of the years ended December 31, 1993 and 1992. Item 6. Selected Financial Data For information required by Item 6, refer to the "Selected Financial Data" section of the Financial Statements, Financial Statement Schedules and Supplementary Data filed as part of this report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations For information required by Item 7, refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the Financial Statements, Financial Statement Schedules and Supplementary Data filed as part of this report. Item 8. Financial Statements and Supplementary Data For information required by Item 8, refer to the "Consolidated Financial Statements and Schedules" and "Quarterly Financial Data sections of the Financial Statements, Financial Statement Schedules and Supplementary Data filed as part of this report. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure As previously reported in Sprint's Current Report on Form 8-K dated April 23, 1993, following consummation of the merger with Centel, Arthur Andersen & Co. was replaced with Ernst & Young as auditors of Centel and its subsidiaries, effective April 23, 1993. Part III Item 10. Directors and Executive Officers of the Registrant Pursuant to Instruction G(3) to Form 10-K, the information relating to Directors of Sprint required by Item 10 is incorporated by reference from Sprint's definitive proxy statement filed pursuant to Regulation 14A. For information pertaining to Executive Officers of Sprint, as required by Instruction 3 of Paragraph (b) of Item 401 of Regulation S-K, refer to the "Executive Officers of the Registrant" section of Part I of this report. Pursuant to Instruction G(3) to Form 10-K, the information relating to compliance with Section 16(a) required by Item 10 is incorporated by reference from Sprint's definitive proxy statement filed pursuant to Regulation 14A. Item 11. Executive Compensation Pursuant to Instruction G(3) to Form 10-K, the information required by Item 11 is incorporated by reference from Sprint's definitive proxy statement filed pursuant to Regulation 14A. Item 12. Security Ownership of Certain Beneficial Owners and Management Pursuant to Instruction G(3) to Form 10-K, the information required by Item 12 is incorporated by reference from Sprint's definitive proxy statement filed pursuant to Regulation 14A. Item 13. Certain Relationships and Related Transactions Pursuant to Instruction G(3) to Form 10-K, the information required by Item 13 is incorporated by reference from Sprint's definitive proxy statement filed pursuant to Regulation 14A. Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. The consolidated financial statements of Sprint and supplementary financial information filed as part of this report are listed in the Index to Financial Statements, Financial Statement Schedules and Supplementary Data. 2. The consolidated financial statement schedules of Sprint filed as part of this report are listed in the Index to Financial Statements, Financial Statement Schedules and Supplementary Data. 3. The following exhibits are filed as part of this report: EXHIBITS (3) Articles of Incorporation and Bylaws: (a) Articles of Incorporation, as amended (filed as Exhibit 4 to Sprint Corporation Current Report on Form 8-K dated March 9, 1993 and incorporated herein by reference). (b) Bylaws, as amended (filed as Exhibit 3(b) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). (4) Instruments defining the Rights of Sprint's Equity Security Holders: (a) The rights of Sprint's equity security holders are defined in the Fifth, Sixth, Seventh and Eighth Articles of Sprint's Articles of Incorporation. See Exhibit 3(a). (b) Rights Agreement dated as of August 8, 1989, between Sprint Corporation (formerly United Telecommunications, Inc.) and United Missouri Bank, N.A. (formerly United Missouri Bank of Kansas City, N.A.), as Rights Agent (filed as Exhibit 2(b) to Sprint Corporation Registration Statement on Form 8- A dated August 11, 1989 (File No. 1-4721), and incorporated herein by reference). (c) Amendment and supplement dated June 4, 1992 to Rights Agreement dated as of August 8, 1989 (filed as Exhibit 2(c) to Amendment No. 1 on Form 8 dated June 8, 1992 to Sprint Corporation Registration Statement on Form 8-A dated August 11, 1989 (File No. 1-4721), and incorporated herein by reference). (10) Material Agreements - Merger Agreement: (a) Agreement and Plan of Merger dated as of May 27, 1992, among Sprint Corporation, F W Sub Inc. and Centel Corporation (filed as Exhibit 2 to Sprint Corporation Current Report on Form 8-K dated May 27, 1992 and incorporated herein by reference). (b) First Amendment dated as of February 19, 1993, to the Agreement and Plan of Merger, dated as of May 27, 1992, among Sprint Corporation, F W Sub Inc. and Centel Corporation (filed as Exhibit 2b to Sprint Corporation Current Report on Form 8-K dated March 9, 1993 and incorporated herein by reference). (10) Executive Compensation Plans and Arrangements: (c) 1978 Stock Option Plan, as amended (filed as Exhibit 19(a) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (d) 1981 Stock Option Plan, as amended (filed as Exhibit 19(b) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (e) 1985 Stock Option Plan, as amended (filed as Exhibit 19(c) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (f) 1990 Stock Option Plan, as amended. (g) 1990 Restricted Stock Plan, as amended (filed as Exhibit 99 to Sprint Corporation Registration Statement No. 33-50421 and incorporated herein by reference). (h) Long-Term Stock Incentive Program, as amended (filed as Exhibit 19(e) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (i) Restated Memorandum Agreements Respecting Supplemental Pension Benefits between Sprint Corporation (formerly United Telecommunications, Inc.) and two of its current and former executive officers (filed as Exhibit 10(i) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1992, and incorporated herein by reference). (j) Executive Long-Term Incentive Plan. (k) Executive Management Incentive Plan. (l) Long-Term Incentive Compensation Plan (filed as Exhibit 10(j) to United Telecommunications, Inc. Annual Report on Form 10-K for the year ended December 31, 1989, and incorporated herein by reference). (m) Short-Term Incentive Compensation Plan (filed as Exhibit 10(k) to United Telecommunications, Inc. Annual Report on Form 10-K for the year ended December 31, 1989, and incorporated herein by reference). (n) Retirement Plan for Directors, as amended (filed as Exhibit 28d to Registration Statement No. 33-28237, and incorporated herein by reference). (o) Key Management Benefit Plan, as amended. (p) Executive Deferred Compensation Plan, as amended (filed as Exhibit 19(f) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (q) Director's Deferred Fee Plan, as amended (filed as Exhibit 19(g) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (r) Supplemental Executive Retirement Plan (filed as Exhibit 10(q) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1992, and incorporated herein by reference). (s) Form of Contingency Employment Agreements between Sprint Corporation and certain of its executive officers (filed as Exhibit 10(r) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1992, and incorporated herein by reference). (t) Form of Indemnification Agreements between Sprint Corporation (formerly United Telecommunications, Inc.) and its Directors and Officers (filed as Exhibit 10(s) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1991, and incorporated herein by reference). (u) Summary of Executive Benefits (filed as Exhibit 10(u) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1991, and incorporated herein by reference). (v) Amended and Restated Centel Management Incentive Plan. (w) Amended and Restated Centel Stock Option Plan. (x) Agreements Regarding Special Compensation and Post Employment Restrictive Covenants between Sprint Corporation and three of its executive officers. (y) Amended and Restated Centel Matched Deferred Salary Plan. (z) Amended and Restated Centel Directors Deferred Compensation Plan. (aa) Amended and Restated Centel Director Stock Option Plan. (11) Computation of Earnings Per Common Share. (12) Computation of Ratio of Earnings to Fixed Charges. (21) Subsidiaries of Registrant. (23a) Consent of Ernst & Young. (23b) Consent of Arthur Andersen & Co. Sprint will furnish to the Securities and Exchange Commission, upon request, a copy of the instruments defining the rights of holders of its long-term debt and the long-term debt of its subsidiaries. The total amount of securities authorized under any of said instruments does not exceed 10 percent of the total assets of Sprint and its subsidiaries on a consolidated basis. (b) Reports on Form 8-K No reports on Form 8-K were filed during the fourth quarter of 1993. (c) Exhibits are listed in Item 14(a). SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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/ W. T. Esrey William T. Esrey Chairman and Chief Executive Officer Date: March 14, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 14th day of March, 1994. /s/ W. T. Esrey William T. Esrey Chairman and Chief Executive Officer /s/ Arthur B. Krause Arthur B. Krause Executive Vice President - Chief Financial Officer /s/ John P. Meyer John P. Meyer Senior Vice President and Controller Principal Accounting Officer SIGNATURES SPRINT CORPORATION (Registrant) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 14th day of March, 1994. /s/ DuBose Ausley /s/ Robert E. R. Huntley DuBose Ausley, Director Robert E. R. Huntley, Director /s/ Warren L. Batts /s/ George Hutton Jr. Warren L. Batts, Director George N. Hutton Jr., Director /s/ Ruth M. Davis /s/ Ronald T. LeMay Ruth M. Davis, Director Ronald T. LeMay, Director /s/ Joseph L. Dionne /s/ Linda K. Lorimer Joseph L. Dionne, Director Linda Koch Lorimer, Director /s/ W. T. Esrey /s/ C. Price William T. Esrey, Director Charles H. Price II, Director /s/ Donald J. Hall /s/ Frank E. Reed Donald J. Hall, Director Frank E. Reed, Director /s/ P. H. Henson /s/ Charles E. Rice Paul H. Henson, Director Charles E. Rice, Director /s/ Harold S. Hook /s/ Stewart Turley Harold S. Hook, Director Stewart Turley, Director INDEX TO FINANCIAL STATEMENTS, FINANCIAL Sprint Corporation STATEMENT SCHEDULES AND SUPPLEMENTARY DATA Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Consolidated Financial Statements and Schedules: Management Report Report of Independent Auditors - Ernst & Young Report of Independent Auditors - Arthur Andersen & Co. Business Segment Information as of or for each of the three years ended December 31, 1993 Consolidated Statements of Income for each of the three years ended December 31, 1993 Consolidated Balance Sheets as of December 31, 1993 and 1992 Consolidated Statements of Cash Flows for each of the three years ended December 31, 1993 Consolidated Statements of Common Stock and Other Shareholders' Equity for each of the three years ended December 31, 1993 Notes to Consolidated Financial Statements Financial Statement Schedules for each of the three years ended December 31, 1993: V - Consolidated Property, Plant and Equipment VI - Consolidated Accumulated Depreciation VIII - Consolidated Valuation and Qualifying Accounts IX - Consolidated Short-term Borrowings X - Consolidated Supplementary Income Statement Information Certain financial statement schedules are omitted because the required information is not present, or because the information required is included in the consolidated financial statements and notes thereto. Quarterly Financial Data SELECTED FINANCIAL DATA Sprint Corporation As of or For the Years Ended December 31, 1993 1992 1991 1990 1989 (In Millions, Except Per Share Data) Results of Operations <1> Net operating revenues $ 11,367.8 $10,420.3 $9,933.3 $9,469.8 $8,557.6 Operating income <2> 1,250.6 1,213.4 1,185.6 1,045.3 1,076.7 Income from continuing operations <2>, <3>, <4> 480.6 496.1 472.7 351.1 353.0 Earnings per common share from continuing operations <2>, <3>, <4> 1.39 1.46 1.41 1.06 1.08 Dividends per common share 1.00 1.00 1.00 1.00 0.97 Financial Position <1> Total assets $14,148.9 $13,599.6 $13,929.8 $14,080.6 $13,092.7 Property, plant and equipment, net 10,314.8 10,219.9 10,310.5 10,295.2 9,700.9 Total debt (including short-term borrowings) 5,094.4 5,442.7 5,571.2 6,082.3 5,471.3 Redeemable preferred stock 38.6 40.2 56.6 60.0 63.5 Common stock and other shareholders' equity 3,918.3 3,971.6 3,671.9 3,353.5 3,151.5 <1>Effective March 9, 1993, Sprint Corporation (Sprint) consummated its merger with Centel Corporation (Centel). Because the merger has been accounted for as a pooling of interests, the accompanying data has been retroactively restated to include the results of operations and financial position of Centel. Dividends per common share for periods prior to the merger represent the amounts paid by Sprint. <2>During 1993, nonrecurring charges of $293 million were recorded related to (a) transaction costs associated with the merger with Centel and the expenses of integrating and restructuring the operations of the two companies and (b) a realignment and restructuring within the long distance division. Such charges reduced consolidated 1993 income from continuing operations by $193 million ($0.56 per share). During 1990, nonrecurring charges of $72 million were recorded related to the long distance division, which reduced consolidated 1990 income from continuing operations by $37 million ($0.11 per share). <3>During 1992 and 1991, gains were recognized related to the sales of certain local telephone and cellular properties, which increased consolidated 1992 income from continuing operations by $44 million ($0.13 per share) and consolidated 1991 income from continuing operations by $78 million ($0.23 per share). <4>During 1993, as a result of the enactment of the Revenue Reconciliation Act of 1993, Sprint was required to adjust its deferred income tax assets and liabilities to reflect the increased tax rate. Such adjustment reduced consolidated 1993 income from continuing operations by $13 million ($0.04 per share). MANAGEMENT'S DISCUSSION AND ANALYSIS OF Sprint Corporation FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sprint/Centel Merger Effective March 9, 1993, Sprint Corporation (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 has been accounted for as a pooling of interests. Accordingly, the accompanying consolidated financial statements and information have been restated retroactively to include the results of operations, financial position and cash flows of Centel for all periods prior to consummation of the merger. Consolidated Results of Operations Each of Sprint's primary divisions -- long distance, local and cellular/wireless communications services -- generated record levels of net operating revenues and improved operating results in 1993. The long distance division generated a solid 8 percent growth in traffic volumes in 1993, the number of access lines served by the local division grew 5 percent, and the cellular/wireless division benefited from a strong 67 percent customer line growth rate. Cost controls and synergies resulting from the merger with Centel also contributed to the improved 1993 results. Consolidated results of operations in 1993, 1992 and 1991 were, however, affected by several nonrecurring items, as described in the next section. Highlights of consolidated results are as follows, excluding nonrecurring items as applicable: *Consolidated net operating revenues grew 9 percent in 1993 to $11.37 billion, following a 5 percent increase in 1992. *Income from continuing operations in 1993 was $687 million as compared to $452 million in 1992 and $395 million in 1991 -- which represents a compounded annual growth rate of 21 percent over the past three years. *Earnings per common share from continuing operations increased 50 percent in 1993 to $1.99 per share as compared to $1.33 per share in 1992. The following analysis of earnings per common share in 1993 and 1992 highlights the factors contributing to the improved results and the impact of nonrecurring items: 1993 1992 Prior year's earnings per common share from continuing operations (excluding nonrecurring items) $ 1.33 $ 1.18 Favorable (unfavorable) factors contributing to changes Divisional operating results 0.63 0.06 Interest expense 0.11 0.07 Other non-operating expense (0.03) 0.05 Effective income tax rate (0.02) (0.02) Change in weighted average common shares (0.03) (0.01) Current year's earnings per common share from continuing operations (excluding nonrecurring items) 1.99 1.33 Nonrecurring items Merger, integration and restructuring costs (0.56) Divestitures 0.13 1993 Tax law change (0.04) Discontinued operations (0.04) Extraordinary losses (0.08) (0.05) Accounting changes (1.12) 0.07 Total earnings per common share $ 0.15 $ 1.48 Nonrecurring Items Merger, Integration and Restructuring Costs - As a result of the merger with Centel, the operations of the merged companies continue to be integrated and restructured to achieve efficiencies which have begun to yield operational synergies and cost savings, particularly during the latter half of 1993. 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) resulted in nonrecurring charges aggregating $259 million, which reduced 1993 income from continuing operations by $172 million ($0.50 per share). In addition, in 1993, Sprint initiated a realignment and restructuring of its long distance division, including the elimination of approximately 1,000 positions and the closure of two facilities. These actions are expected to improve market focus, lower costs and streamline operations within the division, and resulted in a nonrecurring charge of $34 million, which reduced 1993 income from continuing operations by $21 million ($0.06 per share). Divestitures - Divestitures of local telephone and cellular operations in 1992 and 1991 resulted in gains of $81 million and $114 million, respectively, which increased income from continuing operations by $44 million and $78 million, respectively. 1993 Tax Law Change - In August 1993, the Revenue Reconciliation Act of 1993 was enacted which, among other changes, raised the federal income tax rate to 35 percent from 34 percent. As a result, Sprint adjusted its deferred income tax assets and liabilities to reflect the revised rate. The adjustment related to Sprint's nonregulated subsidiaries increased the income tax provision for 1993 by $13 million. Discontinued Operations and Extraordinary Losses - During 1993, Sprint incurred a loss from discontinued operations of $12 million, net of related income tax benefits. In 1993, 1992 and 1991, Sprint incurred extraordinary losses related to the early extinguishments of debt of $29 million, $16 million, and $2 million, respectively, net of related income tax benefits. Accounting Changes - Effective January 1, 1993, Sprint changed its method of accounting for postretirement and postemployment benefits by adopting Statement of Financial Accounting Standards (SFAS) No. 106 and No. 112 and effected another accounting change. The cumulative effect of these changes in accounting principles reduced 1993 net income by $384 million. Effective January 1, 1992, Sprint also changed its method of accounting for income taxes by adopting SFAS No. 109. The cumulative effect of this change in accounting principle increased 1992 net income by $23 million. Non-operating Items Interest expense in 1993 and 1992 decreased $59 million and $37 million, respectively, generally related to decreases in average levels of debt outstanding and lower interest rates. The components of other expense, net are as follows (in millions): 1993 1992 1991 Equity in earnings from cellular minority partnership investments $ 20.0 $ 12.8 $ 8.8 Minority interests (9.4) (6.1) (51.6) Write-down of assets held for sale (16.0) (15.0) Other, net (16.9) 3.3 7.2 Total other expense, net $ (22.3) $ (5.0) $ (35.6) The decline in 1992 minority interests reflects Sprint's acquisition of the remaining 19.9 percent minority interest in Sprint Communications Company L.P. (the Limited Partnership) effective January 1, 1992. Sprint's income tax provisions for 1993, 1992 and 1991 resulted in effective tax rates of 38 percent, 36 percent and 34 percent, respectively. See Note 4 of "Notes to Consolidated Financial Statements" for information regarding the differences which cause the effective income tax rates to vary from the statutory federal income tax rates. As of December 31, 1993, Sprint has recorded deferred income tax assets of $316 million related to postretirement benefits and other accruals, $260 million related to alternative minimum tax credit carryforwards, and $40 million (net of a $25 million valuation allowance) related to state operating loss carryforwards. Sprint's management has determined that it is more likely than not that these deferred income tax assets, net of the valuation allowance, will be realized based on current income tax laws and expectations of future taxable income stemming from ordinary operations or the reversal of existing deferred tax liabilities. Uncertainties surrounding income tax law changes, shifts in operations between state taxing jurisdictions, and future operating income levels may, however, affect the ultimate realization of all or some portion of these deferred income tax assets. The effects of inflation on Sprint's operations were not significant during 1993, 1992, or 1991. Segmental Results of Operations Long Distance Communications Services Sprint's long distance division provides domestic and international voice and data communications services. Rates charged by the division for its services are subject to different levels of state and federal regulation, but are generally not rate-base regulated. Net operating revenues increased 9 percent in 1993, following a 5 percent increase in 1992. Such increases were generally due to traffic volume growth of 8 percent and 6 percent, respectively. Average revenue per minute received from customers was relatively constant during 1993 but declined 3 percent during 1992, primarily due to the mix of products among markets and competitive influences. The increases in net operating revenues and traffic volumes in both 1993 and 1992 reflect ongoing growth in the business and international markets, coupled with rebounding growth in the residential market during 1993. Growth in the business market in 1993 was also enhanced by the arrival of "800 portability," whereby customers who wish to change long distance carriers may now do so while retaining their advertised "800" numbers. In addition, lower revenue adjustments, reflecting improvement in the collectibility of customer accounts receivable, resulted in increased net operating revenues in 1992. Future rates of growth in both net operating revenues and traffic volumes may be influenced by both domestic and international economic conditions and the division's ability to maintain market share and current price levels in the intensely competitive long distance marketplace. Interconnection costs increased $136 million and $118 million in 1993 and 1992, respectively. International interconnection costs increased due to increased traffic volumes, partially offset by price reductions and the conversion of international traffic from resale arrangements (traffic transported by other long distance carriers) to less costly direct access arrangements. Costs of connecting to networks domestically also increased primarily as a result of traffic volume growth, partially offset by reductions in interconnection rates paid to local exchange companies and by reduced costs related to the transition from switched to special access arrangements. Interconnection costs as a percentage of net operating revenues were 44 percent in 1993 as compared to 46 percent in both 1992 and 1991. 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 systems sales. Operations expense increased $98 million in 1993 over 1992, partially due to a change in accounting whereby circuit activity costs are now being expensed when incurred (see Note 1 of "Notes to Consolidated Financial Statements" for additional information). Exclusive of the effect of this accounting change, operations expense increased approximately $63 million in 1993 and $43 million in 1992, primarily due to expanded service offerings, increased traffic volumes and increased salaries and related benefits. Selling, general and administrative (SG&A) expense increased $120 million and $92 million in 1993 and 1992, respectively, generally as a result of intensified sales and marketing efforts. During 1993, marketing efforts primarily directed towards "800 portability," The Most calling plan and the recently introduced "Be there now" campaign resulted in increased advertising and other marketing expenses, as well as increased commissions and salaries and related expenses. During 1992, the introduction of several new calling plans and calling card features also resulted in increases in such sales and marketing expenses. Despite the increases in the amount of SG&A expense in 1993 and 1992, such expenses as a percentage of net operating revenues remained constant when compared to 1991, at 25 percent. Depreciation and amortization in 1993 decreased from 1992, primarily due to the change in accounting for circuit activity costs, as described above. Depreciation and amortization in 1992 was consistent with the 1991 amount as the increased depreciation resulting from additions to property, plant and equipment was substantially offset by a decrease in amortization expense resulting from the full amortization in June 1991 of certain intangible assets related to the 1986 formation of the Limited Partnership. Local Communications Services The local division consists principally of Sprint's rate- regulated, local exchange telephone operations. The following table summarizes, by major category, the net operating revenues of the division (in millions): 1993 1992 1991 Net operating revenues Local service $ 1,624.3 $ 1,507.4 $ 1,436.4 Network access 1,530.4 1,425.8 1,398.5 Toll service 505.3 487.5 487.2 Other 466.0 441.5 431.6 Total $ 4,126.0 $ 3,862.2 $ 3,753.7 As described in Note 9 of "Notes to Consolidated Financial Statements," certain local telephone operations were divested during 1992 and 1991. The following comparisons and discussion exclude the effects of such divested operations. Net operating revenues increased 7 percent in 1993, following a 5 percent increase in 1992. Increased local service revenues reflect continued increases in the number of access lines served and growth in add-on services, such as custom calling features. The division experienced 4.8 percent growth in access lines during 1993, compared to 4.2 percent in 1992. Network access revenues, derived from interexchange long distance carriers' use of the local network to complete calls, increased during 1993 and 1992 as a result of increased traffic volumes and additional revenues resulting from the recognition of a portion of the merger, integration and restructuring costs for regulatory purposes in certain jurisdictions, partially offset by periodic reductions in network access rates charged. 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 1 percent in 1993 and 1992, respectively. Such increase in 1993 primarily reflects the election of the division's Indiana operations to serve as the primary intralata toll carrier within its serving area, rather than providing network access to another carrier. Other revenues increased in 1993 and 1992 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 4 percent and 2 percent increases in such costs in 1993 and 1992, respectively, were primarily related to increases in the costs of providing services resulting from access line growth. Depreciation and amortization expense increased $14 million in 1993, following a $15 million increase in 1992. Exclusive of the effects of depreciation rate changes, special short-term amortizations and nonrecurring charges approved by state regulatory commissions, such increases were $17 million and $16 million, respectively, generally due to plant additions. Other operating expense increased $99 million and $122 million in 1993 and 1992, respectively. Such increases resulted primarily from higher sales and marketing expenses to promote new products and services; increases in systems development costs incurred to enhance the efficiency and capabilities of the division's billing processes; and increases in the cost of equipment sales. The increases in both plant operations and other operating expenses also reflect the impact of the increased postretirement benefits cost of approximately $38 million being recognized in 1993 as a result of the adoption of SFAS No. 106. Consistent with most local exchange carriers, the division accounts for the economic effects of regulation pursuant to 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 which might be utilized by non-regulated enterprises. Sprint's management believes that the division's operations meet the criteria for the continued application of the provisions of SFAS No. 71. With increasing competition and the changing nature of regulation in the telecommunications industry, the ongoing applicability of SFAS No. 71 must, however, be constantly monitored and evaluated. Should the division no longer qualify for the application of the provisions of SFAS No. 71 at some future date, the accounting impact could result in the recognition of a material, extraordinary, noncash charge. Cellular and Wireless Communications Services Sprint's cellular and wireless division consists of wholly- owned and majority-owned interests in 42 metropolitan service area (MSA) markets and 46 rural service area (RSA) markets. The company also owns minority interests in 31 MSA and 33 RSA markets. Equity in the earnings and losses of these minority investments is included in other expense, net in the consolidated statements of income. The increases in net operating revenues during 1993 and 1992 resulted principally from the growth in customer lines served, which increased 67 percent in 1993 and 52 percent in 1992. The effects of growth in customer lines served was partially offset by a decline in service revenue per customer line served, reflecting an industry-wide trend that has occurred as a result of increased general consumer market penetration. Costs of services and products declined to 33 percent of net operating revenue in 1993 from 37 percent in 1992 and 39 percent in 1991, generally reflecting economies gained from serving additional customer lines. The increases in selling, general and administrative expense for 1993 and 1992 resulted principally from increased commissions and customer service expenses, as well as increased advertising costs related to the growth in customer lines. Despite the increases in the amount of SG&A expense, such costs as a percentage of net operating revenues declined to 45 percent in 1993 from 48 percent in 1992 and 47 percent in 1991. Such improvement resulted primarily from an overall reduction in the unit cost of acquiring new customers and additional economies realized from providing service and support to a larger customer base. Depreciation and amortization increased during both 1993 and 1992 as additional investment in property, plant and equipment was required to meet the growth in customer lines. Product Distribution and Directory Publishing Sprint's product distribution and directory publishing businesses generated operating income of $64 million, $66 million and $62 million in 1993, 1992 and 1991, respectively. North Supply, a wholesale distributor of telecommunications products, had 1993 net operating revenues of $677 million, compared to $594 million in 1992 and $569 million in 1991. The increases primarily reflect additional nonaffiliated contracts and increased sales to the local division, partially as a result of sales during 1993 to the merged Centel telephone operations. Sprint Publishing & Advertising, a publisher and marketer of telephone directories, had net operating revenues of $268 million in 1993, compared with 1992 and 1991 net operating revenues of $257 million and $245 million, respectively. Liquidity and Capital Resources Cash Flows - Operating Activities Cash flows from operating activities, which are Sprint's primary source of liquidity, were $2.14 billion, $2.26 billion and $1.82 billion in 1993, 1992 and 1991, respectively. The 1992 operating cash flows include proceeds of $300 million from the sale of accounts receivable within the long distance division. Excluding these proceeds, the improvement in 1993 operating cash flows reflects better operating results, partially offset by expenditures related to merger, integration and restructuring actions of $155 million. Cash Flows - Investing Activities Sprint's investing activities used cash of $1.57 billion, $1.58 billion and $1.08 billion in 1993, 1992 and 1991, respectively. Capital expenditures, which represent Sprint's most significant investing activity, were $1.59 billion, $1.47 billion and $1.52 billion in 1993, 1992 and 1991, respectively (see "Business Segment Information" for the amounts incurred by each division). Long distance capital expenditures were incurred each year primarily to increase the network capacity and to enhance network capabilities for providing new products and services. Capital expenditures for the local division 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. The increases in 1993 and 1992 capital expenditures for the cellular and wireless division reflect the significant increases in the number of customer lines served during such years. Investing activities in 1992 also include $250 million paid in connection with Sprint's $530 million acquisition of the remaining 19.9 percent interest in the Limited Partnership and proceeds of $114 million from the sale of certain local telephone properties. Investing activities for 1991 include proceeds of $468 million from the divestitures of certain local telephone, cellular and other properties. Cash Flows - Financing Activities Sprint's financing activities used cash of $620 million, $681 million and $755 million in 1993, 1992 and 1991, respectively. Improved operating cash flows during each year, together with proceeds from the sale of additional accounts receivable in 1992 and from the various divestitures in 1992 and 1991, allowed Sprint to fund capital expenditures and dividends internally and to reduce total debt outstanding during each year. In addition, the $280 million note issued to the seller in connection with the acquisition of the remaining interest in the Limited Partnership was paid in 1992. During 1993 and 1992, a significant level of debt refinancing occurred in order to take advantage of lower interest rates. Accordingly, a majority of the proceeds from long-term borrowings in 1993 was used to finance the redemption prior to scheduled maturities of $1.24 billion of debt. During 1992, Sprint refinanced $720 million of long-term debt and borrowed $250 million to finance the payment related to the acquisition of the remaining 19.9 percent interest in the Limited Partnership. Sprint paid dividends to common and preferred shareholders of $347 million, $300 million and $296 million in 1993, 1992 and 1991, respectively. Sprint's indicated annual dividend rate on common stock is currently $1.00 per share. Financial Position, Liquidity and Capital Requirements As of December 31, 1993, Sprint's total capitalization aggregated $9.05 billion, consisting of long-term debt (including current maturities), redeemable preferred stock, and common stock and other shareholders' equity. Long-term debt (including current maturities) and short-term borrowings comprised 55 percent of total capitalization as of December 31, 1993, compared to 58 percent at year-end 1992 (as adjusted in both years on a proforma basis for the effects of changes in accounting principles). During 1994, Sprint anticipates funding estimated capital expenditures of $1.8 billion and dividends with cash flows from operating activities. Notes payable and commercial paper outstanding as of December 31, 1993 (classified as long-term debt) aggregated $756 million. During 1994, this entire balance will be replaced by the issuance of long-term debt or will continue to be refinanced under existing long-term credit facilities. Sprint expects its external cash requirements for 1994 to be approximately $800 million to $900 million, which is generally required to repay scheduled long-term debt maturities and reduce notes payable and commercial paper outstanding. A portion of such external cash requirements is expected to be generated from issuances of common stock through employee benefit plans and from the sale of certain investments. The method of financing the remaining external cash requirements will depend upon prevailing market conditions during the year. Sprint may also undertake additional debt refinancings during 1994 in order to take advantage of favorable interest rates. At year-end 1993, Sprint had the ability to borrow $803 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. Additionally, pursuant to shelf registration statements filed with the Securities and Exchange Commission, up to $1.2 billion of debt securities may be offered for sale. The aggregate amount of additional borrowings which can be incurred is ultimately limited by certain covenants contained in existing debt agreements. As of December 31, 1993, Sprint had borrowing capacity of approximately $2.8 billion under the most restrictive of its debt covenants. MANAGEMENT REPORT The management of Sprint Corporation has the responsibility for the integrity and objectivity of the information contained in this Annual Report. Management is responsible for the consistency of reporting such information and for ensuring that generally accepted accounting principles are used. In discharging this responsibility, management maintains a comprehensive system of internal controls and supports an extensive program of internal audits, has made organizational arrangements providing appropriate divisions of responsibility and has established communication programs aimed at assuring that its policies, procedures and codes of conduct are understood and practiced by its employees. The consolidated financial statements included in this Annual Report have been audited by Ernst & Young, independent auditors. Their audit was conducted in accordance with generally accepted auditing standards and their report is included herein. The responsibility of the Board of Directors for these financial statements is pursued primarily through its Audit Committee. The Audit Committee, composed entirely of directors who are not officers or employees of Sprint, meets periodically with the internal auditors and independent auditors, both with and without management present, to assure that their respective responsibilities are being fulfilled. The internal and independent auditors have full access to the Audit Committee to discuss auditing and financial reporting matters. /s/ W. T. Esrey William T. Esrey Chairman and Chief Executive Officer /s/ Arthur B. Krause Arthur B. Krause Executive Vice President - Chief Financial Officer REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders Sprint Corporation We have audited the accompanying consolidated balance sheets of Sprint Corporation (Sprint) as of December 31, 1993 and 1992, and the related consolidated statements of income, cash flows, and common stock and other shareholders' equity for each of the three years in the period ended December 31, 1993. Our audits also included the financial statement schedules listed in the Index To Financial Statements, Financial Statement Schedules and Supplementary Data. These financial statements and schedules are the responsibility of the management of Sprint. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We did not audit the financial statements or schedules of Centel Corporation, a wholly-owned subsidiary, as of December 31, 1992, or for each of the two years in the period ended December 31, 1992, which statements reflect total assets constituting 25% in 1992, and net income constituting approximately 9% in 1992 and 29% in 1991 of the related consolidated financial statement totals. Those statements and schedules were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for Centel Corporation, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sprint Corporation at December 31, 1993 and 1992, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in Note 1 to the consolidated financial statements, Sprint changed its method of accounting for postretirement benefits, postemployment benefits and circuit activity costs in 1993 and income taxes in 1992. ERNST & YOUNG Kansas City, Missouri February 2, 1994 REPORT OF INDEPENDENT AUDITORS To the Shareowners of Centel Corporation: We have audited the consolidated balance sheet of CENTEL CORPORATION (a Kansas corporation) AND SUBSIDIARIES as of December 31, 1992, and the related consolidated statements of income, common shareowners' investment and cash flows for each of the two years in the period ended December 31, 1992, prior to the pooling of interests with Sprint Corporation (and, therefore, are not presented herein) described in Note 2 to the consolidated financial statements of Sprint Corporation for the year ended December 31, 1993. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Centel Corporation and Subsidiaries as of December 31, 1992, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 1992, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. In connection with our audits, certain auditing procedures were applied to the following schedules which are required for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. Such schedules are not included herein: Schedule I - Marketable Securities Schedule V - Consolidated Plant, Property and Equipment Schedule VI - Consolidated Accumulated Depreciation Schedule VIII - Consolidated Allowance for Doubtful Accounts Schedule IX - Consolidated Short-Term Borrowings Schedule X - Consolidated Supplementary Income Statement Information In our opinion, the information contained in these schedules fairly states, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN & CO. Chicago, Illinois February 3, 1993 BUSINESS SEGMENT INFORMATION Sprint Corporation As of or for the Years Ended December 31, 1993 1992 1991 (In Millions) Long Distance Communications Services <1> Net operating revenues $ 6,139.2 $ 5,658.2 $ 5,387.6 Operating expenses Interconnection 2,710.7 2,574.9 2,457.0 Operations 857.7 759.8 717.1 Selling, general and administrative 1,546.4 1,426.3 1,334.3 Depreciation and amortization 523.5 586.6 584.4 Total operating expenses <2>, <3> 5,638.3 5,347.6 5,092.8 Operating income $ 500.9 $ 310.6 $ 294.8 Capital expenditures $ 529.4 $ 468.1 $ 580.2 Identifiable assets as of December 31 $ 4,193.1 $ 4,232.0 $ 4,543.5 Local Communications Services <1> Net operating revenues $ 4,126.0 $ 3,862.2 $ 3,753.7 Operating expenses Plant operations 1,206.7 1,165.6 1,160.9 Depreciation and amortization 733.0 720.0 716.7 Other 1,232.5 1,137.0 1,036.5 Total operating expenses <2>, <4> 3,172.2 3,022.6 2,914.1 Operating income $ 953.8 $ 839.6 $ 839.6 Capital expenditures $ 845.3 $ 839.4 $ 802.4 Identifiable assets as of December 31 $ 7,604.0 $ 7,242.2 $ 7,099.6 Cellular and Wireless Communications Services <1> Net operating revenues $ 464.0 $ 322.2 $ 242.1 Operating expenses Cost of services and products 154.9 118.3 95.2 Selling, general and administrative 209.9 154.6 114.5 Depreciation and amortization 75.0 52.1 43.2 Total operating expenses <2> 439.8 325.0 252.9 Operating income (loss) $ 24.2 $ (2.8) $ (10.8) Capital expenditures $ 164.9 $ 123.8 $ 91.8 Identifiable assets as of December 31 $ 1,504.3 $ 1,489.4 $ 1,418.1 Product Distribution, Directory Publishing and Other <1> Net operating revenues $ 945.2 $ 862.9 $ 826.0 Operating income <2> $ 64.2 $ 66.0 $ 62.0 Depreciation and amortization $ 27.2 $ 32.8 $ 25.2 Capital expenditures $ 55.1 $ 34.9 $ 48.8 Identifiable assets as of December 31 $ 847.5 $ 636.0 $ 868.6 <1>Include net operating revenues and operating expenses eliminated in consolidation of $306.6 million, $285.2 million and $276.1 million for the years ended December 31, 1993, 1992 and 1991, respectively. <2>Exclude a nonrecurring charge of $259.0 million in 1993 related to the transaction costs associated with the merger with Centel and the estimated expenses of integrating and restructuring the operations of the two companies (see Note 2 of "Notes to Consolidated Financial Statements" for additional information). Such charge was allocable as follows: Long Distance-$12.4 million; Local-$190.1 million; Cellular and Wireless-$3.2 million; Product Distribution and Directory Publishing-$2.5 million; and Other-$50.8 million. <3>Exclude a nonrecurring charge of $33.5 million in 1993 related to the realignment and restructuring of the long distance division (see Note 9 of "Notes to Consolidated Financial Statements" for additional information). <4>Includes increased postretirement benefits cost of approximately $38 million in 1993 related to the adoption of SFAS No. 106. Such cost for the other divisions was not significant. CONSOLIDATED STATEMENTS OF INCOME Sprint Corporation For the Years Ended December 31, 1993 1992 1991 (In Millions, Except Per Share Data) Net Operating Revenues $11,367.8 $10,420.3 $ 9,933.3 Operating Expenses Costs of services and products 5,736.1 5,325.5 5,091.0 Selling, general and administrative 2,729.9 2,489.9 2,287.2 Depreciation and amortization 1,358.7 1,391.5 1,369.5 Merger, integration and restructuring costs 292.5 Total operating expenses 10,117.2 9,206.9 8,747.7 Operating Income 1,250.6 1,213.4 1,185.6 Gain on divestiture of telephone and cellular properties 81.1 113.9 Interest expense (452.4) (511.1) (548.3) Other expense, net (22.3) (5.0) (35.6) Income from continuing operations before income taxes 775.9 778.4 715.6 Income tax provision (295.3) (282.3) (242.9) Income From Continuing Operations 480.6 496.1 472.7 Discontinued operations, net (12.3) 49.4 Extraordinary losses on early extinguishments of debt, net (29.2) (16.0) (1.9) Cumulative effect of changes in accounting principles, net (384.2) 22.7 Net income 54.9 502.8 520.2 Preferred stock dividends (2.8) (3.5) (4.1) Earnings applicable to common stock $ 52.1 $ 499.3 $ 516.1 Earnings Per Common Share Continuing operations $ 1.39 $ 1.46 $ 1.41 Discontinued operations (0.04) 0.15 Extraordinary item (0.08) (0.05) (0.01) Cumulative effect of changes in accounting principles (1.12) 0.07 Total $ 0.15 $ 1.48 $ 1.55 Weighted average number of common shares 343.7 337.2 333.5 See accompanying notes to consolidated financial statements. CONSOLIDATED BALANCE SHEETS Sprint Corporation As of December 31, 1993 1992 Assets (In Millions) Current assets Cash and equivalents $ 76.8 $ 128.8 Accounts receivable, net of allowance for doubtful accounts of $121.9 million ($118.0 million in 1992) 1,230.6 1,044.8 Investment in common stock 130.2 Inventories 182.3 172.1 Deferred income taxes 81.1 46.5 Prepaid expenses 120.7 102.5 Other 156.2 169.3 Total current assets 1,977.9 1,664.0 Investments in common stocks 173.1 209.0 Property, plant and equipment Long distance communications services 5,492.7 5,355.9 Local communications services 11,226.4 10,732.2 Cellular and wireless communications services 569.6 409.9 Other 433.7 405.2 17,722.4 16,903.2 Less accumulated depreciation 7,407.6 6,683.3 10,314.8 10,219.9 Cellular minority partnership investments 287.5 271.2 Excess of cost over net assets acquired 736.8 765.3 Other assets 658.8 470.2 $14,148.9 $13,599.6 Liabilities and Shareholders' Equity Current liabilities Current maturities of long-term debt $ 523.4 $ 386.6 Short-term borrowings 362.3 Accounts payable 925.4 755.4 Accrued interconnection costs 487.5 464.3 Accrued taxes 307.2 291.9 Other 825.1 716.8 Total current liabilities 3,068.6 2,977.3 Long-term debt 4,571.0 4,693.8 Deferred credits and other liabilities Deferred income taxes and investment tax credits 1,182.9 1,308.3 Postretirement and other benefit obligations 793.1 69.0 Other 576.4 539.4 2,552.4 1,916.7 Redeemable preferred stock 38.6 40.2 Common stock and other shareholders' equity Common stock, par value $2.50 per share, authorized-500.0 million shares 858.5 847.1 Capital in excess of par or stated value 827.4 717.5 Retained earnings 2,184.2 2,451.7 Other 48.2 (44.7) 3,918.3 3,971.6 $14,148.9 $13,599.6 See accompanying notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS Sprint Corporation For the Years Ended December 31, 1993 1992 1991 (In Millions) Operating Activities Net income $ 54.9 $ 502.8 $ 520.2 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 1,358.7 1,391.5 1,369.5 Gain on divestiture of telephone and cellular properties (81.1) (113.9) Discontinued operations (5.9) (20.6) (43.9) Extraordinary losses on early extinguishments of debt 49.5 25.1 3.1 Cumulative effect of changes in accounting principles 384.2 (22.7) Deferred income taxes and investment tax credits (34.5) 3.0 (34.7) Changes in operating assets and liabilities Accounts receivable, net (185.8) 257.8 42.4 Inventories and other current assets (42.7) (13.9) 52.3 Accounts payable and accrued interconnection costs 196.4 165.8 (130.1) Accrued expenses and other current liabilities 160.5 (39.0) 98.5 Noncurrent assets and liabilities, net 135.1 152.3 7.0 Other, net 66.0 (59.5) 50.2 Net cash provided by operating activities 2,136.4 2,261.5 1,820.6 Investing Activities Capital expenditures (1,594.7) (1,466.2) (1,523.2) Acquisition of Limited Partnership minority interest (250.0) Proceeds from divestiture of telephone and cellular properties 114.0 148.3 Proceeds from sale of discontinued operations 320.0 Other, net 26.3 24.3 (24.5) Net cash used by investing activities (1,568.4) (1,577.9) (1,079.4) Financing Activities Proceeds from long-term debt 840.4 951.2 645.0 Retirements of long-term debt (1,589.0) (1,257.4) (744.3) Net increase (decrease) in notes payable and commercial paper 393.5 147.0 (468.3) Payment of note payable to minority partner (280.0) Proceeds from common stock issued 70.8 51.6 54.1 Proceeds from employees stock purchase installments, net 28.3 13.2 13.9 Dividends paid (347.1) (300.1) (295.8) Other, net (16.9) (6.2) 40.7 Net cash used by financing activities (620.0) (680.7) (754.7) Increase (Decrease) in Cash and Equivalents (52.0) 2.9 (13.5) Cash and Equivalents at Beginning of Year 128.8 125.9 139.4 Cash and Equivalents at End of Year $ 76.8 $ 128.8 $ 125.9 See accompanying notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF COMMON STOCK Sprint Corporation AND OTHER SHAREHOLDERS'EQUITY For the Years Ended December 31, 1993, 1992 and 1991 Capital in Excess of Par or Common Stated Retained Stock Value Earnings Other Total (In Millions) Balance as of January 1, 1991 (330.6 million shares issued and outstanding) $ 826.4 $ 554.0 $2,021.4 $ (48.3) $3,353.5 Net income 520.2 520.2 Common stock dividends (291.7) (291.7) Preferred stock dividends (4.1) (4.1) Employee stock purchase and other installments received, net 16.0 16.0 Common stock issued 10.0 85.6 (24.8) 70.8 Other, net 0.5 0.7 2.3 3.7 7.2 Balance as of December 31, 1991 (334.8 million shares issued and outstanding) 836.9 640.3 2,248.1 (53.4) 3,671.9 Net income 502.8 502.8 Common stock dividends (296.6) (296.6) Preferred stock dividends (3.5) (3.5) Employee stock purchase and other installments received, net 15.5 15.5 Common stock issued 9.9 73.7 (6.5) 77.1 Other, net 0.3 3.5 0.9 (0.3) 4.4 Balance as of December 31, 1992 (338.9 million shares issued and outstanding) 847.1 717.5 2,451.7 (44.7) 3,971.6 Net income 54.9 54.9 Common stock dividends (324.5) (324.5) Preferred stock dividends (2.8) (2.8) Employee stock purchase and other installments received, net 30.8 30.8 Common stock issued 11.0 98.4 (2.4) 107.0 Unrealized holding gains on investments in common stocks, net 64.8 64.8 Other, net 0.4 11.5 4.9 (0.3) 16.5 Balance as of December 31, 1993 (343.4 million shares issued and outstanding) $ 858.5 $ 827.4 $2,184.2 $ 48.2 $3,918.3 See accompanying notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Sprint Corporation 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), including Centel Corporation (Centel) and Sprint Communications Company L.P. (the Limited Partnership). Investments in less than 50 percent-owned cellular communications partnerships are accounted for using the equity method. During 1991, GTE Corporation (GTE) owned a 19.9 percent interest in the Limited Partnership. Effective January 1, 1992, Sprint acquired GTE's interest in exchange for a $250 million cash payment and a $280 million note which was paid in June 1992. 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 $225 million, $194 million and $164 million in 1993, 1992 and 1991, 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. Revenue Recognition Operating revenues for the long distance, local and cellular/wireless communications services divisions are recognized as communications services are rendered. Operating revenues for the long distance communications services division are recorded net of an estimate for uncollectible accounts. Operating revenues for Sprint's product distribution business are recognized upon delivery of products to customers. Regulated Operations Sprint's rate-regulated telephone companies account 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," which requires the accounting recognition of the rate actions of regulators where appropriate. Such actions can provide reasonable assurance of the existence of an asset, reduce or eliminate the value of an asset, or impose a liability on a regulated enterprise. Cash and Equivalents Cash equivalents generally include highly liquid investments with original maturities of three months or less and are stated at cost, which approximates market value. As of December 31, 1993 and 1992, outstanding checks in excess of cash balances of $166 million and $151 million, respectively, are included in accounts payable. Investments in Common Stocks Effective December 31, 1993, Sprint changed its method of accounting for its portfolio of marketable equity securities by adopting SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Accordingly, such investments in common stocks are classified as available for sale and reported at fair value (estimated based on quoted market prices) as of December 31, 1993 and at cost as of December 31, 1992. As of December 31, 1993, the cost of such investments is $202 million, with the gross unrealized holding gains of $101 million reflected as an addition to other shareholders' equity, net of related income taxes. As of December 31, 1992, the market value of such investments was $278 million. Inventories Inventories, consisting principally of those related to Sprint's product distribution business, are stated at the lower of cost (principally first-in, first-out method) or market. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Generally, ordinary asset retirements and disposals are charged against accumulated depreciation with no gain or loss recognized. Repairs and maintenance costs are expensed as incurred. 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 change was made to conform Sprint's accounting to the predominant industry practice for such costs. Under the new method, such costs (which were previously capitalized) are being expensed when incurred. 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. The proforma impact of retroactive application of the change would not have been material to net income or earnings per share for 1992 or 1991, and the impact of the change on Sprint's 1993 operating expenses was not significant. Depreciation The cost of property, plant and equipment is depreciated generally on a straight-line basis over the estimated useful lives (such lives related to regulated property, plant and equipment are those prescribed by regulatory commissions). Depreciation rate changes, special short-term amortizations and nonrecurring charges approved by regulatory commissions for the rate-regulated telephone companies resulted in additional depreciation totaling $7 million, $46 million and $49 million in 1993, 1992 and 1991, respectively. After the related effects on revenues and income taxes, these items reduced income from continuing operations for 1993, 1992 and 1991 by approximately $4 million, $24 million and $25 million, respectively. Cellular Minority Partnership Investments Cellular minority partnership investments include the excess of the purchase price over the underlying book value of cellular communications partnerships of $203 million and $209 million as of December 31, 1993 and 1992, respectively. Such excess is being amortized on a straight-line basis over 40 years; accumulated amortization aggregated $29 million and $23 million as of December 31, 1993 and 1992, respectively. Excess of Cost over Net Assets Acquired The excess of the purchase price over the fair value of net assets acquired, principally related to cellular communications services properties, is being amortized on a straight-line basis over 40 years. Accumulated amortization aggregated $112 million and $88 million as of December 31, 1993 and 1992, respectively. Postretirement Benefits Effective January 1, 1993, Sprint changed or modified its method of accounting for certain postretirement benefits by adopting SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." Sprint provides postretirement benefits (principally health care benefits) to certain retirees. SFAS No. 106 requires accrual of the expected cost of providing postretirement benefits to employees and their dependents or beneficiaries during the years employees earn the benefits. During 1992 and 1991, the cost of providing postretirement benefits to Sprint's retirees was expensed as such costs were paid, while for Centel's employees and retirees, an accrual basis approach was utilized to recognize such costs. Upon adoption of the new standard, Sprint elected to immediately recognize its previously unrecorded obligation for postretirement benefits already earned by current retirees and employees (the transition obligation), a substantial portion of which related to its rate-regulated telephone companies. Pursuant to SFAS No. 71, regulatory assets associated with the recognition of the transition obligation were recorded in jurisdictions where the regulators have issued orders specific to Sprint permitting recognition of net postretirement benefits costs for ratemaking purposes, and providing for recovery of the transition obligation over a period of no longer than 20 years. As of December 31, 1993, such regulatory assets aggregated $83 million. In all other jurisdictions, regulatory assets associated with the recognition of the transition obligation were not recorded due to the uncertainties as to the timing and extent of recovery. 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. Net postretirement benefits cost for 1993 increased approximately $50 million as a result of adopting SFAS No. 106. Postemployment Benefits Effective January 1, 1993, Sprint adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits." Upon adoption, Sprint recognized certain previously unrecorded obligations for benefits being provided to former or inactive employees and their dependents, after employment but before retirement. Such postemployment benefits offered by Sprint include severance, disability and workers compensation benefits, including the continuation of other benefits such as health care and life insurance coverage. 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. Adoption of SFAS No. 112 had no significant impact on operating expenses in 1993. Income Taxes Effective January 1, 1992, Sprint changed its method of accounting for income taxes by adopting SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires an asset and liability approach to accounting for income taxes and establishes less restrictive criteria for recognizing deferred income tax assets. Accordingly, Sprint adjusted its existing deferred income tax assets and liabilities to reflect current statutory income tax rates and previously unrecognized tax benefits related to federal and certain state net operating loss carryforwards. To the extent reductions of the rate-regulated telephone companies' deferred income tax liabilities will accrue to the benefit of its customers, such reductions were recorded as regulatory liabilities. The remaining net change in Sprint's deferred income tax assets and liabilities increased 1992 net income by $23 million ($0.07 per share) and is reflected in the consolidated statement of income as a cumulative effect of change in accounting principle. As allowed under SFAS No. 109, prior years' consolidated financial statements were not restated. During 1991, in accordance with Accounting Principles Board Opinion (APB) No. 11, deferred income taxes were provided for all differences in timing of reporting income and expenses for financial statement and income tax purposes, except for rate- regulated telephone companies' items that were not allowable by various regulatory commissions as expenses for rate-making purposes. Investment tax credits related to regulated telephone property, plant and equipment have been deferred and are being amortized over the estimated useful lives of the related assets. Interest Charged to Construction Regulatory commissions allow the rate-regulated telephone companies to capitalize an allowance for funds expended during construction. Amounts capitalized will be recovered over the service lives of the respective assets constructed as the resulting higher depreciation is recovered through increased revenues. Interest costs associated with the construction of capital assets for Sprint's other operations are capitalized in accordance with SFAS No. 34, "Capitalization of Interest Costs." Total interest amounts capitalized during 1993, 1992 and 1991, including an allowance for funds expended during construction, totaled $8 million, $11 million and $15 million, respectively. Earnings Per Share Earnings per common share amounts are based on the weighted average number of shares both outstanding and issuable assuming exercise of all dilutive options, as applicable. Reclassifications Certain amounts in the accompanying consolidated financial statements for 1992 and 1991 have been reclassified to conform to the presentation of amounts in the 1993 consolidated financial statements. Such reclassifications had no effect on the results of operations. 2. Sprint / Centel Merger Effective March 9, 1993, Sprint consummated its merger with Centel, a telecommunications company with local exchange and cellular/wireless communications services operations. Pursuant to the Agreement and Plan of Merger dated May 27, 1992, Sprint issued 1.37 shares of its common stock in exchange for each outstanding share of Centel common stock, or approximately 119 million shares. 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) resulted in nonrecurring charges of $259 million, which reduced 1993 income from continuing operations by $172 million ($0.50 per share). The merger has been accounted for as a pooling of interests. Accordingly, the accompanying consolidated financial statements have been retroactively restated for all periods presented to include the results of operations, financial position and cash flows of Centel. In addition, the accompanying consolidated financial statements reflect the elimination of significant, recurring intercompany transactions and certain adjustments to conform the accounting policies of the two companies. Operating results of the separate companies for periods prior to the merger are as follows (in millions): 1992 1991 Net operating revenues Sprint $ 9,230.4 $ 8,779.7 Centel 1,191.4 1,180.5 Eliminations and reclassifications (1.5) (26.9) Total $ 10,420.3 $ 9,933.3 Income from continuing operations Sprint $ 427.2 $ 367.5 Centel 83.8 112.3 Accounting conformity adjustments (14.9) (7.1) Total 496.1 472.7 Discontinued operations, net 49.4 Extraordinary losses on early extinguishments of debt, net (1992: Sprint - $6.5 million, Centel - $9.5 million; 1991: Centel - $1.9 million) (16.0) (1.9) Cumulative effect of change in accounting for income taxes 22.7 Net income (1992: Sprint - $457.1 million, Centel - $45.7 million; 1991: Sprint - $367.5 million, Centel - $152.7 million) $ 502.8 $ 520.2 3. Employee Benefit Plans Defined Benefit Pension Plan Substantially all Sprint employees are covered by a noncontributory defined benefit pension plan. For participants of the plan represented by collective bargaining units, benefits are based upon schedules of defined amounts as negotiated by the respective parties. For participants not covered by collective bargaining agreements, the plan provides pension benefits based upon years of service and participants' compensation. Sprint's policy is to make contributions to the plan each year equal to an actuarially determined amount consistent with applicable federal tax regulations. The funding objective is to accumulate funds at a relatively stable rate over the participants' working lives so that benefits are fully funded at retirement. As of December 31, 1993, the plan's assets consisted principally of investments in corporate equity securities and U.S. government and corporate debt securities. The components of the net pension credits and related weighted average assumptions are as follows (in millions): 1993 1992 1991 Service cost -- benefits earned during the period $ 58.2 $ 50.8 $ 47.8 Interest cost on projected benefit obligation 103.9 96.1 87.2 Actual return on plan assets (241.2) (89.5) (381.7) Net amortization and deferral 62.5 (64.7) 231.4 Net pension credit $ (16.6) $ (7.3) $ (15.3) Discount rate 8.0% 8.4% 8.6% Expected long-term rate of return on plan assets 9.5% 8.5% 8.5% Anticipated composite rate of future increases in compensation 5.5% 6.2% 7.3% In addition, Sprint recognized pension curtailment losses of $3 million in 1993 as a result of integration and restructuring actions (see Notes 2 and 9). The funded status and amounts recognized in the consolidated balance sheets for the plan, as of December 31, are as follows (in millions): 1993 1992 Actuarial present value of benefit obligations Vested benefit obligation $ (1,277.0) $ (1,043.6) Accumulated benefit obligation $ (1,462.7) $ (1,183.2) Projected benefit obligation $ (1,582.9) $ (1,321.2) Plan assets at fair value 2,029.0 1,862.4 Plan assets in excess of the projected benefit obligation 446.1 541.2 Unrecognized net gains (197.3) (215.1) Unrecognized prior service cost 88.1 23.0 Unamortized portion of transition asset (221.9) (247.3) Prepaid pension cost $ 115.0 $ 101.8 The projected benefit obligations as of December 31, 1993 and 1992 were determined using discount rates of 7.5 percent and 8.0 percent, respectively, and anticipated composite rates of future increases in compensation of 4.5 percent and 5.5 percent, respectively. Defined Contribution Plans Sprint sponsors defined contribution employee savings plans covering substantially all employees. Participants may contribute portions of their compensation to the plans. Contributions of participants represented by collective bargaining units are matched by Sprint based upon defined amounts as negotiated by the respective parties. Contributions of participants not covered by collective bargaining agreements are also matched by Sprint. For these participants, Sprint provides matching contributions in common stock equal to 50 percent of participants' contributions up to 6 percent of their compensation and may, at the discretion of the Board of Directors, provide additional matching contributions based upon the performance of Sprint's common stock in comparison to other telecommunications companies. Sprint's matching contributions (including cash contributions under the former Centel savings plans) aggregated $49 million, $40 million and $36 million in 1993, 1992 and 1991, respectively. Postretirement Benefits Sprint sponsors postretirement benefits (principally health care benefits) arrangements covering substantially all employees. Employees who retired before specified dates are eligible for these benefits at no cost or a reduced cost. Employees retiring after specified dates are eligible for these benefits on a shared cost basis. Sprint funds the accrued costs as benefits are paid. The components of the 1993 net postretirement benefits cost are as follows (in millions): Service cost -- benefits earned during the period $ 22.1 Interest on accumulated benefit obligation 56.5 Net postretirement benefits cost $ 78.6 For measurement purposes, an annual health care cost trend rate of 13 percent was assumed for 1993, gradually decreasing to 6 percent by 2001 and remaining constant thereafter. The effect of a one percent increase in the assumed trend rates would have increased the 1993 net postretirement benefits cost by approximately $14 million. The weighted average discount rate for 1993 was 8.0 percent. In addition, the Company recognized postretirement benefits curtailment losses of $11 million in 1993 as a result of integration and restructuring actions (see Notes 2 and 9). The cost of providing postretirement benefits was $28 million in 1992 and $29 million in 1991. The amount recognized in the consolidated balance sheet as of December 31, 1993 is as follows (in millions): Accumulated postretirement benefits obligation Retirees $ 322.8 Active plan participants -- fully eligible 158.0 Active plan participants -- other 254.4 735.2 Unrecognized prior service benefit 6.8 Unrecognized net gains 38.9 Accrued postretirement benefits cost $ 780.9 The accumulated benefits obligation as of December 31, 1993 was determined using a discount rate of 7.5 percent. An annual health care trend rate of 12 percent was assumed for 1994, gradually decreasing to 6 percent by 2001 and remaining constant thereafter. The effect of a one percent annual increase in the assumed health care cost trend rates would have increased the accumulated benefits obligation as of December 31, 1993 by approximately $98 million. 4. Income Taxes The components of the income tax provisions allocated to continuing operations are as follows (in millions): 1993 1992 1991 Current income tax provision Federal $ 275.6 $ 242.1 $ 232.9 State 54.2 37.2 44.7 Amortization of deferred investment tax credits (24.7) (31.3) (34.6) 305.1 248.0 243.0 Deferred income tax provision (benefit) Federal 16.4 9.5 (6.4) State (26.2) 24.8 6.3 (9.8) 34.3 (0.1) Total income tax provision $ 295.3 $ 282.3 $ 242.9 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, Sprint adjusted its deferred income tax assets and liabilities to reflect the revised rate. The resulting adjustment related to Sprint's nonregulated subsidiaries increased the 1993 deferred income tax provision by $13 million ($0.04 per share). Adjustments to the net deferred income tax liabilities associated with the rate-regulated telephone companies were generally recorded as reductions to regulatory liabilities and, accordingly, had no immediate effect on Sprint's net income. The differences which cause the effective income tax rate to vary from the statutory federal income tax rate of 35 percent in 1993 and 34 percent in 1992 and 1991 are as follows (in millions): 1993 1992 1991 Income tax provision at the statutory rate $ 271.6 $ 264.7 $ 243.3 Less investment tax credits included in income 24.7 31.3 34.6 Expected federal income tax provision after investment tax credits 246.9 233.4 208.7 Effect of State income taxes, net of federal income tax effect 18.2 40.9 33.7 Differences required to be flowed through by regulatory commissions 6.0 5.6 5.7 Reversal of rate differentials (13.0) (16.3) (23.7) Amortization of intangibles 8.8 8.6 8.3 Merger related costs 18.0 Other, net 10.4 10.1 10.2 Income tax provision, including investment tax credits $ 295.3 $ 282.3 $ 242.9 Effective income tax rate 38% 36% 34% The income tax provisions (benefits) allocated to other items are as follows (in millions): 1993 1992 1991 Discontinued operations $ (6.6) $ 15.3 Extraordinary losses on early extinguishments of debt (20.3) $ (9.1) (1.2) Cumulative effect of changes in accounting principles Postretirement benefits (216.7) Postemployment benefits (6.7) Circuit activity costs (21.5) Unrealized holding gains on investments in common stocks (recorded directly to shareholders' equity) 36.5 Stock ownership, purchase and options arrangements (recorded directly to shareholders' equity) (10.6) (6.0) (2.7) Effective with the adoption of SFAS No. 109 in 1992, deferred income taxes are provided for the temporary differences between the carrying amounts of Sprint's assets and liabilities for financial statement purposes and their tax bases. The sources of the differences that give rise to the deferred income tax assets and liabilities as of December 31, 1993 and 1992, along with the income tax effect of each, are as follows (in millions): 1993 Deferred 1992 Deferred Income Tax Income Tax Assets Liabilities Assets Liabilities Property, plant and equipment $ 1,564.0 $ 1,522.6 Postretirement and other benefits $ 281.1 $ 25.6 Alternative minimum tax credit carryforwards 259.7 311.6 Operating loss carryforwards 64.7 70.2 Integration and restructuring costs 35.0 Other, net 9.9 10.2 Subtotal 640.5 1,573.9 417.6 1,522.6 Less valuation allowance 24.5 30.2 Total $ 616.0 $ 1,573.9 $ 387.4 $ 1,522.6 During 1993 and 1992, the valuation allowance related to deferred income tax assets decreased $6 million and $5 million, respectively. During 1991, in accordance with APB No. 11, deferred income tax provisions resulted from the differences in the timing of recognizing certain revenues and expenses for financial statement and income tax purposes. The sources of the differences, along with the income tax effect of each, are as follows (in millions): Property, plant and equipment $ 86.5 Allowance for doubtful accounts 8.9 Deferred revenue (2.9) Expense accruals (9.0) Exchangeable debentures 7.0 Alternative minimum tax credit carryforwards (90.8) Investment tax credit carryforwards 5.9 Special partnership allocations 25.3 Sale of telephone properties (32.2) Other, net 1.2 Total $ (0.1) As of December 31, 1993, Sprint has available, for income tax purposes, $260 million of alternative minimum tax credit carryforwards to offset regular income tax payable in future years, and tax benefits of $65 million associated with state operating loss carryforwards. The loss carryforwards expire in varying amounts annually from 1994 through 2008. 5. Debt Long-term debt, as of December 31, is as follows (in millions): Maturing 1993 1992 Corporate Senior notes 9.75% 1993 $ 100.0 8.60% to 9.71% 1994 $ 225.0 225.0 9.45% 1995 50.0 50.0 10.45% 1996 200.0 200.0 9.88% 1997 120.0 160.0 9.19% to 9.60% 1998 43.0 43.0 8.13% to 9.80% 2000 to 2003 632.3 632.3 Debentures 9.25% 2022 200.0 200.0 Subordinated debentures 8.00% 2006 204.8 Notes payable and commercial paper, classified as long-term debt 1996 634.4 Other 11.88% 1999 4.5 5.6 Long Distance Communications Services Vendor financing agreements 6.99% to 10.18% 1994 to 2001 423.4 538.5 Note payable to GTE 5.30% 1993 72.8 Local Communications Services First mortgage bonds 4.63% to 9.00% 1994 to 1998 167.4 260.3 2.00% to 9.37% 1999 to 2003 541.1 487.1 4.00% to 8.75% 2004 to 2008 353.0 344.3 6.88% to 9.79% 2009 to 2013 80.0 32.6 8.77% to 8.78% 2014 to 2018 80.5 216.3 7.13% to 9.89% 2019 to 2023 343.1 268.9 Debentures and notes 4.50% to 9.61% 1994 to 2017 424.4 340.1 Notes payable and commercial paper, classified as long-term debt 1996 121.4 Other 2.00% to 19.45% 1994 to 2017 17.3 20.7 Other Senior notes 9.88% to 11.70% 1998 to 2000 277.1 281.0 Debentures 9.00% 2019 150.0 229.2 Other 8.59% to 13.00% 1995 to 1998 6.5 167.9 Subtotal 5,094.4 5,080.4 Less current maturities 523.4 386.6 Long-term debt $4,571.0 $4,693.8 Long-term debt maturities during each of the next five years are as follows (in millions): Amount 1994 $ 523.4 1995 216.8 1996 1,104.2 1997 100.7 1998 385.3 Property, plant and equipment with an aggregate cost of approximately $10.36 billion is either pledged as security for first mortgage bonds and certain notes or is restricted for use as mortgaged property. Notes payable and commercial paper outstanding and related weighted average interest rates, as of December 31, are as follows (in millions): 1993 1992 Bank notes, 3.55% weighted average interest rate $ 397.5 $ 206.3 Master Trust notes, 3.71% weighted average interest rate 250.0 80.0 Commercial paper, 3.29% weighted average interest rate 108.3 76.0 Total notes payable and commercial paper $ 755.8 $ 362.3 Notes payable and commercial paper outstanding as of December 31, 1993 are classified as long-term debt due to Sprint's intent to refinance such borrowings on a long-term basis and due to its demonstrated ability to do so pursuant to the $1.1 billion revolving credit agreement described below. Such borrowings as of December 31, 1992 were classified as short-term borrowings. The bank notes are renewable at various dates throughout the year. Sprint pays a fee to certain commercial banks to support current and future credit requirements based upon loan commitments. Lines of credit may be withdrawn by the banks if there is a material adverse change in Sprint's financial condition. Sprint has a Master Trust Note Agreement with the trust division of a bank to borrow funds on demand. Interest on such borrowings is at a rate that yields interest equivalent to the most favorable discount rate paid on 180-day commercial paper. As of December 31, 1993, Sprint had a total of $1.31 billion of credit arrangements, consisting of various bank commitments and a $1.1 billion revolving credit agreement with a syndicate of domestic and international banks. At that date, Sprint had availability totaling $803 million under such arrangements. The revolving credit agreement expires in July 1996 and, subject to the approval of the lenders, may be extended for up to an additional two years. During 1993 and 1992, Sprint redeemed or called for redemption prior to scheduled maturities $1.34 billion and $720 million, respectively, of first mortgage bonds, senior notes and debentures. Excluding amounts deferred by the rate-regulated telephone companies as required by certain regulatory commissions, the prepayment penalties incurred in connection with early extinguishments of debt and the write-off of related debt issuance costs aggregated $29 million in 1993 and $16 million in 1992, net of related income tax benefits, and are reflected as extraordinary losses in the consolidated statements of income. In 1991, extraordinary losses of $2 million, net of related income tax benefits, were recorded related to the early extinguishment and defeasance of debt. 6. Redeemable Preferred Stock Sprint has 20 million authorized shares and subsidiaries have approximately 6 million authorized shares of preferred stock, including non-redeemable preferred stock. The redeemable preferred stock outstanding, as of December 31, is as follows (in millions): 1993 1992 Third series -- stated value $100 per share, shares - 208,000 in 1993 and 220,000 in 1992, non-participating, non-voting, cumulative 7.75% annual dividend rate $ 20.8 $ 22.0 Fifth series -- stated value $100,000 per share, shares - 95 in 1993 and 1992, voting, cumulative 6% annual dividend rate 9.5 9.5 Subsidiaries -- stated value ranging from $10 to $100 per share, shares - 380,055 in 1993 and 395,765 in 1992, annual dividend rates ranging from 4.7% to 5.4% 8.3 8.7 Total redeemable preferred stock $ 38.6 $ 40.2 Sprint's third series preferred stock is redeemed through a sinking fund at the rate of 12,000 shares, or $1.2 million per year, until 2008, at which time all remaining shares are to be redeemed. Sprint may redeem additional third series preferred shares at $102.55 per share during 1994, and at declining amounts in succeeding years. In the event of default, the holders of Sprint's third series redeemable preferred stock are entitled to elect a certain number of directors until all arrears in dividend and sinking fund payments have been paid. Sprint's fifth series preferred stock must be redeemed in full in 2003. If less than full dividends have been paid for four consecutive dividend periods or if the total amount of dividends in arrears exceeds an amount equal to the dividend payment for six dividend periods, the holders of the fifth series preferred stock are entitled to elect a majority of directors standing for election until all arrears in dividend payments have been paid. 7. Common Stock Common stock activity during 1993 and shares reserved for future grants under stock option plans or future issuances under various arrangements are as follows (in millions): Number of Shares 1993 Reserved as of Activity December 31, 1993 Employees Stock Purchase Plan 0.1 3.3 Employee savings plans 1.4 5.0 Automatic Dividend Reinvestment Plan 0.4 1.3 Officer and key employees' and Directors' stock options 2.2 12.2 Conversion of preferred stock and other 0.4 2.1 Total 4.5 23.9 As of December 31, 1993, elections to purchase 2.6 million of Sprint's common shares were outstanding under the 1992 offering of the Employees Stock Purchase Plan. The purchase price under the offering cannot exceed $19.66 per share, such price representing 85 percent of the average market price on the offering date, or fall below $12.00 per share. The 1992 offering terminates on June 30, 1994. Under various stock option plans, shares of common stock are reserved for issuance to officers, other key employees and outside directors. All options are granted at 100 percent of the market price at date of grant. Approximately 6 percent of all options outstanding as of December 31, 1993 provide for the granting of stock appreciation rights as an alternate method of settlement upon exercise. The stock appreciation rights feature allows the optionee to elect to receive any gain in the stock price on the underlying option directly from Sprint, either in stock or in cash or a combination of the two, in lieu of exercising the option by payment of the purchase price. A summary of stock option activity under the plans is as follows (in millions, except per share data): Per Share Number Exercise Aggregate of Price Exercise Shares Low High Amount Shares under option as of January 1, 1993 (5.5 million shares exercisable) 7.5 $ 9.44 $ 39.31 $ 170.2 Granted 1.6 27.50 38.44 50.3 Exercised Options without stock appreciation rights (2.1) 9.44 33.75 (41.0) Options with stock appreciation rights (0.3) 11.09 29.68 (5.5) Terminated and expired (0.1) 18.16 33.75 (3.2) Shares under option as of December 31, 1993 (4.5 million shares exercisable) 6.6 $ 9.44 $ 39.31 $ 170.8 During 1990, the Savings Plan Trust, an employee savings plan, acquired shares of common stock from Sprint in exchange for a $75 million promissory note payable to Sprint. The note bears an interest rate of 9 percent and is to be repaid from the common stock dividends received by the plan and the contributions made to the plan by Sprint in accordance with plan provisions. The remaining balance of the note receivable of $60 million as of December 31, 1993 is reflected as a reduction to other shareholders' equity. Under a Shareholder Rights plan, one-half of a Preferred Stock Purchase Right is attached to each share of common stock. Each Right, which is exercisable and detachable only upon the occurrence of certain takeover events, entitles shareholders to buy units consisting of one one-hundredth of a newly issued share of Preferred Stock-Fourth Series, Junior Participating at a price of $235 per unit or, in certain circumstances, common stock. Under certain circumstances, Rights beneficially owned by an acquiring person become null and void. Sprint's Preferred Stock- Fourth Series is without par value. It is voting, cumulative and accrues dividends equal generally to the greater of $10 per share or one hundred times the aggregate per share amount of all common stock dividends. No shares of Preferred Stock-Fourth Series were issued or outstanding at December 31, 1993. The Rights may be redeemed by Sprint at a price of one cent per Right and will expire on September 8, 1999. During 1993, 1992 and 1991, Sprint declared and paid annual dividends on common stock of $1.00 per share, and Centel declared pre-merger common stock dividends of $0.15, $0.90 and $0.89 per share, respectively. The most restrictive covenant applicable to dividends on common stock results from the $1.1 billion revolving credit agreement. Among other restrictions, this agreement requires Sprint to maintain specified levels of consolidated net worth, as defined. As a result of this requirement, $1.45 billion of Sprint's $2.18 billion consolidated retained earnings were effectively restricted from the payment of dividends as of December 31, 1993. The indentures and financing agreements of certain of Sprint's subsidiaries contain various provisions restricting the payment of cash dividends on subsidiary common stock held by Sprint. In connection with these restrictions, $749 million of the related subsidiaries' $1.79 billion total retained earnings is restricted as of December 31, 1993. The flow of cash in the form of advances from the subsidiaries to Sprint is generally not restricted. 8. Commitments and Contingencies Litigation, Claims and Assessments During 1993, an agreement for settlement was reached related to a class action complaint filed in January 1992 against Sprint and certain of its officers and directors, amending a complaint originally filed in 1990. The plaintiffs in the class action alleged violations of various federal securities laws and related state laws and, among other relief, sought unspecified compensatory damages. The settlement, which is subject to approval by the court, totaled $29 million, of which approximately 60 percent will be recovered from Sprint's insurance carriers. The net settlement did not have a significant effect on Sprint's 1993 results of operations. 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 January 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. On a quarterly basis, subject to the approval of the investors, Sprint may extend the agreement for an additional ninety days. During 1992, proceeds of $300 million were received under the arrangement. Receivables sold that remained uncollected as of December 31, 1993 and 1992 aggregated $600 million. Operating Leases Minimum rental commitments as of December 31, 1993 for all non- cancelable operating leases, consisting principally of leases for data processing equipment and real estate, are as follows (in millions): Amount 1994 $ 304.1 1995 251.4 1996 171.1 1997 100.6 1998 83.8 Thereafter 243.6 Gross rental expense aggregated $387 million, $385 million and $397 million in 1993, 1992 and 1991, respectively. The amount of rental commitments applicable to subleases, contingent rentals and executory costs is not significant. 9. Additional Financial Information Segment Information See "Business Segment Information." Realignment and Restructuring Charge During 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 are expected to improve market focus, lower costs and streamline operations within the division, and resulted in a nonrecurring charge of $34 million, which reduced income from continuing operations by $21 million ($0.06 per share). Divestiture of Telephone and Cellular Properties During 1992, the sale of Centel's local telephone operations in Ohio was completed, pursuant to a definitive agreement reached in November 1991. Proceeds from the sale aggregated $129 million, including $114 million of cash and $15 million of assumed debt; a gain of $44 million ($0.13 per share), net of related income taxes, was realized on the sale. During 1991, the sales of Centel's local telephone operations in Minnesota and Iowa were completed, pursuant to a definitive agreement reached in November 1990. Proceeds from the sales included $116 million in cash, 2,885,000 shares of Rochester Telephone Corporation common stock with a value of $84 million and ownership rights in various cellular franchises with a value of $28 million. Gains of $64 million ($0.19 per share), net of related income taxes, were realized on the sales. Also during 1991, 50 percent of Centel's interest in a cellular limited partnership was divested. Cash proceeds of $36 million were received, and a gain of $14 million ($0.04 per share), net of related income taxes, was realized on this divestiture. Discontinued Operations During 1991, pursuant to a definitive agreement reached in December 1990, the sale of Centel's electric operations was completed for $320 million in cash and $26 million of assumed liabilities. A gain of $37 million, net of related income taxes, was realized on the sale. Revenues related to discontinued operations were $178 million in 1991. Financial Instruments The carrying amounts and estimated fair values of Sprint's long-term debt, as of December 31, are as follows (in millions): 1993 1992 Estimated Estimated Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt Corporate $ 2,109.2 $ 2,377.2 $ 1,820.7 $ 1,957.3 Long distance communications services 423.4 447.8 611.3 656.7 Local communications services 2,128.2 2,342.5 1,970.3 2,032.3 Other 433.6 534.6 678.1 705.4 The fair values of Sprint's long-term debt are estimated based on quoted market prices for publicly-traded issues, and based on the present value of estimated future cash flows using a discount rate commensurate with the risks involved for all other issues. The carrying values of Sprint's other financial instruments (principally cash equivalents, temporary investments, short-term borrowings, interest rate swap/cap agreements and foreign currency contracts) approximate fair value as of December 31, 1993 and 1992. Supplemental Cash Flows Information 1993 1992 1991 Cash paid for (in millions) Interest $ 453.6 $ 507.5 $ 568.7 Income taxes $ 292.4 $ 269.0 $ 244.8 During 1993, 1992 and 1991, Sprint contributed previously unissued shares of its common stock with market values of $39 million, $28 million and $25 million, respectively, to the employee savings plans. SPRINT CORPORATION SCHEDULE V -- CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT Year Ended December 31, 1993 (In Millions) Balance Balance beginning Additions Other end of of year at cost Retirements changes year LONG DISTANCE COMMUNICATIONS SERVICES Digital fiber- optic network $ 3,976.9 $ 367.0 $ 153.0 (101.5)<1> $ 4,089.4 Data communications equipment 301.9 54.5 11.4 (64.8)<2> 280.2 Administrative assets 864.5 81.1 30.8 (31.2)<2> 883.6 Construction-in- progress 212.6 26.8 0.1 239.5 Subtotal 5,355.9 529.4 195.2 (197.4) 5,492.7 LOCAL COMMUNICATIONS SERVICES Land and buildings 636.5 29.7 6.2 660.0 Other general support assets 624.7 75.1 58.2 (0.7) 640.9 Cable and wire facility assets 5,150.8 324.9 71.5 5,404.2 Central office assets 3,855.7 387.8 163.6 3.3 4,083.2 Information origination/ termination assets 333.6 51.1 49.1 (0.2) 335.4 Telephone plant under construction 130.9 (23.3) (4.9) 102.7 Subtotal 10,732.2 845.3 348.6 (2.5) 11,226.4 CELLULAR AND WIRELESS COMMUNICATIONS SERVICES 409.9 164.9 3.3 (1.9) 569.6 PRODUCT DISTRIBUTION, DIRECTORY PUBLISHING AND OTHER 405.2 55.1 24.8 (1.8) 433.7 $ 16,903.2 $ 1,594.7 $ 571.9 $ (203.6) $ 17,722.4 Depreciation is computed on a straight-line basis. The weighted average annual composite depreciation rate for the rate-regulated local division, excluding special short-term amortizations and nonrecurring charges, was 6.7 percent in 1993. <1>Adjustment primarily represents reductions to plant due to a change in the method of accounting for certain costs related to connecting new customers to the network. See Note 1 of "Notes to Consolidated Financial Statements" for additional information. <2>Adjustments primarily represent the contribution of plant to a joint venture. SPRINT CORPORATION SCHEDULE V -- CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT Year Ended December 31, 1992 (In Millions) Balance Balance beginning Additions Other end of of year at cost Retirements changes year LONG DISTANCE COMMUNICATIONS SERVICES Digital fiber- optic network $ 3,899.1 $ 356.8 $ 230.2 $ (48.8)<1><2> $ 3,976.9 Data communications equipment 243.9 51.2 3.7 10.5 <2> 301.9 Administrative assets 932.0 76.6 76.5 (67.6)<2> 864.5 Construction-in -progress 227.7 (16.5) 1.4 212.6 Subtotal 5,302.7 468.1 310.4 (104.5) 5,355.9 LOCAL COMMUNICATIONS SERVICES Land and buildings 598.7 53.5 15.3 (0.4) 636.5 Other general support assets 593.8 81.6 51.5 0.8 624.7 Cable and wire facility assets 4,959.2 292.9 101.2 (0.1) 5,150.8 Central office assets 3,688.3 377.2 210.4 0.6 3,855.7 Information origination/ termination assets 527.4 42.4 237.0 0.8 333.6 Telephone plant under construction 140.2 (8.2) (1.1) 130.9 Subtotal 10,507.6 839.4 615.4<3> 0.6 10,732.2 CELLULAR AND WIRELESS COMMUNICATIONS SERVICES 298.4 123.8 8.2 (4.1) 409.9 PRODUCT DISTRIBUTION, DIRECTORY PUBLISHING AND OTHER 398.8 34.9 29.3 0.8 405.2 $ 16,507.5 $ 1,466.2 $ 963.3 $ (107.2) $ 16,903.2 Depreciation is computed on a straight-line basis. The weighted average annual composite depreciation rate for the rate-regulated local division, excluding special short-term amortizations and nonrecurring charges, was 6.6 percent in 1992. <1>Adjustment represents an adjustment pursuant to Accounting Principles Board Opinion No. 16 related to the acquisition of the remaining 19.9% of the Limited Partnership, partially offset by reclassifications of plant among categories. <2>Adjustments represent the reclassification of plant among categories. <3>Retirements include approximately $95 million related to the divestiture of Centel's local telephone operations in Ohio. SPRINT CORPORATION SCHEDULE V -- CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT Year Ended December 31, 1991 (In Millions) Balance Balance beginning Additions Other end of of year at cost Retirements changes year LONG DISTANCE COMMUNICATIONS SERVICES Digital fiber- optic network $ 3,619.1 $ 451.6 $ 137.5 $(34.1)<1> $ 3,899.1 Data communications equipment 178.4 54.0 3.3 14.8 <2> 243.9 Administrative assets 835.1 136.8 39.2 (0.7) 932.0 Construction-in -progress 289.9 (62.2) 227.7 Subtotal 4,922.5 580.2 180.0 (20.0) 5,302.7 LOCAL COMMUNICATIONS SERVICES Land and buildings 585.9 27.0 15.0 0.8 598.7 Other general support assets 564.8 75.7 49.4 2.7 593.8 Cable and wire facility assets 4,801.0 308.1 149.8 (0.1) 4,959.2 Central office assets 3,580.2 348.3 238.5 (1.7) 3,688.3 Information origination/ termination assets 708.7 33.1 215.0 0.6 527.4 Telephone plant under construction 131.4 10.2 0.1 (1.3) 140.2 Subtotal 10,372.0 802.4 667.8<3> 1.0 10,507.6 CELLULAR AND WIRELESS COMMUNICATIONS SERVICES 222.5 91.8 14.5 (1.4) 298.4 PRODUCT DISTRIBUTION, DIRECTORY PUBLISHING AND OTHER 363.9 48.8 13.8 (0.1) 398.8 $ 15,880.9 $ 1,523.2 $ 876.1 $ (20.5) $ 16,507.5 Depreciation is computed on a straight-line basis. The weighted average annual composite depreciation rate for the rate-regulated local division, excluding special short-term amortizations and nonrecurring charges, was 6.3 percent in 1991. <1>Adjustment primarily represents the reclassification of plant between categories and to inventories. <2>Adjustment represents the reclassification of plant between categories. <3>Retirements include approximately $213 million related to the divestiture of Centel's local telephone operations in Minnesota and Iowa. SPRINT CORPORATION SCHEDULE VI -- CONSOLIDATED ACCUMULATED DEPRECIATION Year Ended December 31, 1993 (In Millions) Balance Additions Balance beginning charged to Other end of of year income Retirements Changes year LONG DISTANCE COMMUNICATIONS SERVICES Digital fiber- optic network $1,258.4 $357.4 $105.4 $(62.6)<3> $1,447.8 Data communications equipment 169.5 37.7 9.2 (18.4)<4> 179.6 Administrative assets 507.2 122.7 30.7 (13.3)<4> 585.9 Subtotal 1,935.1 517.8 145.3 (94.3) 2,213.3 LOCAL COMMUNICATIONS SERVICES Buildings 180.1 22.0 6.2 (2.5) 193.4 Other general support assets 318.0 67.5 58.0 4.6 332.1 Cable and wire facility assets 2,172.8 301.1 71.5 (12.2) 2,390.2 Central office assets 1,572.9 307.6 165.1 6.5 1,721.9 Information origination/ termination assets 251.0 28.8 49.1 5.2 235.9 Subtotal 4,494.8 727.0 349.9 1.6 4,873.5 CELLULAR AND WIRELESS COMMUNICATIONS SERVICES 85.9 55.5 2.0 (1.5) 137.9 PRODUCT DISTRIBUTION, DIRECTORY PUBLISHING AND OTHER 167.5 33.3 21.1 3.2 182.9 $6,683.3 $1,333.6<1> $518.3<2> $(91.0) $7,407.6 <1> Reconciliation of additions charged to income to amount disclosed in the consolidated statement of income: Amount charged to income $ 1,333.6 Amortization of intangibles 25.1 Depreciation and amortization included in consolidated statement of income $ 1,358.7 <2> Reconciliation of retirements included in Schedule V -- Consolidated Property, Plant and Equipment: Amount charged to reserve $ 518.3 Net book value of long distance and cellular/wireless division retirements and other 53.6 Total Schedule V retirements $ 571.9 <3>Adjustment primarily represents reduction to accumulated depreciation due to a change in the method of accounting for certain costs related to connecting new customers to the network. See Note 1 of "Notes to Consolidated Financial Statements" for additional information. <4>Adjustments primarily represent the contribution of plant to a joint venture. SPRINT CORPORATION SCHEDULE VI -- CONSOLIDATED ACCUMULATED DEPRECIATION Year Ended December 31, 1992 (In Millions) Balance Additions Balance beginning charged to Other end of of year income Retirements Changes year LONG DISTANCE COMMUNICATIONS SERVICES Digital fiber- optic network $1,062.9 $385.6 $190.6 $0.5<3> $1,258.4 Data communications equipment 125.5 39.5 3.1 7.6<3> 169.5 Administrative assets 453.3 136.9 74.9 (8.1)<3> 507.2 Subtotal 1,641.7 562.0 268.6 1,935.1 LOCAL COMMUNICATIONS SERVICES Buildings 171.1 19.9 10.4 (0.5) 180.1 Other general support assets 300.9 61.8 49.3 4.6 318.0 Cable and wire facility assets 1,973.8 289.4 78.6 (11.8) 2,172.8 Central office assets 1,429.5 319.7 182.9 6.6 1,572.9 Information origination/ termination assets 458.0 26.5 236.7 3.2 251.0 Subtotal 4,333.3 717.3 557.9 2.1 4,494.8 CELLULAR AND WIRELESS COMMUNICATIONS SERVICES 60.6 32.8 2.9 (4.6) 85.9 PRODUCT DISTRIBUTION, DIRECTORY PUBLISHING AND OTHER 161.4 30.4 24.3 167.5 $6,197.0 $1,342.5<1> $853.7<2> $(2.5) $6,683.3 <1>Reconciliation of additions charged to income to amount disclosed in the consolidated statement of income: Amount charged to income $ 1,342.5 Amortization of intangibles 49.0 Depreciation and amortization included in consolidated statement of income $ 1,391.5 <2>Reconciliation of retirements included in Schedule V -- Consolidated Property, Plant and Equipment: Amount charged to reserve $ 853.7 Divestiture of local telephone operations 57.3 Net book value of long distance and cellular/wireless divisions retirements and other 52.3 Total Schedule V retirements $ 963.3 <3>Adjustments primarily represent reclassifications of plant among categories. SPRINT CORPORATION SCHEDULE VI -- CONSOLIDATED ACCUMULATED DEPRECIATION Year Ended December 31, 1991 (In Millions) Balance Additions Balance beginning charged to Other end of of year income Retirements Changes year LONG DISTANCE COMMUNICATIONS SERVICES Digital fiber- optic network $810.9 $370.8 $118.8 $1,062.9 Data communications equipment 63.4 24.1 1.1 $39.1 125.5 Administrative assets 363.6 143.5 22.6 (31.2)<3> 453.3 Subtotal 1,237.9 538.4 142.5 7.9 1,641.7 LOCAL COMMUNICATIONS SERVICES Buildings 162.0 18.9 8.5 (1.3) 171.1 Other general support assets 270.5 67.5 42.1 5.0 300.9 Cable and wire facility assets 1,802.5 271.4 89.2 (10.9) 1,973.8 Central office assets 1,295.9 320.0 192.1 5.7 1,429.5 Information origination/ termination assets 631.1 36.2 213.2 3.9 458.0 Subtotal 4,162.0 714.0 545.1 2.4 4,333.3 CELLULAR AND WIRELESS COMMUNICATIONS SERVICES 42.0 24.7 4.8 (1.3) 60.6 PRODUCT DISTRIBUTION, DIRECTORY PUBLISHING AND OTHER 143.8 27.9 12.1 1.8 161.4 $5,585.7 $1,305.0<1> $704.5<2> $10.8 $6,197.0 <1>Reconciliation of additions charged to income to amount disclosed in the consolidated statement of income: Amount charged to income $ 1,305.0 Amortization of intangibles 64.5 Depreciation and amortization included in consolidated statement of income $ 1,369.5 <2>Reconciliation of retirements included in Schedule V -- Consolidated Property, Plant and Equipment: Amount charged to reserve $ 704.5 Divestiture of local telephone operations 122.7 Net book value of long distance and cellular/wireless divisions retirements and other 48.9 Total Schedule V retirements $ 876.1 <3>Adjustments primarily represent reclassifications of plant between categories. SPRINT CORPORATION SCHEDULE VIII -- CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1993, 1992 and 1991 (In Millions) Additions Balance Charged Charged Balance beginning to to other Other end of of year income accounts deductions year 1993 Allowance for doubtful accounts $118.0 $271.5 $2.6 $(270.2)<1> $121.9 Valuation allowance - deferred income tax assets $30.2 $0.7 $(6.4) $24.5 1992 Allowance for doubtful accounts $144.8 $267.6 $2.4 $(296.8)<1> $118.0 Valuation allowance - deferred income tax assets $35.4<2> $ (5.2) $30.2 1991 Allowance for doubtful accounts $212.6 $371.2 $2.9 $(441.9)<1> $144.8 <1> Accounts written off, net of recoveries. <2> Valuation allowance established upon adoption of SFAS No. 109, "Accounting for Income Taxes." See Notes 1 and 4 of "Notes to Consolidated Financial Statements" for additional information. SPRINT CORPORATION SCHEDULE IX -- CONSOLIDATED SHORT-TERM BORROWINGS Years Ended December 31, 1993, 1992 and 1991 (In Millions) 1993 <1> 1992 1991 <1> Bank Commercial Bank Commercial Bank Commercial Notes Paper Notes Paper Notes Paper <2> <3> <2> <3> <2> <3> Balance at end of period $ 647.5 $108.3 $ 286.3 $76.0 $ 185.3 $30.0 Weighted average interest rate 3.61% 3.29% 3.92% 4.10% 5.25% 5.31% Average amount outstanding during the year $ 456.8 $80.3 $ 398.0 $37.5 $ 401.2 $52.5 Maximum amount outstanding during the year $ 722.0 $198.0 $ 486.4 $78.5 $ 749.0 $130.2 Weighted average interest rate during the year (computed by dividing the annual interest expense by the average debt outstanding during the year) 3.70% 3.25% 4.17% 4.10% 6.73% 6.66% <1>As of December 31, 1993 and 1991, short-term borrowings were classified as long-term debt in the consolidated balance sheets due to Sprint's intent and demonstrated ability to refinance such borrowings on a long-term basis. <2>Bank notes are generally issued for terms ranging from overnight to 60 days. <3>Commercial paper is generally issued for periods ranging from overnight to 30 days. SPRINT CORPORATION SCHEDULE X -- CONSOLIDATED SUPPLEMENTARY INCOME STATEMENT INFORMATION Years Ended December 31, 1993, 1992 and 1991 (In Millions) 1993 1992 1991 Maintenance and repairs <1> $ 167.2 $ 174.1 $ 162.2 Taxes, other than payroll and income taxes: Property taxes $ 158.6 $ 148.2 $ 157.0 Gross receipts and other 77.9 76.8 60.7 $ 236.5 $ 225.0 $ 217.7 Advertising expense $ 317.2 $ 251.7 $ 192.6 <1>Amount represents maintenance and repairs for the long distance division, cellular and wireless division, and product distribution, directory publishing and other. For the local division, maintenance and repairs is the primary component of plant operations expense which totaled $1.21 billion, $1.17 billion and $1.16 billion in 1993, 1992 and 1991, respectively. QUARTERLY FINANCIAL DATA (Unaudited) First Quarter Second Quarter Third Quarter 1993 1992 1993 1992 1993 1992 (In Millions, Except Per Share Data) Net operating revenues $2,718.0 $2,501.0 $2,800.9 $2,568.2 $2,867.6 $2,631.2 Operating expenses Costs of services and products 1,381.9 1,272.5 1,408.9 1,307.2 1,435.1 1,350.8 Selling, general and administrative 641.8 594.5 675.9 625.0 690.8 609.7 Depreciation and amortization 337.2 334.3 338.0 352.4 338.5 356.8 Merger, integration and restructuring costs <1>,<2> 248.0 44.5 Total operating expenses 2,608.9 2,201.3 2,422.8 2,284.6 2,508.9 2,317.3 Operating income 109.1 299.7 378.1 283.6 358.7 313.9 Gain on divestiture of telephone properties <3> 81.1 Interest expense (117.9) (131.2) (113.0) (129.4) (114.2) (126.7) Other income (expense), net (0.7) (1.8) (8.1) 6.5 (11.4) 6.4 Income (loss) from continuing operations before income taxes (9.5) 166.7 257.0 241.8 233.1 193.6 Income tax provision <4> (1.8) (60.4) (91.9) (94.2) (96.4) (68.3) Income (loss) from continuing operations (11.3) 106.3 165.1 147.6 136.7 125.3 Discontinued operations, net (12.3) Extraordinary losses on early extinguishments of debt, net (5.2) (8.5) (14.5) (5.6) Cumulative effect of changes in accounting principles, net<5> (384.2) 22.7 Net income (loss) (413.0) 129.0 156.6 147.6 122.2 119.7 Preferred stock dividends (0.6) (1.0) (0.9) (0.9) (0.6) (0.9) Earnings (loss) applicable to common stock $(413.6) $128.0 $155.7 $146.7 $121.6 $118.8 Earnings (loss) per common share Continuing operations $(0.03) $0.31 $0.48 $0.44 $0.39 $0.37 Discontinued operations (0.04) Extraordinary item (0.02) (0.02) (0.04) (0.02) Cumulative effect of changes in accounting principles (1.12) 0.07 Total $(1.21) $0.38 $0.46 $0.44 $0.35 $0.35 QUARTERLY Sprint Corporation FINANCIAL DATA (Unaudited) Fourth Quarter Total Year 1993 1992 1993 1992 Net operating revenues $2,981.3 $2,719.9 $11,367.8 $10,420.3 Operating expenses Costs of services and products 1,510.2 1,395.0 5,736.1 5,325.5 Selling, general and administrative 721.4 660.7 2,729.9 2,489.9 Depreciation and amortization 345.0 348.0 1,358.7 1,391.5 Merger, integration and restructuring costs <1>,<2> 292.5 Total operating expenses 2,576.6 2,403.7 10,117.2 9,206.9 Operating income 404.7 316.2 1,250.6 1,213.4 Gain on divestiture of telephone properties <3> 81.1 Interest expense (107.3) (123.8) (452.4) (511.1) Other income (expense), net (2.1) (16.1) (22.3) (5.0) Income (loss) from continuing operations before income taxes 295.3 176.3 775.9 778.4 Income tax provision <4> (105.2) (59.4) (295.3) (282.3) Income (loss) from continuing operations 190.1 116.9 480.6 496.1 Discontinued operations, net (12.3) Extraordinary losses on early extinguishments of debt, net (1.0) (10.4) (29.2) (16.0) Cumulative effect of changes in accounting principles, net <5> (384.2) 22.7 Net income (loss) 189.1 106.5 54.9 502.8 Preferred stock dividends (0.7) (0.7) (2.8) (3.5) Earnings (loss) applicable to common stock $188.4 $105.8 $52.1 $499.3 Earnings (loss) per common share Continuing operations $0.55 $0.34 $1.39 $1.46 Discontinued operations (0.04) Extraordinary item (0.03) (0.08) (0.05) Cumulative effect of changes in accounting principles (1.12) 0.07 Total $0.55 $0.31 $0.15 $1.48 <1>During 1993, Sprint consummated its merger with Centel. The transaction costs associated with the merger and the expenses of integrating and restructuring the operations of the two companies resulted in nonrecurring charges in the first and third quarters of 1993. Such charges reduced net income by $165 million ($0.48 per share) and $7 million ($0.02 per share), respectively. See Note 2 of "Notes to Consolidated Financial Statements" for additional information. <2>During third quarter 1993, Sprint realigned and restructured its long distance communications services division, resulting in a nonrecurring charge which reduced net income by $21 million ($0.06 per share). See Note 9 of "Notes to Consolidated Financial Statements" for additional information. <3>During second quarter 1992, a gain of $44 million ($0.13 per share), net of related income taxes, was recognized related to the sale of certain of Centel's local telephone operations. See Note 9 of "Notes to Consolidated Financial Statements" for additional information. <4>During third quarter 1993, the Revenue Reconciliation Act of 1993 was enacted which, among other changes, raised the federal income tax rate to 35 percent from 34 percent. As a result, Sprint adjusted its deferred income tax assets and liabilities to reflect the revised rate, resulting in a nonrecurring charge which reduced net income by $13 million ($0.04 per share). See Note 4 of "Notes to Consolidated Financial Statements" for additional information. <5>Effective January 1, 1993, Sprint changed its method of accounting for postretirement and postemployment benefits by adopting SFAS No. 106 and No. 112 and effected another accounting change. Effective January 1, 1992, Sprint changed its method of accounting for income taxes by adopting SFAS No. 109. See Note 1 of "Notes to Consolidated Financial Statements" for additional information. EXHIBIT INDEX EXHIBIT NUMBER (3) Articles of Incorporation and Bylaws: (a) Articles of Incorporation, as amended (filed as Exhibit 4 to Sprint Corporation Current Report on Form 8-K dated March 9, 1993 and incorporated herein by reference). (b) Bylaws, as amended (filed as Exhibit 3(b) to Sprint Corporation Annual Report on Form 10- K for the year ended December 31, 1991 and incorporated herein by reference). (4) Instruments defining the Rights of Sprint's Equity Security Holders: (a) The rights of Sprint's equity security holders are defined in the Fifth, Sixth, Seventh and Eighth Articles of Sprint's Articles of Incorporation. See Exhibit 3(a). (b) Rights Agreement dated as of August 8, 1989, between Sprint Corporation (formerly United Telecommunications, Inc.) and United Missouri Bank, N.A. (formerly United Missouri Bank of Kansas City, N.A.), as Rights Agent (filed as Exhibit 2(b) to Sprint Corporation Registration Statement on Form 8-A dated August 11, 1989 (File No. 1-4721), and incorporated herein by reference). (c) Amendment and supplement dated June 4, 1992 to Rights Agreement dated as of August 8, 1989 (filed as Exhibit 2(c) to Amendment No. 1 on Form 8 dated June 8, 1992 to Sprint Corporation Registration Statement on Form 8-A dated August 11, 1989 (File No. 1-4721), and incorporated herein by reference). (10) Material Agreements - Merger Agreement: (a) Agreement and Plan of Merger dated as of May 27, 1992, among Sprint Corporation, F W Sub Inc. and Centel Corporation (filed as Exhibit 2 to Sprint Corporation Current Report on Form 8-K dated May 27, 1992 and incorporated herein by reference). (b) First Amendment dated as of February 19, 1993, to the Agreement and Plan of Merger, dated as of May 27, 1992, among Sprint Corporation, F W Sub Inc. and Centel Corporation (filed as Exhibit 2b to Sprint Corporation Current Report on Form 8-K dated March 9, 1993 and incorporated herein by reference). (10) Executive Compensation Plans and Arrangements: (c) 1978 Stock Option Plan, as amended (filed as Exhibit 19(a) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (d) 1981 Stock Option Plan, as amended (filed as Exhibit 19(b) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (e) 1985 Stock Option Plan, as amended (filed as Exhibit 19(c) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (f) 1990 Stock Option Plan, as amended. (g) 1990 Restricted Stock Plan, as amended (filed as Exhibit 99 to Sprint Corporation Registration Statement No. 33-50421 and incorporated herein by reference). (h) Long-Term Stock Incentive Program, as amended (filed as Exhibit 19(e) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (i) Restated Memorandum Agreements Respecting Supplemental Pension Benefits between Sprint Corporation (formerly United Telecommunications, Inc.) and two of its current and former executive officers (filed as Exhibit 10(i) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). (j) Executive Long-Term Incentive Plan. (k) Executive Management Incentive Plan. (l) Long-Term Incentive Compensation Plan (filed as Exhibit 10(j) to United Telecommunications, Inc. Annual Report on Form 10-K for the year ended December 31, 1989, and incorporated herein by reference). (m) Short-Term Incentive Compensation Plan (filed as Exhibit 10(k) to United Telecommunications, Inc. Annual Report on Form 10-K for the year ended December 31, 1989, and incorporated herein by reference). (n) Retirement Plan for Directors, as amended (filed as Exhibit 28d to Registration Statement No. 33-28237, and incorporated herein by reference). (o) Key Management Benefit Plan, as amended. (p) Executive Deferred Compensation Plan, as amended (filed as Exhibit 19(f) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (q) Director's Deferred Fee Plan, as amended (filed as Exhibit 19(g) to United Telecommunications, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and incorporated herein by reference). (r) Supplemental Executive Retirement Plan (filed as Exhibit 10(q) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1992, and incorporated herein by reference). (s) Form of Contingency Employment Agreements between Sprint Corporation and certain of its executive officers (filed as Exhibit 10(r) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1992, and incorporated herein by reference). (t) Form of Indemnification Agreements between Sprint Corporation (formerly United Telecommunications, Inc.) and its Directors and Officers (filed as Exhibit 10(s) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). (u) Summary of Executive Benefits (filed as Exhibit 10(u) to Sprint Corporation Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). (v) Amended and Restated Centel Management Incentive Plan. (w) Amended and Restated Centel Stock Option Plan. (x) Agreements Regarding Special Compensation and Post Employment Restrictive Covenants between Sprint Corporation and three of its executive officers. (y) Amended and Restated Centel Matched Deferred Salary Plan. (z) Amended and Restated Centel Directors Deferred Compensation Plan. (aa) Amended and Restated Centel Director Stock Option Plan. (11) Computation of Earnings Per Common Share. (12) Computation of Ratio of Earnings to Fixed Charges. (21) Subsidiaries of Registrant. (23a) Consent of Ernst & Young. (23b) Consent of Arthur Andersen & Co. EX-10 2 EX10 Exhibit (10)(f) 1990 STOCK OPTION PLAN Section 1. Establishment. Pursuant to the Sprint Corporation Long-Term Stock Incentive Program (the "Program"), Sprint Corporation, a Kansas corporation (the "Company"), hereby establishes a stock option plan to be named the 1990 Stock Option Plan (the "Plan"), for officers and key employees of the Company and its subsidiaries. Section 2. Purpose. The purpose of the Plan is to induce officers and key employees of the Company and its subsidiaries, who are in a position to contribute materially to the prosperity thereof, to remain with the Company or its subsidiaries, to offer them incentives and reward in recognition of their share in the Company's progress, and to encourage them to continue to promote the best interests of the Company and its affiliates. The Plan will also aid the Company and its subsidiaries in competing with other enterprises for the services of new key personnel needed to help insure their continued development. Options granted to an optionee shall be either Incentive Stock Options within the meaning of Section 422A of the Internal Revenue Code of 1986, as amended, or Nonstatutory Stock Options, provided that no Incentive Stock Options shall be granted which would permit options first exercisable in any calendar year to exceed the limitations set forth in Section 6(a) hereof. Options which become first exercisable in any calendar year in excess of said limitations shall be Nonstatutory Stock Options. Options designated "Nonstatutory Stock Options" shall not be restricted by the limitations of said Section 6(a) and shall not be treated as Incentive Stock Options. Section 3. Administration. The Plan shall be administered by the Organization and Compensation Committee (the "Committee") of the Board of Directors of the Company. Members of the Committee shall be Disinterested Persons as defined in the Program. The Committee shall hold its meetings at such times and places as it may determine. A majority of the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee, shall be deemed the acts of the Committee. The Company shall grant options and related Stock Appreciation Rights ("SARs") under the Plan in accordance with determinations made by the Committee pursuant to the provisions of the Plan and the Program. The Committee from time to time may adopt (and thereafter amend and rescind) such rules and regulations for carrying out the Plan and take such action in the administration of the Plan, not inconsistent with the provisions of the Plan and the Program, as it shall deem proper. The interpretation and construction of any provisions of the Plan by the Committee shall, unless otherwise determined by the Board of Directors of the Company, be final and conclusive. No member of the Board of Directors or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it. Section 4. Total Number of Shares to be Optioned. The maximum number of shares of common stock ($2.50 par value) of the Company which may be issued upon exercise of options under the Plan shall not exceed 8,500,000 (subject to adjustment as provided in Section 11 hereof). The shares sold under the Plan may be either treasury shares or authorized but unissued shares, as the Board of Directors from time to time may determine. The maximum number of shares of common stock which may be issued upon exercise of options granted in any calendar year, together with shares of common stock subject to other awards under the Program, shall not exceed the limits set forth in Section 4(a) of the Program. In the event that any outstanding options under the Plan for any reason expire or are terminated, the shares of common stock of the Company allocable to the unexercised portion of all of such options may again be subject to an option under the Plan. Section 5. Eligibility. Options shall be granted only to officers and key employees of the Company or its subsidiaries. The Committee will, in its discretion, determine the officers and key employees to be granted options, the time or times at which options shall be granted, the number of shares subject to each option, whether the options are Incentive Stock Options or Nonstatutory Stock Options, any conditions on the exercise of the options, and the manner in which options may be exercised. In making such determination, the Committee may take into consideration the value of the services rendered by the respective individuals, their present and potential contributions to the success of the Company and its affiliates and such other factors which the Committee may deem relevant in accomplishing the purpose of the Plan. No option may be granted to any individual who immediately after the option grant owns directly or indirectly stock possessing more than five percent (5%) of the total combined voting power or value of all classes of stock of the Company or any subsidiary. An individual may be granted more than one option but only on the terms and subject to the restrictions hereinafter set forth. No person shall be eligible to receive an option for a larger number of shares than is recommended for such individual by the Committee. Section 6. Limitation on Incentive Stock Options. (a) General Rule. The aggregate fair market value (determined at the time the option is granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time during any calendar year by the optionee under all plans of the Company and its subsidiaries shall not exceed $100,000 or, if different, the maximum limitation in effect at the time of grant under Section 422A of the Internal Revenue Code of 1986, as amended, or any successor provision, and any regulations promulgated thereunder. (b) Fair Market Value. Fair market value shall be deemed to be the average of the high and low prices of the common stock of the Company for composite transactions as published by major newspapers for the date the Incentive Stock Option is granted or, if no sale of the Company's stock shall have been made on that day, the next preceding day on which there was a sale of such stock. Section 7. Terms and Conditions of Options. Each option granted under the Plan shall be evidenced by a Stock Option Agreement in such form not inconsistent with the Plan as the Committee shall determine, provided that such Stock Option Agreement clearly and separately identifies Nonstatutory Stock Options and Incentive Stock Options and that the substance of the following terms and conditions be included therein: (a) Option Price. The price at which each share of common stock covered by such option may be purchased shall be determined by the Committee and shall be no less than one hundred percent (100%) of the fair market value of the stock on the date the option is granted. Fair market value shall be deemed to be the average of the high and low prices of the common stock of the Company for composite transactions as published by major newspapers for the date the option is granted or, if no sale of the Company's stock shall have been made on that day, the next preceding day on which there was a sale of such stock. (b) Nontransferable. The option and any related SAR shall not be transferable by the optionee otherwise than by will or by the laws of descent and distribution; provided that, if so determined by the Committee, an optionee may, in the manner established by the Committee, designate a beneficiary to exercise the option and any related SAR upon the death of the optionee. During the optionee's lifetime, the option and any related SAR may be exercised only by the optionee or, if permissible under applicable law, by the guardian or representative of the optionee. (c) Exercise of Option. The option and any related SAR, if exercised by the optionee, may be exercised (subject, however, to the provisions of Section 9, and if applicable, Section 10) only if the optionee has been an employee of the Company or of any subsidiary thereof at all times during the period beginning with the date of the granting of the option and ending on the day three (3) months before the date of such exercise; provided, however, that in the case of an optionee who is a retiree of the Company or of any subsidiary thereof or who becomes permanently and totally disabled, the three (3) months shall be extended to twelve (12) months for options designated "Incentive Stock Options" and to five (5) years for options designated "Nonstatutory" Stock Options" (for this purpose, a retiree is a person who is entitled to receive pension benefits in accordance with the Sprint Retirement Pension Plan immediately upon termination of employment). Options granted under the Plan shall not be affected by any change of duties or position so long as the optionee continues to be an employee of the Company or of a subsidiary. Only those options exercisable at the date the optionee's employment is terminated may be exercised during the period following such termination, whether such termination is by retirement or otherwise. (d) Term of Option. The option and any related SAR shall not be exercisable after the expiration of ten (10) years from the date the option was granted. (e) Death of Optionee. In the event of the death of an optionee during the period in which an option is exercisable (as set forth in Section 7(c) above), the option theretofore granted to such person and any related SAR shall be exercisable only within the twelve (12) months next succeeding such death, and then only (i) by the executor or administrator of the optionee's estate, by the person or persons to whom the optionee's rights under the option shall pass by the optionee's will or the laws of descent and distribution, or, if a beneficiary has been designated in accordance with Section 7(b) above, by the beneficiary, and (ii) if and to the extent that the optionee was entitled (or deemed to be entitled by the Committee) to exercise the option at the date of the optionee's death, provided that in no event shall the option be exercisable more than ten (10) years after the date it was granted. Section 7A. Reload Options. In connection with non-qualified options (including newly- granted options or outstanding options granted under the Plan or any other stock option plan of the Company or of US Sprint Communications Company Limited Partnership), the Committee may provide that an optionee has the right to a reload option, which shall be subject to the following terms and conditions: (a) Grant of the Reload Option; Number of Shares, Price. Subject to subsections (b) and (c) of this Section 7A and to the availability of shares to be optioned under the Plan, if an optionee has an option (the "original option") with reload rights and pays for the exercise of the original option by surrendering common stock of the Company, the optionee shall receive a new option ("reload option") for the number of shares so surrendered at an option price equal to the fair market value of the stock on the date of the exercise of the original option. (b) Minimum Purchase Required. A reload option will be granted only if the exercise of the original option is an exercise of at least 25% of the total number of shares granted under the original option (or an exercise of all the shares remaining under the original option if less than 25% of the shares remain to be exercised). (c) Other Requirements. A reload option will not be granted: (1) if the market value of the common stock of the Company on the date of exercise of the original option is less than the exercise price of the original option; (2) if the optionee is no longer an employee of Sprint or a Sprint subsidiary; or (3) if the original option is exercised less than one year prior to the expiration of the original option. (d) Term of Option. The reload option shall expire on the same date as the original option. (e) Type of Option. The reload option shall be a non-qualified option. (f) No Additional Reload Options. The reload options shall not include any right to a second reload option. (g) Date of Grant, Vesting. The date of grant of the reload option shall be the date of the exercise of the original option. The reload options shall be exercisable in full beginning one year from date of grant; provided, however, that all shares purchased upon the exercise of the original option (except for any shares withheld for tax withholding obligations) shall not be sold, transferred or pledged within six months from the date of exercise of the original option. In no event shall a reload option be exercised after the original option expires as provided in subsection (d) of this Section 7A. (h) Stock Withholding; Grants of Reload Options. If the other requirements of this Section 7A are satisfied, and if shares are withheld or shares surrendered for tax withholding pursuant to Section 17, a reload option will be granted for the number of shares surrendered as payment for the exercise of the original option plus the number of shares surrendered or withheld to satisfy tax withholding. In connection with reload options for officers who are subject to Section 16 of the Securities Exchange Act of 1934 ("Insiders"), the Committee may at any time impose any limitations which, in the Committee's sole discretion, are necessary or desirable in order to comply with Section 16(b) of the Securities Exchange Act of 1934 and the rules and regulations thereunder, or in order to obtain any exemption therefrom. (i) Other Terms and Conditions. Except as otherwise provided in this Section 7A, all the provisions of the 1990 Stock Option Plan shall apply to reload options granted pursuant to this Section 7A. Section 8. Consideration for Options. Each optionee shall, as consideration for the grant of the option, agree in writing to remain in the employ of the Company or of one of its subsidiaries, at the pleasure of the Company or of such subsidiary, for at least (1) year from the date of the granting of such option or until earlier termination of the optionee's employment effected or approved by the Company or by such subsidiary. In the event of a violation by the optionee of such agreement, any options still held by such person at the time of such violation shall automatically terminate. The Committee may waive this requirement in the case of any optionee. Nothing contained in the Plan, or in any option granted pursuant to the Plan, nor in any agreement made pursuant to the provisions of this Section 8, shall confer upon any optionee any right with respect to continuance of employment by the Company or its subsidiaries, nor interfere in any way with the right of the Company or its subsidiaries to terminate the optionee's employment or change the optionee's compensation at any time. Section 9. Exercise of Options - Purchase of Shares. Options and related SARs shall be exercisable at such time or times, and upon the satisfaction of such conditions, as determined by the Committee; provided, however, that unless otherwise determined by the Committee, no Incentive Stock Option shall be exercisable during the year ending on the day before the first anniversary date of the granting of the Incentive Stock Option. An optionee's right to purchase shares with respect to shares which become exercisable shall be cumulative during the term of the option. An option shall be exercisable by purchase of shares only upon payment to the Company of the full purchase price of the shares with respect to which the option is exercised; provided, however, that the Company shall not be required to issue or deliver any certificates for shares of common stock purchased upon the exercise of an option prior to (i) if requested by the Company, the filing with the Company by the optionee or purchaser acting under Section 7(e) hereof of a representation in writing that at the time of such exercise it is the optionee's or purchaser's then present intention to acquire the shares being purchased for investment and not for resale, or (ii) the completion of any registration or other qualification of such shares under any state or federal laws or rulings or regulations of any government regulatory body, which the Company shall determine to be necessary or advisable. Payment for the shares shall be either in United States dollars, payable in cash or by check, or by surrender of stock certificates representing like common stock of the Company having an aggregate fair market value, determined as of the date of exercise, equal to the number of shares with respect to which such option is exercised multiplied by the option price per share; provided that the Committee may impose whatever restrictions it deems necessary or desirable with respect to the payment for shares by the surrender of stock certificates representing like common stock of the Company. The fair market value of common stock on the date of exercise of an option shall be determined in the same manner as the fair market value of common stock on the date of grant of an option is determined pursuant to Section 7(a). Such payment shall be accompanied by a written request for the shares purchased. An option shall be deemed exercised on the date such payment and written request are received by the Secretary of the Company. No optionee or optionee's beneficiary, executor or administrator, legatees or distributees, as the case may be, will be, or will be deemed to be, a holder of any shares subject to an option unless and until a stock certificate or certificates for such shares are issued to such person or them under the terms of the Plan. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as provided in Section 11 hereof. In the event that any optionee shall be dismissed from the employ of the Company or any of its subsidiaries for any reason which in the opinion of the Committee shall constitute good cause for dismissal, any option still held by such person at such time shall automatically terminate. The decision of the Committee as to what shall constitute good cause for dismissal shall be final and binding upon all concerned. In the event that any optionee, without the consent of the Committee, while employed by the Company or any affiliate of the Company or after termination of such employment, becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee), any business that is in competition with the Company or with any business in which the Company has a substantial interest, as determined by the Committee, any option still held by such person at such time shall automatically terminate. The decision of the Committee on any such matters shall be final and binding upon all concerned. Section 10. Exercise of Options - Stock Appreciation Rights. In addition to providing for the exercise of an option as set forth in Section 9, at the time of grant of such option the Committee may by separate agreement, in conjunction with all or part of any option granted under the Plan, permit an optionee to exercise the option in an alternative manner based on the appreciated value of the common stock subject to option; provided, however, that no SAR granted to an optionee who is subject to Section 16(b) of the Exchange Act (an "Insider") shall be exercisable during the six-month period following the date of grant, except that such limitation shall not apply in the event of death or physical disability of such optionee occurring prior to the expiration of such six-month period. SARs may be exercised by an optionee by surrendering the related option or applicable portion thereof. Upon such exercise and surrender, the optionee shall be entitled to receive the value of such SARs determined in the manner prescribed in this Section 10. Options which have been so surrendered, in whole or in part, shall no longer be exercisable. Each agreement evidencing SARs shall clearly and separately identify the Nonstatutory Stock Options and Incentive Stock Options to which it relates and shall contain such terms and conditions not inconsistent with other provisions of the Plan and the Program as shall be determined from time to time by the Committee, which shall include the following: (a) SARs shall expire no later than the expiration of the related option. (b) SARs shall be transferable only when and to the extent that the related option is transferable. (c) SARs shall be exercisable at such time or times and only to the extent that the related option is exercisable. The SAR shall terminate and no longer be exercisable upon the termination or exercise of the related option, except that SARs granted with respect to less than the full number of shares covered by a related option shall not be reduced until the exercise or termination of the related option exceeds the number of shares not covered by the SARs. (d) SARs shall be exercisable only when there is a positive spread, that is, when the market price of the stock subject to the related option exceeds the exercise price of such option. (e) Upon the exercise of SARs, an optionee shall be entitled to receive the value thereof, which value shall be equal to the excess of the fair market value on the date of exercise of one share of common stock over the option price per share specified in the related option multiplied by the number of shares in respect of which the SARs shall have been exercised. The fair market value of common stock on the date of exercise of SARs shall be determined in the same manner as the fair market value of common stock on the date of grant of an option is determined pursuant to Section 7(a). (f) Upon an exercise of SARs, the optionee shall notify the Company of the form in which payment of the value thereof will be made (i.e., cash, common stock, or any combination thereof); provided, however, in the case of Insiders, (i) payment of the value of SARs related to Incentive Stock Options may be elected in common stock only insofar as the issuance of such common stock to the optionee would be subject to the Internal Revenue Code of 1986, Section 83 Income Inclusion Rule, as in effect on the date of exercise of the SARs, and (ii) the Committee may at any time impose any other limitations upon the exercise of SARs which, in the Committee's sole discretion, are necessary or desirable in order to comply with Section 16(b) of the Exchange Act and the rules and regulations thereunder, or in order to obtain any exemption therefrom. Upon the exercise of SARs, the option or part thereof to which such SARs are related shall be deemed to have been exercised for the purpose of the limitation of the number of shares of common stock to be issued under the Plan as set forth in Section 4 and the limitation of the number of shares of common stock to be issued under the Program as set forth in Section 4(a) of the Program. SARs shall be deemed exercised on the date written notice of exercise is received by the Secretary of the Company. Section 11. Change in Stock, Adjustments, Etc. In the event that the outstanding shares of common stock of the Company are hereafter increased or decreased or changed into or exchanged for a different number of shares or kind of shares or other securities of the Company or of another corporation, by reason of reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, or a dividend payable in capital stock, appropriate adjustment shall be made by the Committee in the number and kind of shares for the purchase of which options may be granted under the Plan including the maximum number that may be granted to any one person. In addition, the Committee shall make appropriate adjustment in the number and kind of shares as to which outstanding options, or portions thereof then unexercised, shall be exercisable, to the end that the optionee's proportionate interest shall be maintained as before the occurrence of such event, and such adjustment of outstanding options shall be made without change of the total price applicable to the unexercised portion of the option and with a corresponding adjustment in the option price per share; provided, however, that each such adjustment in the number and kind of shares subject to outstanding options, including any adjustment in the option price, shall be made in such manner as not to constitute a modification as defined in Section 425 of the Internal Revenue Code of 1986, as amended. If any outstanding options are subject to any conditions, the Committee shall also make appropriate adjustments to such conditions. Any such adjustment made by the Committee shall be conclusive. The grant of an option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets. Section 12. Duration, Amendment and Termination. The Board of Directors of the Company may at any time terminate the Plan or make such amendments thereof as it shall deem advisable and in the best interests of the Company; provided, however, that no such termination or amendment shall, without the consent of the individual to whom any option shall theretofore have been granted, affect or impair the rights of such individual under such option; and provided further, that any such amendment shall be consistent with the provisions of the Program, as it may be amended from time to time. No stock option shall be granted under the Plan after April 18, 1999, but stock options granted prior to or as of such date may extend beyond such date in accordance with the provisions hereof. Section 13. Effectiveness of Plan. This Plan shall be effective as of February 17, 1990. Section 14. Date of Granting of Options. The date of grant of a reload option shall be determined in accordance with Section 7A(g). The date of grant of all other options shall be the date designated by the Committee as the date of grant, provided that in no event shall the date of grant be earlier than the date on which the Committee approved the grant. Within sixty (60) days of the granting of the option, the Company shall notify the optionee of the grant of the option, and submit to the optionee a Stock Option Agreement and, if applicable, an agreement respecting SARs, duly executed by and on behalf of the Company, with the request that the optionee execute the agreement or agreements within sixty (60) days after the mailing by the Company of the notice to the optionee. The optionee shall execute the written option agreement and, if applicable, the agreement respecting SARs, within said 60-day period. Section 15. Application of Funds. The proceeds received by the Company from the sale of stock subject to option are to be added to the general funds of the Company and used for its corporate purposes. Section 16. No Obligation to Exercise Option. Granting of an option shall impose no obligation on the optionee to exercise such option. Section 17. Stock Withholding Election. When taxes are withheld in connection with the exercise of a Nonstatutory Stock Option or SAR for stock, the optionee may elect to make payment for the withholding of federal, state and local taxes, excluding social security and medicare taxes, up to the optionee's marginal tax rates, by one or both of the following methods: (i) delivering part or all of the payment in previously-owned shares (which shall be valued at fair market, as defined herein, on the date of exercise) held for at least six months, whether or not received through the prior exercise of a stock option or SAR for stock; or (ii) requesting the Company to withhold from those shares that would otherwise be received upon exercise of the option, or upon exercise of an SAR for stock, a number of shares having a fair market value (as defined herein) on the date of exercise equal to the amount to be withheld. The amount of tax withholding to be satisfied by withholding shares from the option exercise is limited to the minimum amount of taxes, excluding social security and medicare taxes, required to be withheld under federal, state and local law. Such election is irrevocable. Any social security and medicare taxes, any fractional share amount and any additional withholding not paid by the withholding or surrender of shares must be paid in cash. If no timely election is made, cash must be delivered to satisfy all tax withholding requirements. Optionees who are subject to Section 16 of the Securities Exchange Act of 1934 ("Insiders") making an election pursuant to (i) or (ii) of the immediately preceding paragraph must do so: (a) at least six months after the date of grant of the option or SAR; and (b) within a "window period" as defined in Rule 16b-3(e)(3) under the Securities Exchange Act of 1934. An election by an Insider to deliver stock or have stock retained to satisfy tax obligations is subject to the approval of the Committee and to such rules as the Committee may from time to Exhibit (10)(j) EXECUTIVE LONG-TERM INCENTIVE PLAN 1.0 Establishment 1.01 The Executive Long-Term Incentive Plan is effective January 1, 1994. Thereafter, it will continue from year to year, until the Board amends or terminates it. 2.0 Definitions 2.01 "Board" is the Board of Directors of Sprint Corporation. 2.02 "Committee" is the Organization and Compensation Committee of the Board. 2.03 "Company" is Sprint Corporation. 2.04 "Participant" is a Senior Officer designated by the Committee to participate in the Plan. 2.05 "Senior Officer" is an officer of the Company holding the office of Senior Vice President or higher. 3.0 Purpose 3.01 The Plan is intended to further the Company's long-term objectives by offering competitive incentive compensation to Senior Officers who make substantive contributions to those objectives. 4.0 Administration 4.01 The Committee will be responsible for the administration of the Plan. The Committee is authorized to interpret the Plan, to prescribe, amend, and rescind rules and regulations deemed advisable to protect the interests of the Company, and to make all other administrative determinations necessary. Any determination, interpretation or other action made or taken by the Committee pursuant to the Plan's provisions will be final for all purposes and upon all persons. 5.0 Performance Cycle 5.01 A performance cycle, established by the Committee, consists of at least two (2) consecutive calendar years, over which period the Company's performance is to be measured. 6.0 Performance Criteria 6.01 Prior to the beginning of each Performance Cycle, the Committee will determine the factors to be used for measuring performance. Such Committee determinations may vary for different Performance Cycles. 7.0 Adjustments 7.01 In the event of a restructuring charge, a change in a method of accounting, or a charge or writedown related to asset impairments, the Committee shall make adjustments to reflect the impact of the change on the Plan features or measurement areas. 7.02 In the event of a Corporate transaction, such as any merger, consolidation, distribution of stock or property, reorganization or partial or complete liquidation of the Company, the Committee shall make adjustments to reflect the impact of the Corporate transaction on the Plan features or measurement areas. 7.03 At the Committee's discretion, the payout for a participant may be decreased or eliminated. In determining whether to exercise its discretion pursuant to this paragraph, the Committee shall consider, among the other factors it deems appropriate, the level of incentive awards payable under plans offered by the Company which are similar to the Plan established hereunder. 8.0 Participation 8.01 For each Performance Cycle, the Committee will determine which Senior Officers will participate in the Plan. 8.02 Participation is limited to those positions (or individuals) approved by the Committee at the beginning of each performance period unless specified elsewhere in this Plan. Individuals may join or leave the Plan through transfer to a participating or non participating position throughout the Performance Cycle. In such cases, incentive opportunity and payouts will be prorated based on time served under the Plan. No employee will be eligible to receive a Plan payout without having served at least 24 months of the Performance Cycle. With Committee approval, individuals who have not served 24 months under this Plan but who have a total of 24 months under this Plan and/or any other Company or subsidiary long-term Plan during the cycle, may receive a prorated payout under this Plan. 9.0 Payment 9.01 The Committee will determine the incentive opportunity earned by each participant for any Performance Cycle. 9.02 The incentive opportunity earned based upon the achievement of the performance criteria will be adjusted by the percent increase or decrease in the market price of Sprint Corporation common stock as occurs over the Performance Cycle. 9.03 The Committee will certify that the performance criteria were met and approve the payment of each award made under the Plan. Payments will be made following the end of each Performance Cycle. 9.04 Award payments will be made to the participants as soon as practicable following the end of each Performance Cycle after the Committee certifies that the performance criteria were met and gives approval for payment. Unless otherwise determined by the Committee, payment shall be in the form of Sprint common stock, less the cash amount necessary to pay any taxes due based on the then current tax law. 10.0 Termination of Employment 10.01 If termination of employment occurs during a Performance Cycle by reason of death, disability (as determined under the company's long-term disability program), or normal retirement (as determined under the Company's retirement plan), the participant shall be entitled to prorated award based on Company performance as of the most recently completed fiscal year for any plan in which the participant has completed at least two thirds of the performance period. The Committee will determine the prorated award under the rules and regulations it establishes. The award will be paid when all other payments are made at the end of the cycle. If termination of employment occurs for reasons other than death, disability or normal retirement, all the participant's rights and interests under this Plan will be canceled and forfeited, unless determined otherwise by the Committee. 11.0 Non-Transferability 11.01 A participant's rights and interests under the Plan may not be sold, pledged, assigned or transferred in any manner other than by will or by the laws of descent and distribution except as provided by the Plan or specified by the Committee. 12.0 Tax Withholding 12.01 The Company shall have the right to deduct from all awards any taxes required by law to be withheld with respect to such awards. 13.0 Continuance of Employment 13.01 Nothing under this Plan nor any action taken because of the Plan will be construed as giving any employee any right to be retained in the Company's employ. 14.0 Amendment and Termination 14.01 The Board, at any time, may terminate, and at any time, and in any respect, may amend or modify, the Plan. 15.0 Legal Requirements 15.01 The designation of participation and any opportunity in the Plan, together with the award of the Plan payout will be subject to all applicable federal, state and local laws, rules and regulations. 15.02 The Plan, and all related provisions, shall be construed in accordance with and governed by the laws of the State of Kansas. Exhibit (10)(k) EXECUTIVE MANAGEMENT INCENTIVE PLAN 1.0 Establishment 1.01 The Executive Management Incentive Plan is effective January 1, 1994. Thereafter, it will continue from year to year, until the Board amends or terminates it. 2.0 Definitions 2.01 "Board" is the Board of Directors of Sprint Corporation. 2.02 "Committee" is the Organization and Compensation Committee of the Board. 2.03 "Company" is Sprint Corporation. 2.04 "Participant" is a Senior Officer designated by the Committee to participate in the Plan. 2.05 "Senior Officer" is an officer of the Company holding the office of Senior Vice President or higher. 3.0 Purpose 3.01 The plan is intended to further the Company's objectives by offering competitive incentive compensation to Senior Officers who make substantive contributions to those objectives. 4.0 Administration 4.01 The Committee will be responsible for the administration of the Plan. This Committee is authorized to interpret the Plan, to prescribe, amend, and rescind rules and regulations deemed advisable to protect the interests of the Company, and to make all other administrative determinations necessary. Any determination, interpretation or other action made or taken by the Committee pursuant to the Plan's provisions will be final for all purposes and upon all persons. 5.0 Performance Cycle 5.01 A Performance Cycle consists of a calendar year. Cash may be awarded to participants for each year the Committee approves a plan. 6.0 Performance Criteria 6.01 Prior to the beginning of each Performance Cycle, the Committee will determine the factors to be used for measuring performance. Such Committee determinations may vary from year to year. 7.0 Adjustments 7.01 In the event of a restructuring charge, a change in a method of accounting, or a charge or writedown related to asset impairments, the Committee shall make adjustments to reflect the impact of such items on the Plan features or measurement areas. 7.02 In the event of a Corporate transaction, such as any merger, consolidation, distribution of stock or property, reorganization or partial or complete liquidation of the Company, the Committee shall make adjustments to reflect the impact of the Corporate transaction on the Plan features or measurement areas. 7.03 At the Committee's discretion, the payout for a participant may be decreased or eliminated. In determining whether to exercise its discretion pursuant to this paragraph, the Committee shall consider, among the other factors it deems appropriate, the level of incentive awards payable under plans offered by the Company which are similar to the Plan established hereunder. 8.0 Participation 8.01 For each Performance Cycle, the Committee will determine which Senior Officers will participate in the Plan. 8.02 Senior Officers hired or promoted during a Performance Cycle into a position appropriate for participation in this Plan may either participate in the already existing Cycle on a prorated basis, or be held out until the beginning of the next Cycle. This determination will be made by the Committee. 9.0 Payment 9.01 The Committee will determine the incentive opportunity (or possible cash payment) earned by each participant for any Performance Cycle. 9.02 The Committee will certify that the performance criteria were met and approve the payment of each award made under the Plan. Payments will be made following the end of each Performance Cycle. This normally follows the Committee's February meeting. 10.0 Deferral 10.01 For each Performance Cycle, an eligible participant may elect, in writing, to voluntarily defer all or a portion of a potential payment. This will be consistent with the federal income tax code requirements to effectively defer income. The Committee and the Executive Deferred Compensation Plan will determine the terms of all deferrals. 11.0 Termination of Employment 11.01 If termination of employment occurs during a Performance Cycle by reason of death, disability (as determined under the Company's long-term disability program), or normal retirement (as determined under the Company's retirement plan), the Participant will be entitled to a prorated award based upon appropriate Performance Criteria. The Committee will determine the prorated award under the rules and regulations it establishes. The award will be paid when all other payments are made at the end of the cycle. Should a Senior Officer terminate to immediately become employed by an affiliated organization, a prorata payment may also be extended. If termination of employment occurs for reasons other than death, disability, normal retirement or transfer, all the Participant's interests and rights in this Plan will be forfeited, unless otherwise determined by the Committee. 12.0 Non-Transferability 12.01 A participant's rights and interests under the Plan may not be sold, pledged, assigned or transferred in any manner other than by will or by the laws of descent and distribution except as provided by the Plan or specified by the Committee. 13.0 Tax Withholding 13.01 The Company retains the right to deduct from all awards paid in cash any taxes required by law to be withheld with respect to cash awards. 14.0 Continuance of Employment 14.01 Nothing under the Plan nor any action taken because of Plan will be construed as giving any employee any right to be retained in the Company's employ. 15.0 Amendment and Termination 15.01 The Board, at any time may terminate, and at any time and in any respect may amend or modify the Plan. 16.0 Legal Requirements 16.01 The designation of participation and any opportunity in the Plan, together with the payment of cash, will be subject to all applicable federal, state and local laws, rules and regulations. 16.02 The Plan and all related provisions will be construed in accordance with and governed by the laws of the State of Kansas. Attachment B EXECUTIVE LONG-TERM INCENTIVE PLAN 1.0 Establishment 1.01 The Executive Long-Term Incentive Plan is effective January 1, 1994. Thereafter, it will continue from year to year, until the Board amends or terminates it. 2.0 Definitions 2.01 "Board" is the Board of Directors of Sprint Corporation. 2.02 "Committee" is the Organization and Compensation Committee of the Board. 2.03 "Company" is Sprint Corporation. 2.04 "Participant" is a Senior Officer designated by the Committee to participate in the Plan. 2.05 "Senior Officer" is an officer of the Company holding the office of Senior Vice President or higher. 3.0 Purpose 3.01 The Plan is intended to further the Company's long-term objectives by offering competitive incentive compensation to Senior Officers who make substantive contributions to those objectives. 4.0 Administration 4.01 The Committee will be responsible for the administration of the Plan. The Committee is authorized to interpret the Plan, to prescribe, amend, and rescind rules and regulations deemed advisable to protect the interests of the Company, and to make all other administrative determinations necessary. Any determination, interpretation or other action made or taken by the Committee pursuant to the Plan's provisions will be final for all purposes and upon all persons. 5.0 Performance Cycle 5.01 A performance cycle, established by the Committee, consists of at least two (2) consecutive calendar years, over which period the Company's performance is to be measured. 6.0 Performance Criteria 6.01 Prior to the beginning of each Performance Cycle, the Committee will determine the factors to be used for measuring performance. Such Committee determinations may vary for different Performance Cycles. 7.0 Adjustments 7.01 In the event of a restructuring charge, a change in a method of accounting, or a charge or writedown related to asset impairments, the Committee shall make adjustments to reflect the impact of the change on the Plan features or measurement areas. 7.02 In the event of a Corporate transaction, such as any merger, consolidation, distribution of stock or property, reorganization or partial or complete liquidation of the Company, the Committee shall make adjustments to reflect the impact of the Corporate transaction on the Plan features or measurement areas. 7.03 At the Committee's discretion, the payout for a participant may be decreased or eliminated. In determining whether to exercise its discretion pursuant to this paragraph, the Committee shall consider, among the other factors it deems appropriate, the level of incentive awards payable under plans offered by the Company which are similar to the Plan established hereunder. 8.0 Participation 8.01 For each Performance Cycle, the Committee will determine which Senior Officers will participate in the Plan. 8.02 Participation is limited to those positions (or individuals) approved by the Committee at the beginning of each performance period unless specified elsewhere in this Plan. Individuals may join or leave the Plan through transfer to a participating or non participating position throughout the Performance Cycle. In such cases, incentive opportunity and payouts will be prorated based on time served under the Plan. No employee will be eligible to receive a Plan payout without having served at least 24 months of the Performance Cycle. With Committee approval, individuals who have not served 24 months under this Plan but who have a total of 24 months under this Plan and/or any other Company or subsidiary long-term Plan during the cycle, may receive a prorated payout under this Plan. 9.0 Payment 9.01 The Committee will determine the incentive opportunity earned by each participant for any Performance Cycle. 9.02 The incentive opportunity earned based upon the achievement of the performance criteria will be adjusted by the percent increase or decrease in the market price of Sprint Corporation common stock as occurs over the Performance Cycle. 9.03 The Committee will certify that the performance criteria were met and approve the payment of each award made under the Plan. Payments will be made following the end of each Performance Cycle. 9.04 Award payments will be made to the participants as soon as practicable following the end of each Performance Cycle after the Committee certifies that the performance criteria were met and gives approval for payment. Unless otherwise determined by the Committee, payment shall be in the form of Sprint common stock, less the cash amount necessary to pay any taxes due based on the then current tax law. 10.0 Termination of Employment 10.01 If termination of employment occurs during a Performance Cycle by reason of death, disability (as determined under the company's long-term disability program), or normal retirement (as determined under the Company's retirement plan), the participant shall be entitled to prorated award based on Company performance as of the most recently completed fiscal year for any plan in which the participant has completed at least two thirds of the performance period. The Committee will determine the prorated award under the rules and regulations it establishes. The award will be paid when all other payments are made at the end of the cycle. If termination of employment occurs for reasons other than death, disability or normal retirement, all the participant's rights and interests under this Plan will be canceled and forfeited, unless determined otherwise by the Committee. 11.0 Non-Transferability 11.01 A participant's rights and interests under the Plan may not be sold, pledged, assigned or transferred in any manner other than by will or by the laws of descent and distribution except as provided by the Plan or specified by the Committee. 12.0 Tax Withholding 12.01 The Company shall have the right to deduct from all awards any taxes required by law to be withheld with respect to such awards. 13.0 Continuance of Employment 13.01 Nothing under this Plan nor any action taken because of the Plan will be construed as giving any employee any right to be retained in the Company's employ. 14.0 Amendment and Termination 14.01 The Board, at any time, may terminate, and at any time, and in any respect, may amend or modify, the Plan. 15.0 Legal Requirements 15.01 The designation of participation and any opportunity in the Plan, together with the award of the Plan payout will be subject to all applicable federal, state and local laws, rules and regulations. 15.02 The Plan, and all related provisions, shall be construed in accordance with and governed by the laws of the State of Kansas. Exhibit (10)(o) SPRINT CORPORATION KEY MANAGEMENT BENEFIT PLAN This Plan has been established for the benefit of certain key executives of Sprint Corporation and its subsidiaries, in order to retain their services and encourage them to continue the increasing profitability of the Company. Section 1. Definitions The following terms shall have the meaning set forth below: (a) "Base Salary" means the highest annual salary of a Participant during the last five years immediately preceding the participant's death or retirement, as applicable. "Base Salary" shall include amounts deferred under the Sprint Retirement Savings Plan and the Sprint Executive Deferred Compensation Plan, but shall not include incentive payments, bonuses, supplemental unemployment benefits, contributions to any profit sharing or other qualified plan, reimbursements of moving expenses or other expenses, or disability payments. The Compensation Committee shall determine whether a particular item of income constitutes Base Salary if a question arises. (b) "Beneficiary" means the person or persons entitled under Section 5 to receive a Survivor Benefit after a Participant's death. (c) "Company" means Sprint Corporation. (d) "Compensation Committee" means the Organization and Compensation Committee of the Company's Board of Directors. (e) "Key Executive" means a key employee of Company or its subsidiaries so designated by the Chief Executive Officer of the Company. (f) "Participant" means a present or former Key Executive on whose account a Survivor Benefit will be payable under Section 3. (g) "Participation Agreement" means a written agreement, together with a form of Benefit Election, in form and substance satisfactory to the Company, by which a Participant in the Plan agrees to retire from employment with the Company or subsidiary no later than the month following the date on which the Participant attains age 65. (h) "Plan" means this Key Management Benefit Plan as amended from time to time. (i) "Survivor Benefit" means a benefit payable under Section 3 of this Plan. Section 2. Participation The Chief Executive Officer of the Company, with the approval of the Compensation Committee, shall designate from time to time the Key Executives who may become Participants in this Plan. A Key Executive shall become a Participant in the Plan only after signing a Participation Agreement. A Beneficiary shall be eligible for benefits only as hereinafter provided. Section 3. Survivor Benefit (a) If a Participant's employment with Company or subsidiary end because of his death while he is a Key Executive, his Beneficiary shall receive an annual Survivor Benefit equal to 25% of the Participant's Base Salary. This annual benefit shall be payable for a period of 10 years. (b) If a Participant (i) remains a Key Executive until age 60, and retires or terminates employment no later than the month after the date on which the Participant attains age 65, or (ii) becomes disabled and qualifies for long-term disability benefits under the Company's Long-Term Disability Insurance Plan, or (iii) elects to retire before age 65 and qualifies to receive early retirement benefits under the Company's pension plan, then his Beneficiary shall receive upon his death a Survivor Benefit equal to 300% of the Participant's Base Salary; provided, the Survivor Benefit for a Participant electing early retirement under (iii) above shall be reduced 10% per year of attained age prior to age 60, e.g., to 270% of Base Salary for retirement at age 59, and to 150% of Base Salary for retirement at age 55. This Survivor Benefit shall be paid in the manner provided in Section 4(b) and/or Section 4(c). (c) If a Participant does not satisfy the conditions of Section 3(a) or 3(b), no Survivor Benefit shall be payable on his account. Section 4. Payment of Survivor Benefit (a) The Survivor Benefit under Section 3(a) shall be payable in equal annual installments, commencing on the first day of the second month following the Participant's death. (b) The Survivor Benefit described in Section 3(b) shall normally be paid in a lump sum. However, a Participant may elect in the Participation Agreement an installment method of payment and the period of such payments, provided that in all events the Survivor Benefit shall be payable over a period of not less than 2 years but not more than 20 years. If a Participant elects to have the Survivor Benefit pay in installments, the actuaries then servicing the Company shall determine the present value using an assumed interest rate of 6 1/2% of the payment method so elected, and the amount of the Survivor Benefit shall be revised accordingly, so that the value of the Survivor Benefit, determined at the time of the Participant's death, is the same as if the Beneficiary received a lump sum. (c) A Participant, with the consent of the Company, may elect, prior to attaining age 60 and at least 13 months prior to retirement, to receive the Survivor Benefit described in Section 3(b) in the form of a supplemental retirement benefit. A Participant may elect in the Participation Agreement to receive, upon satisfying the requirement of clause (i) or (iii) of Section 3(b), the Survivor Benefit in the form of a supplemental retirement benefit. The Company may determine to pay a disabled Participant's Survivor Benefit in the form of a supplemental retirement benefit within 60 days of the commencement of the Participant's disability. Such determination shall be final and conclusive on all parties. The Participant may elect in the Participation Agreement to receive the supplemental retirement benefit either (i) in a lump sum, (ii) in annual installments over a period not to exceed 30 years, or (iii) in the form of a single life annuity, or (iv) in any combination of the forms set forth in Section 4(c)(i)-(iii) (to be elected as a percentage of the total benefit). The actuaries then servicing the Company shall determine the present value using an assumed interest rate of 6 1/2% of the payment method elected by the Participant, and the amount of the Survivor Benefit shall be revised accordingly, so that the value of the supplemental retirement benefit determined at the time of the Participant's retirement, is the same as if the Participant received the Survivor Benefit in a lump sum. (d) If a Participant fails to make the election described in Section 4(c) in the Participation Agreement, the Survivor Benefit shall be paid as provided in Section 4(b). Section 5. Beneficiaries (a) A Participant may designate one or more Beneficiaries to receive a Survivor Benefit payable under this Plan. Beneficiaries shall be designated only upon forms made available by or satisfactory to the Company, and filed by the Participant with the Company, as the Company may require. (b) At any time prior to his death, a Participant may change his Designation of Beneficiary by filing a substitute Designation of Beneficiary with the Company in accordance with Section 5(a) above. (c) In the absence of an effective Designation of Beneficiary, or if all persons so designated shall have predeceased the Participant or shall have died before the Survivor Benefit shall have been fully distributed, the balance of the Survivor Benefit shall be paid to the Participant's surviving spouse or, if none, to the Participant's issue per stirpes or, if no issue to the executor or administrator of the Participant's estate. (d) If a Survivor Benefit is payable to a minor or person declared incompetent or to a person incapable of handling the disposition of his property, the Company may pay such Survivor Benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Company may require proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the Survivor Benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit. Section 6. Unfunded Plan (a) Benefits to be provided under this Plan are unfunded obligations of the Company. Nothing contained in this Plan shall require the Company to segregate any monies from its general funds, to create any trust, to make any special deposits, or to purchase any policies of insurance with respect to such obligations. If the Company elects to purchase individual policies of insurance on one or more of the Participants to help finance its obligations under this Plan, such individual policies and the proceeds therefrom shall at all times remain the sole property of the Company and neither the Participants whose lives are insured nor their Beneficiaries shall have any ownership rights in such policies of insurance. (b) No Participant shall be required or permitted to make contributions to this Plan. Section 7. Plan Administration (a) The Company through its Compensation Committee, shall be the Plan Administrator of this Plan and shall be solely responsible for its general administration and interpretation and for carrying out the respective provisions hereof, and shall have all such powers as may be necessary to do so. The Company may from time to time establish rules for the administration of this Plan and the transaction of its business. Any action by the Company shall be final, conclusive and binding on each Participant and all persons claiming by, through or under any Participant, unless a written appeal is received by the Company within 60 days of the disputed action. The appeal will be reviewed by the Compensation Committee and the decision of the Compensation Committee shall be final, conclusive and binding on the Participant and on all persons claiming by, through or under the Participant. (b) The Company may employ or engage such agents, accountants, actuaries, counsel, other experts and other persons as it shall deem necessary or desirable in connection with the interpretation and administration of this Plan. The Company shall be entitled to rely upon all certificates made by an accountant or actuary selected by Company. The Company and its committees, officers, directors and employees shall not be liable for any action taken, suffered or omitted by them in good faith in reliance upon the advice or opinion of any counsel, accountant, actuary or other expert and all action so taken, suffered or omitted shall be conclusive upon each of them and upon all other persons interested in this Plan. (c) The Company may require proof of the death of any Participant and evidence of the right of any person to receive any Survivor Benefit. (d) Claims under this Plan shall be filed with the Company on its prescribed forms. (e) The Company shall withhold from benefits paid under this Plan any taxes or other amounts required to be withheld by law. Section 8. Miscellaneous (a) No Survivor Benefit shall be subject in any manner to alienation, sale, transfer, assignment, pledge or encumbrance of any kind. Any attempt to alienate, sell, transfer, assign, pledge, or otherwise encumber any Survivor Benefit, whether presently or hereafter payable, shall be void. Except as required by law, no Survivor Benefit payable under this Plan shall in any manner be subject to garnishment, attachment, execution, or other legal process, or be liable for or subject to the debts or liability of any Participant or Beneficiary. (b) Notwithstanding any Plan provision to the contrary, the Board of Directors of the Company shall have the right to amend, modify, suspend, or terminate this Plan at any time. No amendment, suspension or termination shall adversely affect the right of a Participant or Beneficiary to receive a benefit payable as the result of the death, termination of employment, retirement or disability of a Participant which occurred prior to the effective date of such amendment, suspension or termination. (c) Nothing contained in this Plan shall be construed as a contract of employment between any Participant and the Company or to suggest or create a right in any Participant to be continued in employment as a Key Executive or other employee of the Company. (d) The Company may impose such other lawful terms and conditions on participation in this Plan as deemed desirable. (e) 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. (f) This Plan shall become effective as of March 1, 1985. Exhibit (10)(v) CENTEL CORPORATION CENTEL MANAGEMENT INCENTIVE PLAN 1. Purpose of Plan. The purpose of the Centel Management Incentive Plan is to: (a) reward outstanding performance by individuals who make significant contributions to Company and profit center results; (b) reinforce effective teamwork and individual efforts toward the Company's stated goals; (c) provide an incentive opportunity incorporating an appropriate level of risk that will enable the Company to attract and retain outstanding executives and managers; and (d) provide management with the opportunity to acquire a greater stake in the future of the Company through stock ownership. 2. Definitions. The following words and phrases have the respective meanings indicated below unless a different meaning is plainly implied by the context. (a) "Administrative Committee" means the Employee Benefits Committee of Sprint. (b) "award" or "incentive award" or "original incentive award" means the amount approved by the Board Committee to be paid in the form of cash to an eligible employee pursuant to this Plan. (c) "Board Committee" means the Organization and Compensation Committee of the Board of Directors of Sprint. (d) "business group" means each of the major lines of business in which the Company operates (i.e. telephone, cellular, etc.). A business group is also considered a profit center relative to the business group staff. (e) "business group staff" means the group of individuals with discrete functional responsibilities who are not associated with any specific profit center but who service an entire business group. (f) "Common Stock" or "stock" or "shares" means shares of common stock of Sprint. Notwithstanding any other provision of this Plan, the aggregate number of shares of Common Stock which may be distributed pursuant to this Plan shall not exceed 120,000 shares, as may be adjusted from time to time in accordance with Section 13. (g) "Company" means Centel Corporation, a Kansas corporation, and its successors. (h) "corporate staff" means the groups of individuals with discrete functional responsibilities who are not associated with any specific business group or profit center but who service the entire Company. (i) "date of award" means the date on which incentive awards are approved by the Board Committee. (j) "eligible employee" means any full time management employee of the Company or of a subsidiary of Centel who is in a position designated as eligible to receive an incentive award under this Plan. (k) "Exchange Act" means the Securities Exchange Act of 1934, as amended. References to a particular section of, or rule under, the Exchange Act shall include references to successor provisions. (l) "Insider" means any eligible employee who is subject to Section 16 of the Securities Exchange Act of 1934 with respect to the equity securities of Sprint. (m) "market value" of Common Stock on any date means the closing price of the Common Stock on that date on the New York Stock Exchange Composite Transactions List, as subsequently reported in The Wall Street Journal, or if no sale of the Common Stock shall have been made on that date, such closing price on the next preceding date on which there was a sale. (n) "participant" means any person who has received an incentive award pursuant to this Plan. (o) "Plan" means the plan set forth in this Centel Management Incentive Plan, as it may be amended from time to time, and known as the "Centel Management Incentive Plan". (p) "profit center" means an organization or group of organizations with a discrete profit and loss responsibility. (q) "SEC" means the Securities and Exchange Commission. (r) "Sprint" means Sprint Corporation, a Kansas corporation, and its successors. (s) "subsidiary" means any corporation of which fifty percent or more of the voting stock is owned, directly or indirectly, by the Company or Sprint. (t) "target incentive award" means the amount that may be paid to a participant if financial and individual goals are met in a given plan year. 3. Administration of Plan. (a) This Plan shall be administered by the Board Committee. (b) The Board Committee shall have sole authority and discretion, consistent with the provisions of this Plan, to: (1) approve management positions eligible to participate in the Plan; (2) approve at the beginning of each year the performance measures and target amounts for each business group and the Company as a whole as well as the weighting of each of the measures, the payout range, and leveraging, if any, to be used in calculating the incentive awards; (3) determine and approve the original incentive awards; and (4) make all decisions concerning which Insiders are to become participants, and the timing, pricing, and amount of awards to Insiders under the Plan. (c) The Board Committee shall have full authority and discretion to adopt rules and regulations to carry out the purposes and provisions of this Plan. The Board Committee's interpretation and construction of any provision of this Plan shall be binding and conclusive, unless otherwise determined by the Board of Directors. 4. Administrative Committee. (a) The Administrative Committee shall: (1) construe this Plan (subject to Board Committee interpretations) and make equitable adjustments for any mistakes, omissions, or errors made in the administration of this Plan; (2) adopt such rules and regulations and prescribe or approve the forms as may be deemed reasonably necessary for the proper and efficient administration of this Plan consistent with its purposes; (3) enforce this Plan in accordance with its terms and with the rules and regulations adopted for the Plan; and (4) do all other acts which in the Administrative Committee's reasonable judgment are necessary or desirable for the proper and advantageous administration of this Plan consistent with its purposes. (b) The Administrative Committee shall have authority to delegate any or all of its duties to the Benefit Administrative Committee of Sprint. (c) The Administrative Committee will make decisions according to a majority vote and maintain a written record of its decisions and actions, but no member of the Administrative Committee shall act on any matter that has particular reference to such member's own interest under this Plan. (d) All decisions and actions of the Administrative Committee shall be binding and conclusive, unless otherwise determined by the Board Committee. 5. Overview of Plan Operation. (a) Based on the achievement of performance measures which are approved at the beginning of each plan year, the percentage achievement of target will be calculated. (b) The head of each profit center, business group staff or corporate staff group will recommend individual incentive awards for each eligible employee based on the achievement of individual objectives and management performance. (c) All incentive awards are subject to the approval of the Board Committee. (d) No original incentive awards will be awarded for calendar years after 1993. 6. Establishment of Target Incentive Awards. (a) The Board Committee shall, in its sole discretion, determine and approve all target incentive awards for Insiders. The CEO will determine the target incentive award for the other members of the Administrative Committee and other eligible employees in executive positions (other than Insiders) with the approval of the Board Committee. (b) Target incentive awards for all other eligible employees will be established according to current salary planning practice and will be approved by the CEO. (c) Target incentive awards will be adjusted as eligible employees move in and out of individual profit centers, business group staffs or corporate staff groups or as individuals are assigned to positions with different target incentive awards within those groups. Generally, the following conventions will apply as these changes occur (when an individual becomes an eligible employee on or through the fifteenth day of the month, the months will be calculated as of the first of that month; when an individual becomes an eligible employee after the fifteenth day of the month, the months will be calculated as of the first of the following month): (1) individuals who are eligible employees will have their target incentive award prorated proportionately by the number of full calendar months they were an eligible employee (i.e. a promotion effective 4/16/XX would qualify that individual to be considered for 8/12 of his or her target incentive award for that year; a promotion effective 9/15/XX would qualify that individual to be considered for 4/12 of his or her target incentive award for that year). (2) individuals who are assigned to a different award eligible position will have target incentive awards in each position prorated based on the number of months in each position consistent with the conventions outlined in this Section. 7. Establishment of Goals. (a) Individual goals will be determined by the eligible employee and his or her immediate supervisor. (b) Performance measures will be established annually at both the consolidated and business group levels. These measures will be approved by the Board Committee. Specific target amounts for each business unit and the Company as a whole will also be approved by the Board Committee. (c) The Board Committee may, at any time prior to the approval of the incentive awards, approve a change to the target amounts for the performance measures if, in its judgment, such a change is desirable in the interests of equitable treatment of the participants and the Company as a result of extraordinary or non-recurring events, changes in applicable accounting rules or principles, changes in the Company's method of accounting, changes in applicable law, changes due to consolidation, acquisitions, divestitures, reorganization, stock split or stock dividends, combination of shares or other changes in the Company structure or shares, major changes in business strategy, or any other change of a similar nature to any of the foregoing. 8. Determining Incentive Awards. (a) The achievement of each performance measure will stand independently and the weighting, payout range and leveraging, if any, will be established for each business group and the Company as a whole and will be approved by the Board Committee. (b) The Board Committee will review business group operational summary reports along with the performance of the profit centers, business groups and the Company as a whole and determine the percentage of the target incentive awards to be awarded to participants in each business group and corporate staff group. This determination will be based on consolidated financial results and the extent to which profit centers and business groups met their financial goals. (c) The Board Committee reserves the right to give special consideration to individual profit centers or business groups if appropriate. (d) The Board Committee is authorized to make adjustments for unusual or extraordinary circumstances which in its sole judgment are appropriate to the purposes of the Plan. 9. Determining Individual Incentive Awards. (a) Each eligible employee's immediate supervisor will, through lines of organization, recommend the level of award to be paid to such eligible employee. This recommendation will be based on financial performance and the supervisor's judgment of the eligible employee's achievement of his or her individual goals and contribution to the profit center or business group performance. An eligible employee's recommended award may exceed his or her individual target incentive award. (b) The Board Committee will determine and approve all incentive awards. The Board Committee may, at its sole discretion, raise or lower the recommended incentive award of any eligible employee on the basis of the difficulty of the eligible employee's incentive goals, changes in circumstances or priorities during the year, or any other factors it deems relevant. 10. Payment of Incentive Awards. (a) Incentive awards will be paid before the close of the first quarter, if practical, following the year to which the award relates. (b) The original incentive awards for calendar year 1993 will be paid exclusively in cash. (c) Certain participants received all or a portion of their award for 1992 in shares of Common Stock (the "original incentive shares") and received a matching incentive award of shares of Common Stock. To encourage retaining the original incentive shares as an investment, Sprint will, twelve (12) months after issuance of such shares, provide as "retention shares" a number of shares of Common Stock equal to twenty-five percent (25%) of the number of original incentive shares (the award of such retention shares to be known as a "retention incentive award") if the following conditions are met: (1) the participant is still an employee of Sprint or one of its subsidiaries at the end of the twelve month period; and, (2) the participant has not disposed of the original incentive shares through the end of the twelve month period. The original shares must be registered exactly the same way they were registered at the time of issuance unless a new registration is called for by circumstances beyond the control of the participant. In the event that twenty-five percent of the number of original incentive shares is not a whole number, the participant will receive cash in lieu of a fractional share of Common Stock based on the market value of the fractional share of Common Stock on the date that is twelve months after the date of issuance of the original incentive shares. (d) (i) "Six Month Advance Election" means an election made by an Insider to receive an award in the form of stock which (A) becomes effective six months after the date on which such Six Month Advance Election was made, and (B) may be revoked only by making a new Six Month Advance Election. The new Six Month Advance Election may, in turn, be revoked in accordance with this clause (i). (ii) Once a Six Month Advance Election has become effective with respect to an original incentive award or matching incentive award or a Tax Withholding Election (as defined in paragraph (f) of this Section 10), such Six Month Advance Election shall remain effective with respect to all subsequent original incentive awards, matching incentive awards or Tax Withholding Elections, as the case may be, until such Election is revoked in accordance with clause (i) of this paragraph (d). (e) Except where a Tax Withholding Election has been made by an Insider, the federal, state and local income tax withholding and other tax obligations associated with receipt of any retention incentive award will be deducted from the original incentive award of such participant for calendar year 1993, provided that the original incentive award is sufficient to cover all such taxes as well as taxes associated with receipt of the original incentive award; otherwise, Sprint shall retain from the retention shares a sufficient number of shares of Common Stock, valued at the market value of the Common Stock on the date that is twelve months after the date of issuance of the original incentive shares, to satisfy the taxes associated with receipt of the retention shares. (f) A participant who is an Insider may elect to authorize Sprint to retain from the retention shares otherwise to be distributed whole shares of Common Stock to satisfy federal, state and local income tax withholding and FICA obligations associated with receipt of any retention incentive award of such Insider (such election, a "Tax Withholding Election") provided that: (i) such election becomes effective during the period beginning on the third business day following the date of release of quarterly or annual financial data specified in SEC Rule 16b-3(e)(1)(ii) and ending on the twelfth business day following such date (such period, a "Quarterly Window Period" and such election, a "Quarterly Window Period Election") and is subject to the approval of the Board Committee in its sole discretion (a "Quarterly Window Period Election"); or (ii) such election is a Six Month Advance Election. (g) A Quarterly Window Period Election made pursuant to paragraph (f) of this Section 10: (i) becomes effective when made, if made during a Quarterly Window Period, or as of the first day of the next Quarterly Window Period, if not made during a Quarterly Window Period. (ii) may be revoked by making a new Quarterly Window Period Election which (A) changes the previous Quarterly Window Period Election, and (B) becomes effective (in accordance with clause (i) of this paragraph (g) before the date on which the retention shares are to be distributed. (iii) once it has become effective, it shall remain in effect with respect to all subsequent tax withholding until revoked in accordance with clause (ii) of this paragraph (g). 11. Limitation on Vested Interest. The earning of incentive awards by eligible employees under this Plan is within the sole discretion of the Company in accordance with the terms of this Plan, and no eligible employee, participant or other person has any legal right to or vested interest in an incentive award under this Plan prior to the actual payment to the eligible employee of an incentive award. 12. Indemnification of Committee Members. In addition to such other rights of indemnification as any person may have as a director, officer or member of the Board Committee, Administrative Committee or the Benefit Administrative Committee, each member of the Committees shall be indemnified by the Company against the reasonable expenses, including attorney's fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which such person may be a party by reason of any action taken or failure to act under or in connection with this Plan, and against all amounts paid by such person in settlement thereof (provided such settlement is approved by legal counsel selected or approved by the Company), or paid by such person in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding, that such Committee member is liable for gross misconduct; provided that within sixty (60) days after the institution of such action, suit or proceeding, such Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same. 13. Adjustment in Number of Shares. In the event of any subdivision or combination of the outstanding shares of Sprint by reclassification or otherwise, or in the event of the payment of a stock dividend, a capital reorganization, a reclassification of shares, a consolidation or merger, or the sale, lease or conveyance of substantially all the assets of Sprint, the Board Committee shall make appropriate and equitable adjustments in the number and kind of shares with respect to all undistributed retention shares. Any such adjustment made by the Board Committee shall be final and binding upon all participants, the Company, Sprint, and all other interested persons. 14. Compliance with Rule 16b-3. The intent of this Plan is to qualify for the exemption provided by Rule 16b-3 of the Exchange Act. To the extent any provision of the Plan does not comply with the requirements of Rule 16b- 3, it shall be deemed inoperative and shall not affect the validity of the Plan. In the event Rule 16b-3 is revised or replaced, the Board Committee may exercise discretion to modify this Plan in any respect necessary to satisfy the requirements of the revised exemption or its replacement. 15. Non-transferability. No right awarded hereunder is assignable or transferable other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986, as amended. 16. Amendment and Discontinuance. The Board of Directors of the Company may alter, suspend or terminate this Plan. Any such alteration or amendment of this Plan shall be subject to the approval of the Company's shareholders to the extent required by SEC Rule 16b-3 under the Exchange Act or by the listing requirements of any national securities exchange upon which the Common Stock is listed. Exhibit (10)(w) CENTEL CORPORATION CENTEL STOCK OPTION PLAN 1. Purpose of Plan. The purpose of the Centel Stock Option Plan (the Plan) is to promote the long-term financial interests of the Company and its subsidiaries by: (a) providing an incentive for key management employees to maximize the long-term value of Centel Common Stock and otherwise act in the best interest of Centel shareowners; (b) providing management with the opportunity to acquire a greater stake in the future of the Company and its subsidiaries through stock ownership; (c) attracting, retaining and rewarding highly qualified executives and managers who will contribute in exceptional ways to the long-term financial success of the Company and its subsidiaries; and (d) tying compensation of key management employees more closely with the performance of Common Stock. 2. Definitions. The following words and phrases have the respective meanings indicated below unless a different meaning is plainly implied by the context. (a) "Administrative Committee" means a committee of management employees which, pursuant to Section 4, has been appointed by the Board Committee and authorized to assume designated responsibilities and perform designated functions. (b) "award" means the grant of stock options or stock appreciation rights (SARs) to an eligible employee pursuant to this Plan. (c) "Board Committee" means the Organization and Compensation Committee of the Board of Directors of Sprint. (d) "Common Stock" or "stock," or "shares" means shares of common stock of Sprint. (e) "Company" means Centel Corporation, a Kansas corporation and its successors. (f) "date of award" means the date designated by the Board Committee for the award of stock options or SARs which have been approved by the Board Committee to be awarded pursuant to this Plan. (g) "eligible employee" means any management employee of the Company or of a subsidiary of Sprint who is designated by the Board Committee as a key employee eligible to receive an award of options or SARs under this Plan. (h) "Exchange Act" means the Securities Exchange Act of 1934. References to a particular section or, or rule under, the Exchange Act shall include references to successor provisions. (i) "Insider" means any participant who is subject to Section 16 of the Exchange Act with respect to the equity securities of Sprint. (j) "letter of agreement" means a letter from the Board Committee, or from the Administrative Committee or Administrative Committee member acting on behalf of the Board Committee, to an employee, indicating that the employee is a participant in the Centel Stock Option Plan, the number of shares subject to option or SAR to be granted to the participant, the option price, the date or dates when such option or SAR may be exercised, and other provisions consistent with the Plan. (k) "market value" of Common Stock on any date means the closing price of the Common Stock on that date on the New York Stock Exchange Composite Transactions list, as subsequently reported in The Wall Street Journal, or, if no sale of the Common Stock shall have been made on that date, such closing price on the next preceding date on which there was a sale. (l) "Non-Insider" means any participant who is not an Insider. (m) "participant" means any person who has been awarded options or SARs pursuant to this Plan. (n) "Plan" means the plan set forth in this Centel Stock Option Plan, as it may be amended from time to time, and known as the "Centel Stock Option Plan." (o) "retirement" means cessation of employment with the Company, Sprint and all subsidiaries after a participant has attained age fifty-five under circumstances that would result in the participant having a vested interest under the Centel Retirement Benefit Plan or successor Sprint plan if the participant were a participant in that plan. "normal retirement" means retirement after a participant has attained age sixty-five; "early retirement" means retirement before a participant has attained age sixty-five. (p) "SEC" means the Securities and Exchange Commission. (q) "Sprint" means Sprint Corporation, a Kansas corporation, and its successors. (r) "stock appreciation right" or "SAR" is a right granted to a participant to receive a payment in cash or in shares of Common Stock or in a combination of cash and shares equal in value to the increase in the market value of the Common Stock from the date of grant of such SAR to the date of exercise with respect to the shares represented by such SAR. The election to receive either cash or shares, or a combination of cash and shares, is made by the participant. (s) "stock option" or "option" is a right granted to a participant to purchase a designated number of shares of Common Stock at a stated price for a stated period of time. The participant may exercise that right according to Section 8 of the Plan as to all or a portion of the shares at a specified time or times. Stock options granted under this Plan are not intended to qualify as incentive stock options under Internal Revenue Code Section 422A. (t) "subsidiary" means any corporation fifty percent or more of the voting stock of which is owned, directly or indirectly, by the Company or Sprint. (u) "tandem grant" means an option and an SAR granted in combination such that both cover the same shares. Either the option or the SAR may be exercised for all or any portion of the shares. By exercising the option for a given number of shares, the right to exercise the tandem SAR for that number of shares is canceled and vice-versa. (v) "total disability" of a participant means the participant would be eligible to receive disability benefits under the Centel Corporation Group Welfare Plan or similar Sprint plan if the participant were a participant in that plan. 3. Administration of Plan. (a) This Plan shall be administered by the Board Committee. (b) The Board Committee shall have full authority and discretion to adopt rules and regulations and prescribe or approve the forms to carry out the purposes and provisions of this Plan. The Board Committee's interpretation and construction of any provision of this Plan or any option or SAR granted hereunder shall be binding and conclusive, unless otherwise determined by the Board. 4. Appointment of Administrative Committee. (a) The Board Committee may appoint an Administrative Committee to: (1) construe this Plan and make equitable adjustments for any mistakes, omissions, or errors made in the administration of this Plan; (2) adopt such rules and regulations as may be deemed reasonably necessary for the proper and efficient administration of this Plan consistent with its purposes; (3) enforce this Plan in accordance with its terms and with the rules and regulations adopted for the Plan; and (4) do all other acts which in the Administrative Committee's reasonable judgment are necessary or desirable for the proper and advantageous administration of this Plan consistent with the Plan's purposes. (b) No member of the Administrative Committee who is a participant in the Plan shall act on any matter that has particular reference to such member's own interest under this Plan. 5. Eligibility. The Board Committee shall from time to time determine the key management employees of the Company (including officers and directors of the Company who are also employees) and subsidiaries who shall be participants in this Plan. 6. Shares Subject to Plan. Subject to adjustment as provided in Section 21, the aggregate number of shares subject to options or SARs granted by the Board Committee under this Plan shall be less than 2,534,450 shares of Common Stock of Sprint, par value $2.50 per share (the shares), which may be treasury shares reacquired by Sprint or authorized and unissued shares, or a combination of both. 7. Option Price. The option price per share under each option granted by the Board Committee shall be not less than 100% of the market value per share on the date an option is granted, but in no event shall the option price be less than the par value per share. 8. Exercise of Options. (a) Terms. Each option granted under this Plan shall be exercisable on the dates and for the number of shares as shall be provided in a letter of agreement between the Company and the participant evidencing the option granted by the Board Committee and the terms thereof. However, subject to Sections 13, 14, 15, 16, and 17, no option shall become exercisable until six months after its date of award. (b) Exercise and Payment of Exercise Price. Shares shall be issued to the participant pursuant to the exercise of an option only upon receipt by Sprint from the participant of written notice of exercise, specifying the number of shares with respect to which the option is being exercised, accompanied by payment in full either in cash or by a single exchange of shares of Common Stock of Sprint previously owned by the optionee, or a combination of both, in an amount or having a combined value equal to the aggregate purchase price for the shares subject to the option or portion thereof being exercised. The value of the previously owned shares of Common Stock exchanged in full or partial payment for the shares purchased upon the exercise of an option shall be equal to the aggregate market value, as defined in Section 2, of such shares on the date of the exercise of such option. Previously owned shares acquired via prior exercise of a stock option granted under this Plan shall not be accepted in full or partial payment for shares purchased upon the exercise of an option unless such previously owned shares have been held by the participant for at least six months subsequent to such prior exercise. (c) Effect on Tandem Grants. If the option was granted in a tandem grant (as defined in Section 2) with an SAR, then exercise of such option with respect to a stated number of shares shall cancel the right to exercise the tandem SAR with respect to the same number of shares. (d) Tax Withholding. Participants may elect to deliver to Sprint (or authorize Sprint to retain from the shares purchased by such exercise) whole shares of Common Stock (or cash) to satisfy Sprint's obligation, if any, to withhold federal, state and local income tax required to be withheld in respect of such exercise ("Tax Withholding Obligations"), provided that Insiders may not elect to deliver shares to Sprint, or authorize Sprint to retain shares purchased by the option exercise, to satisfy Tax Withholding Obligations unless (i) such election becomes effective during the period beginning on the third business day following the date of release of the quarterly or annual financial data specified in SEC Rule 16b-3(e)(1)(ii) and ending on the twelfth business day following such date (such period, a "Quarterly Window Period" and such an election, a "Quarterly Window Period Election"), and (ii) the option is exercised during a Quarterly Window Period. Any such election by an Insider shall be subject to the approval of the Board Committee in its sole discretion at any time after such election. (e) Quarterly Window Period Elections. (i) A Quarterly Window Period Election made pursuant to paragraph (d) of this Section 8 or paragraphs (c) or (e) of Section 9 becomes effective when made, if made during a Quarterly Window Period, or as of the first day of the next Quarterly Window Period, if not made during a Quarterly Window Period. (ii) A Quarterly Window Period Election may be revoked by making a new Quarterly Window Period Election which (A) changes the previous Quarterly Window Period Election and (B) becomes effective (in accordance with Section 8(e)(i)) before the exercise of the option or SAR, as applicable, to which the new election relates. The new Quarterly Window Period Election may, in turn, be revoked in accordance with this clause (ii). (iii) A Quarterly Window Period Election may be either a specific election or a standing election. A specific election is effective only with respect to the first exercise of options or SARs, as applicable, after the election becomes effective. A standing election that has become effective remains effective with respect to all subsequent exercises of options or SARs, as applicable, until the election is revoked in accordance with Section 8(e)(ii). 9. Exercise of SARs. (a) Terms. Each SAR granted under this Plan shall be exercisable on the dates and for the number of shares as shall be provided in a letter of agreement between the Company and the participant evidencing the SAR granted by the Board Committee and the terms thereof. However, subject to Sections 13, 14, 15, 16, and 17, no SAR shall become exercisable until six months after its date of award. (b) Exercise by Non-Insider Participants. Cash or shares (at the election of the Non-Insider) shall be issued to the Non-Insider pursuant to the exercise of an SAR upon the receipt by Sprint from the Non-Insider of written notice that an SAR is being exercised. (c) Exercise by Insider Participants. An Insider may exercise an SAR by delivery to Sprint of written notice of exercise, which notice includes, or is preceded by, the Insider's election to receive cash or stock. If the Insider elects to receive Common Stock, the SAR may be exercised only pursuant to a Quarterly Window Period Election; provided, however, that an Insider's election to receive stock may be made at any time if the Board Committee determines, with the advice of counsel, that the implementation of this proviso does not require shareholder approval pursuant to SEC Rule 16b-3(b). If the Insider elects to receive cash, (i) such election must be a Quarterly Window Period Election and (ii) the SAR may be exercised only during a Quarterly Window Period. Any such election by an Insider to receive cash shall be subject to the approval of the Board Committee in its sole discretion at any time after such election. (d) Effect on Tandem Grants. If an SAR was granted in a tandem grant (as defined in Section 2) with an option, then exercise of such SAR with respect to a stated number of shares shall cancel the right to exercise the tandem option with respect to the same number of shares. (e) Withholding. Participants may elect to have all or a portion of the cash or shares to be received from exercising an SAR retained by Sprint in order to exercise a stock option, or to satisfy Tax Withholding Obligations in respect of an exercise of an option or SAR; provided, however, that an Insider may elect to have all or a portion of the shares to be received from exercising an SAR retained by Sprint to satisfy Tax Withholding Obligations only if (i) such election is a Quarterly Window Period Election, and (ii) the SAR is exercised during a Quarterly Window Period. Any such election by an Insider that relates to the satisfaction of Tax Withholding Obligations shall be subject to the approval of the Board Committee in its sole discretion at any time after such election. 10. Term of Option or SAR. Each option or SAR granted hereunder shall be exercisable for not more than ten years from the date it is granted, after which the unexercised portion thereof shall expire. 11. Nontransferability of Option. No option or SAR granted under this Plan shall be transferable except by will or the laws of descent or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986. Each such option and SAR shall be exercisable during the participant's lifetime only by the participant. 12. Termination of Employment. Upon termination of employment of a participant for any reason other than retirement, total disability, death, sale or disposition of a business unit, or change in control (as defined in Section 17), all options and SARs previously granted to the participant, whether exercisable or unexercisable, shall be forfeited and canceled. 13. Retirement of Participant. (a) Upon the normal retirement of a participant (after attaining age sixty-five), all options and SARs previously granted to the participant shall become fully exercisable, and may be exercised within a three- year period following the date of retirement, but in no event later than ten years from the date of grant of such options and SARs; provided, however, that an Insider may not exercise an option or SAR until at least six months after the date of award of such option or SAR, as applicable. (b) Upon the early retirement of a participant (prior to attaining age sixty-five), the portion of all options and SARs that the participant is then entitled to exercise may be exercised within a three-year period following the date of retirement, but in no event later than ten years from the date of grant of such options and SARs. 14. Total Disability of Participant. Upon the total disability of a participant (as defined in Section 2) all options and SARs previously granted to the participant shall become fully exercisable and may be exercised within a one-year period following the date the participant becomes totally disabled, but in no event later than ten years from the date of grant of such options and SARs; provided, however, than an Insider may not exercise an option or SAR until at least six months after the date of award of such option or SAR, as applicable. 15. Death of Participant. Upon the death of a participant, all options and SARs previously granted to the participant shall become fully exercisable by the legal representative of the deceased participant's estate and may be exercised within a one-year period following the date of the participant's death, but in no event later than ten years from the date of grant of such options or SARs. 16. Sale or Disposition of a Business Unit. Upon the termination of employment of a participant occurring as a result of the disposition by Sprint of a subsidiary, division or business unit, the Board Committee, or, except with respect to Insiders, the Administrative Committee, acting on behalf of the Board Committee, may determine the extent to which unexercisable options and SARs shall become exercisable, and the period of time, if any, following the date of disposition during which the participant may exercise such options and SARs; provided, however, than an Insider may not exercise an option or SAR until at least six months after the date of award of such option or SAR, as applicable. 17. Change in Control. Deleted. 18. Committee Discretion in the Event of Termination. Notwithstanding the provisions of Sections 12, 13, 14, and 15, if, upon termination of employment of the participant for any reason, the Board Committee, or, except with respect to Insiders, the Administrative Committee acting on behalf of the Board Committee, determines that it is in the best interest of Sprint, it may determine that all or a portion of the participant's unexercisable options and SARs may become exercisable, and that all or a portion of the participant's exercisable options and SARs may be exercised for a period of time following the date of the participant's termination of employment, but in no event later than ten years from the date of grant of such options or SARs. 19. Nonalienation of Benefits. No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit under this Plan shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits except such claims as may be made by the Company, Sprint or any subsidiary. If any participant or beneficiary hereunder should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit under this Plan, such right or benefit shall, in the sole discretion of the Board Committee (or, except with respect to Insiders, the Administrative Committee acting on behalf of the Board Committee), cease, and in such event, the Company or Sprint shall hold or apply the same or any part thereof for the benefit of such participant or beneficiary, such person's spouse, children or other dependents, or any of them, in such manner and in such proportions as the Committee in its sole discretion shall determine. 20. Indemnification of Committee Members. In addition to such other rights of indemnification as any person may have as a director, officer or member of the Board Committee or Administrative Committee, each member of the Committees shall be indemnified by the Company against the reasonable expenses, including attorney's fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which such person may be a party by reason of any action taken or failure to act under or in connection with this Plan, and against all amounts paid by such person in settlement thereof (provided such settlement is approved by legal counsel selected or approved by the Company), or paid by such person in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding, that such Committee member is liable for gross misconduct; provided that within 60 days after the institution of such action, suit or proceeding, such Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same. 21. Adjustment in Number of Shares and Option Price. In the event of any subdivision or combination of the outstanding shares of Sprint by reclassification or otherwise, or in the event of the payment of a stock dividend, a capital reorganization, a reclassification of shares, a consolidation or merger, or the sale, lease or conveyance of substantially all the assets of Sprint, the Board Committee shall make appropriate and equitable adjustments in the number and kind of shares with respect to which all outstanding options and SARs, or portions thereof then unexercised, shall be exercisable. Any such adjustment made by the Board Committee shall be final and binding upon all participants, Sprint, the Company and all other interested persons. 22. Compliance with Rule 16b-3. the intent of this Plan is to qualify for the exemption provided by Rule 16b-3 of the Exchange Act. To the extent any provision of the Plan does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative and shall not affect the validity of the Plan. In the event Rule 16b-3 is revised or replaced, the Board Committee, or the Administrative Committee acting on behalf of the Board Committee, may exercise discretion to modify this Plan in any respect necessary to satisfy the requirements of the revised exemption or its replacement. 23. Amendments and Discontinuance. The Board of Directors of the Company may alter, suspend or terminate this Plan; provided, however, that no such action shall increase the term of any option or SAR previously granted, or increase the number of shares available under the Plan (other than as provided in Section 21), or reduce the minimum option price per share as provided in Section 7, and provided further that no such action shall materially and adversely affect any outstanding options or SARs without the consent of the respective participants. Exhibit (10)(x) AGREEMENT REGARDING SPECIAL COMPENSATION AND POST EMPLOYMENT RESTRICTIVE COVENANTS THIS AGREEMENT made this 20th day of October, 1993, by and between SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and subsidiary of Sprint Corporation ("Employer"), and D. WAYNE PETERSON ("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, Executive has been, and/or now is serving Employer as President and Chief Operating Officer, Local Telco Division; 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 is 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 shall be awarded ten thousand (10,000) shares of restricted stock as set forth in a restricted stock agreement of even date herewith, attached hereto and incorporated herein (the "Restricted Stock Agreement") and shall be entitled to the Special Compensation set forth in Section 6 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 consist of: (a) to continue to receive for a period of eighteen (18) months from the date of termination (the "Severance Period") bi-weekly compensation at the rate equal to the bi- weekly 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) 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 non-qualified 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) 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 executive 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 hereof, or (b) by Executive pursuant to Section 7 hereof, 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 Corporation ("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. 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 services related to the local telecommunications business 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 with any Regional Bell Operating Company where the performance of duties in that position will involve managing, controlling, participating in, investing in, acting as consultant or advisor to, rendering services for, or otherwise assisting any person or entity that engages in or owns any business that is in the local telecommunications business. For purposes of this Agreement, "local telecommunications business" includes all forms of local exchanges, together with related activities such as directory publication, information services and material supply distribution. 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 local telecommunications and provided that such position does not require or permit the disclosure or use of Confidential Information. 13. Inducement of Other Employees. For an 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 any 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: D. Wayne Peterson Sprint Corporation 2330 Shawnee Mission Parkway Westwood, KS 66205 If to Employer and/or Company: Sprint Corporation 2330 Shawnee Mission Parkway Westwood, KS 66205 Attn: 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 and Number. 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 at Westwood, Kansas, on the date above set forth. D. WAYNE PETERSON SPRINT/UNITED MANAGEMENT COMPANY /s/ D. WAYNE PETERSON By: /s/ B. WATSON Authorized Officer Exhibit (10)(x) AGREEMENT REGARDING SPECIAL COMPENSATION AND POST EMPLOYMENT RESTRICTIVE COVENANTS THIS AGREEMENT made this 20th day of October, 1993, by and between SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and subsidiary of Sprint Corporation ("Employer"), and DENNIS E. FOSTER ("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, Executive has been, and/or now is serving Employer as President and Chief Operating Officer, Sprint Cellular Division; 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 is 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 shall be awarded ten thousand (10,000) shares of restricted stock as set forth in a restricted stock agreement of even date herewith, attached hereto and incorporated herein (the "Restricted Stock Agreement") and shall be entitled to the Special Compensation set forth in Section 6 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 consist of: (a) to continue to receive for a period of eighteen (18) months from the date of termination (the "Severance Period") bi-weekly compensation at the rate equal to the bi- weekly 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) 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 non-qualified 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) 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 executive 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 hereof, or (b) by Executive pursuant to Section 7 hereof, 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 Corporation ("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. 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 services related to the cellular and wireless telecommunications business 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, where the performance of duties in that position will involve managing, controlling, participating in, investing in, acting as consultant or advisor to, rendering services for, or otherwise assisting any person or entity that engages in or owns any business that is in the cellular or wireless telecommunications business. For purposes of this Agreement, "cellular and wireless telecommunications business" includes all forms of wireless and cellular communications, together with related activities such as information 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 cellular or wireless communications and provided that such position does not require or permit the disclosure or use of Confidential Information. 13. Inducement of Other Employees. For an 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 any 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: Dennis E. Foster Sprint Corporation 8725 Higgins Road Chicago, IL 60631 If to Employer and/or Company: Sprint Corporation 2330 Shawnee Mission Parkway Westwood, KS 66205 Attn: 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 and Number. 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 at Westwood, Kansas, on the date above set forth. DENNIS E. FOSTER SPRINT/UNITED MANAGEMENT COMPANY /s/ DENNIS E. FOSTER By: /s/ B. WATSON Authorized Officer Exhibit (10)(x) AGREEMENT REGARDING SPECIAL COMPENSATION AND POST EMPLOYMENT RESTRICTIVE COVENANTS THIS AGREEMENT made this 20th day of October, 1993, by and between SPRINT/UNITED MANAGEMENT COMPANY, a Kansas corporation and subsidiary of Sprint Corporation ("Employer"), and RONALD T. LEMAY ("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, Executive has been, and/or now is serving Employer as President and Chief Operating Officer, Long Distance Division; 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 is 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 shall be awarded twenty thousand (20,000) shares of restricted stock as set forth in a restricted stock agreement of even date herewith, attached hereto and incorporated herein (the "Restricted Stock Agreement") and shall be entitled to the Special Compensation set forth in Section 6 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 consist of: (a) to continue to receive for a period of eighteen (18) months from the date of termination (the "Severance Period") monthly compensation at the rate equal to the monthly 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) 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 non-qualified 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) 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, monthly 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 executive 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 hereof, or (b) by Executive pursuant to Section 7 hereof, 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 Corporation ("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. 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 services related to the long distance business 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 the performance of duties in that position will involve managing, controlling, participating in, investing in, acting as consultant or advisor to, rendering services for, or otherwise assisting any person or entity that engages in or owns any business that is in the long distance business. For purposes of this Agreement, "long distance business" includes all forms of interexchange, interstate, intrastate, interlata and international communications, together with related activities such as information 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 the long distance business and provided that such position does not require or permit the disclosure or use of Confidential Information. 13. Inducement of Other Employees. For an 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 any employee benefit or other compensation plans (or any agreements or awards thereunder) referred to in or contemplated by this Agreement, 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: Ronald T. LeMay 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 and Number. 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 at Westwood, Kansas, on the date above set forth. RONALD T. LEMAY SPRINT/UNITED MANAGEMENT COMPANY /s/ RONALD T. LEMAY By: /s/ B. WATSON Authorized Officer Exhibit (10)(y) CENTEL MATCHED DEFERRED SALARY PLAN SECTION 1 - PLAN 1.1 Plan. Centel Corporation, a Kansas corporation, hereby establishes this Centel Matched Deferred Salary Plan effective with respect to Salary paid on and after July 1, 1987. All amounts deferred and accrued under this plan will be unsecured liabilities of the Company or a Subsidiary and will not be funded with specific assets of the Company or any Subsidiary. This Plan supersedes the Centel Executive Deferred Salary Plan. Any account balances in the Centel Executive Deferred Salary Plan will be transferred to this Plan. 1.2 Purpose. The purpose of this Plan is to provide a means for certain management employees of the Company and its Subsidiaries to build savings through salary deferrals. The Plan also provides for Company credits to the same extent as under a 401(k) plan or any similar plan sponsored by the Company or a Subsidiary were there no limitations imposed by the Internal Revenue Code (IRC). SECTION 2 - DEFINITIONS The following words and phrases have the respective meanings stated below unless a different meaning is plainly required by the context: "Beneficiary" means any person who is entitled to receive distributions under this Plan pursuant to Section 9. "Board" means the board of directors of the Company, the executive committee of that board and any other committee of that board authorized to act on its behalf. "Committee" means the committee established pursuant to Section 10. "Company" means Centel Corporation, a Kansas corporation (Centel), and its successor or successors. "Deferral Period" means a period of time containing all pay dates occurring within a calendar month. "Employee" means a salaried employee designated third level or above who is employed by an Employer, and who is (a) exempt from the provisions of Section 6 and 7 of the Fair Labor Standards Act, by reason of the provisions of Section 13(a)(1) of such act, and (b) not in a bargaining unit represented by a labor organization. "Employer" means the Company or any Subsidiary which participates in the Plan. "Enrollment Date" means the date when Salary Deferrals begin, pursuant to Section 3, and may be either (a) the first day of the payroll period of the Employee which includes the first pay date of a calendar month or (b) the first day of a pay period following the Employee's election to enroll in this Plan after the cessation of contributions to any 401(k) plan or similar plan sponsored by the Company or a Subsidiary due to application of IRC contribution limitations. "Long-Term Disability Benefits" means the payments made under the Long-Term Disability provisions of the Centel Group Welfare Plan or any other plan maintained by the Company or a Subsidiary which the Plan Administrator determines to be comparable to Long-Term Disability Benefits provided under the Centel Group Welfare Plan. "Matching Credits" means the credits made by an Employer pursuant to Section 5.1. "Nonvested Amounts" means, as of the date of determination, that portion of Matching Credits not yet attributable to the Participant's account according to the schedule set forth in Section 7. "Participant" means an Employee who has met the requirements of Section 3 for participating in the Plan or a former Employee who is entitled to receive benefits under the Plan. "Plan" means this Centel Matched Deferred Salary Plan. "Plan Administrator" means the Assistant Vice President- Benefits and Human Resource Development of the Company or such other person designated by the Board. "Plan Year" means July 1 to December 31, 1987 and thereafter each calendar year beginning January 1 and ending December 31. "Profit Sharing Credits" means the credits made by an Employer pursuant to Section 5.2. "Retirement" means termination of employment with the Company and all Subsidiaries after age 55 under circumstances that would result in the Participant having a vested interest under the Centel Retirement Benefit Plan if the Participant were a participant in that plan. "Salary" means base pay during the Plan Year, prior to any salary reduction elections entered into by the Participant pursuant to this Plan and any 401(k) plan or similar plans sponsored by the Company or a Subsidiary for such Plan Year. Salary does not include overtime pay, bonuses, commissions or any other extra compensation. "Salary Deferrals" means the deferrals made by an Employee pursuant to Section 4.1. "Separation from Service" means the first day of an absence from active service due to an unpaid leave of absence. "Severance from Service" means with respect to an employee of the Company or any Subsidiary, the date on which the employee resigns, retires, is discharged, dies, or severs employment due to divestiture of his Employer, or the first anniversary of the employee's Separation from Service if the employee has not returned to active service by such date. "Subsidiary" means any corporation of which fifty percent or more of the voting stock is owned directly or indirectly by the Company. SECTION 3 - PLAN PARTICIPATION 3.1 Participants. Each Employee shall become a Participant as of the Enrollment Date next following the date on which such Employee elects, in such manner and at such time as specified by the Committee, to participate in the Plan. 3.2 Timing of Elections. A Participant may elect to participate in this Plan by giving prior written notice authorizing a reduction in Salary in accordance with Section 4 by (a) November 30 prior to the January 1 Enrollment Date or (b) at least 30 days prior to any other Enrollment Date during the Plan Year. 3.3 Method of Election. A separate notice will be required for Salary which would be paid in any year. Each such notice shall specify either (a) the year to which payment of the Salary Deferrals shall be deferred, which may not be less than one year or more than ten years from the year in which the Salary would have been paid if it had not been deferred, but not beyond retirement, or (b) that payment shall be deferred to the earlier of retirement or other Severance from service. 3.4 Transferred Participants. Transfer of a Participant between Employers will not affect the Participant's participation in the Plan, provided that the Participant continues to be an Employee. 3.5 Cessation of Participation. An Employee who has become a Participant shall continue as a Participant until such time as the full value of a Participant's accounts in this Plan have been distributed or forfeited pursuant to Section 8. SECTION 4 - EMPLOYEE SALARY DEFERRALS 4.1 Employee Salary Deferrals. Each Participant may elect to have his or her Employer reduce such Participant's Salary in whole percentage increments up to 50% of Salary. 4.2 Effect of Deferral. To the extent possible, this Plan will be administered in such a manner as to not affect employee benefits and payroll deductions which are based upon Salary except that (a) income tax withholding will be based upon the amount of Salary paid or as directed by the Participant; (b) payroll deductions for Social Security tax (FICA) will be based upon Salary without giving effect to any deferral. To the extent the Company is required to withhold taxes or any other amounts from the Participant's deferred Salary pursuant to any federal, state or local law, such amounts will be withheld from the portion of the Participant's Salary which is not deferred under this Plan. 4.3 Change in Deferrals. A Participant may request a change, as of any pay date, in such Participant's Salary Deferrals to another permissible deferral rate by giving prior written notice, except that no Participant shall be entitled to make more than four such changes in any Plan Year other than on January 1 or a date set forth in paragraph (b) of the definition of "Enrollment Date" contained in Section 2 above. Changes in deferrals shall be made as soon as practicable after receipt of notice and shall apply solely to the Salary of the Participant requesting the change which is attributable to periods after the request is made and given effect. For purposes of this Section 4.3, changes in deferral rates shall include elections to suspend or recommence Salary Deferrals. In the event of a change in the Salary of a Participant, the Salary Deferral rate then in effect will be applied as soon as practicable with respect to such changed Salary, without action by the Participant. SECTION 5 - EMPLOYER CREDITS 5.1 Matching Credits. Each Employer will credit to a Participant's account an Employer Matching Credit on behalf of each of its Employees who is a Participant in an amount equal to seventy percent of the first 6% of Salary Deferrals being credited under this Plan. 5.2 Profit Sharing Credits. Each Employer will credit to a Participant's account a Profit Sharing Credit of the same percentage of Salary as determined by the Board for Employer Profit Sharing Contributions each year to the Centel Retirement Savings Plan. Credits for the portion of the Plan Year following a Participant's enrollment in this Plan will be made in this Plan. 5.3 Deferral Suspension. Salary Deferrals and Employer Credits in this Plan with respect to a Participant will be suspended if the Participant continues to be employed by the Company or a Subsidiary but ceases to be an Employee. Whenever Employee Salary Deferrals are suspended by a Participant, Matching Credits with respect to that Participant will also be suspended, but Profit Sharing Credits will continue during such period of suspension at the rate provided under Section 5.2. SECTION 6 - MAINTENANCE AND VALUATION OF ACCOUNTS 6.1 Maintenance of Separate Accounts. There shall be established separate accounts on the books of the Company, held as reserves according to generally accepted accounting principles, for each Participant, which shall reflect all credits made on the Participant's behalf and earnings thereon. Subaccounts shall be established to reflect Salary Deferrals, Matching Credits and Profit Sharing Credits. Each Participant will be furnished a statement of his or her accounts not less often than annually and following any distribution or withdrawal. 6.2 Valuation of Accounts. The interest of a Participant in his or her account(s), will be represented in cash and will be valued and credited as follows: (a) Salary Deferrals, Matching Credits and Profit Sharing Credits will be added to the balance of the Participant's accounts; (b) account balances will be credited with interest equal to the prime rate in effect at Harris Trust and Savings Bank, Chicago, Illinois on the last business day of each month; and (c) account balances will be debited with distributions or forfeitures. Notwithstanding the foregoing, Participants receiving a distribution will receive interest credit for the period between valuation and final distribution based on the prime rate at Harris Trust and Savings Bank, Chicago, Illinois on the last business day of the preceding month. SECTION 7 - VESTING 7.1 Vesting. Salary Deferrals and Profit Sharing Credits together with the earnings thereon will be fully vested in the Participant at all times. Matching Credits will vest after five years of service. Years of service means the Participant's term of service which begins on the date last hired by the Company or any of its Subsidiaries or predecessor companies (as well as any prior service that may be credited under the Company's bridging of service rules applicable to the Company's 401(k) plan) and ends with Severance from Service. 7.2 Time Deferrals. Notwithstanding the provisions of Section 7.1, Matching Credits, together with the earnings thereon, relating to a Salary Deferral for a specified number of years less than five will vest and be distributed when such account is distributed. 7.3 Committee Discretion. The Committee may elect, in its sole discretion, to partially or fully vest any Nonvested Amounts for a Participant. 7.4 Special Vesting Rules for Certain Terminations. Notwithstanding Section 7.1, Section 8.4(a) or any other provision of the Plan to the contrary, in the case of a termination of employment (a) on account of a divestiture or (b) with benefits payable under the Centel Corporation Change in Control Plan or with benefits payable under any other plan or arrangement which provides for such benefits by reason of a change in control, each affected Participant will become vested (if he or she is not already) in such Participant's subaccount established under Section 6.1 to reflect Matching Credits (and any income thereon) consistent with the principles, and to the same degree, prescribed for the determination of the distributable portion of employer matching contribution accounts under identical circumstances under the Centel Retirement Savings Plan. SECTION 8 - DISTRIBUTION 8.1 Method of Distribution. Upon any distribution from a Participant's accounts, unless otherwise expressly provided, payment will be made in cash on the basis of the accounts' values as set forth in Section 6.2. 8.2 Hardship Distribution. The Committee may, in its sole discretion, upon the request of a Participant, at any time prior to termination of employment, authorize the distribution to the Participant of a specified amount of cash from such Participant's vested accounts for the purposes set forth below and subject to the following rules: (a) Each request for a distribution shall be made by written application to the Plan Administrator supported by such evidence as the Committee may require to establish hardship. (b) Amounts will be distributed to a Participant only on account of a hardship. A distribution will be deemed to be on account of hardship if it is necessary in the light of immediate and heavy financial needs of the Participant. A distribution based upon financial hardship will not exceed the amount required to meet the immediate financial need created by the hardship and not reasonably available from other resources of the Participant. The determination of the existence of financial hardship and the amount required to be distributed to meet the need created by the hardship will be made by the Committee in accordance with uniform and nondiscriminatory standards. (c) The Committee will authorize distribution of amounts to a Participant to enable the Participant to (i) meet any extraordinary expenses incurred on account of accident, sickness, disability or other emergency affecting the Participant or any of the Participant's dependents; (ii) provide for the education of the Participant or the Participant's dependents; (iii) purchase a residence for the Participant and the Participant's family; or (iv) make a major improvement on the Participant's residence. (d) Within sixty days after the written request is received by the Plan Administrator, the Participant shall be advised in writing whether the request for distribution has been approved or denied. If the request is approved, distribution will be made as soon as practicable thereafter. 8.3 Other Distribution While Employed. A Participant who has deferred Salary for a specified number of years, as set forth in Section 3.3(a) will receive a distribution of the Participant's account(s) attributable to Salary Deferrals and corresponding Matching Credits and Profit Sharing Credits as soon as practicable in January, April, July or October, whichever is designated by the Participant, of the year specified by the Participant but not beyond retirement. 8.4 Distribution Upon Severance from Service or Commencement of Long-Term Disability Benefits. (a) Termination Due to Retirement, Resignation, Discharge, Commencement of Long-Term Disability Benefits, Death and Employer Divestiture. If a Participant terminates employment with the Company and all Subsidiaries for any reason during a Plan Year and is not reemployed by the Company or a Subsidiary prior to the time distribution is made, distribution of the Participant's accounts will begin as soon as practicable following Severance from Service or commencement of Long-Term Disability Benefits. In the case of Retirement, termination of employment pursuant to the Centel Exempt Employee Severance Pay Plan (or any other plan maintained by an Employer which the Committee determines to be a comparable severance pay plan), commencement of Long-Term Disability Benefits, death or Employer divestiture, distribution will be made of the entire balance in the Participant's accounts. In the case of any other termination of employment, distribution will be made of the entire balance in the Participant's accounts except the balance representing Nonvested Amounts, which will be forfeited. All forfeitures will be applied as credits against the book reserves of the Company and will be valued for such purposes as of the end of the same month that the balance distributed as a result of the event causing the forfeitures are valued. (b) Separation from Service. There will be no Employee Salary Deferrals, Employer Matching Credits or Profit Sharing Credits following a Separation from Service. If a Separation from Service is followed by a Severance from Service, the Participant's participation in the Plan will be deemed to have terminated at such time for the purpose of distribution under the Plan and Nonvested Amounts will be forfeited. SECTION 9 - BENEFICIARIES 9.1 Beneficiary Designation. A Participant may designate, by written notice delivered prior to the Participant's death, a beneficiary or beneficiaries to receive all or part of the amount of the Participant's accounts in case of the Participant's death. A designation of beneficiary may be replaced by a new designation or may be revoked by the Participant at any time by written notice delivered prior to the Participant's death. 9.2 Absence of Designation. If there is no designated Beneficiary living upon the death of a Participant or if all such designated Beneficiaries die prior to distribution of the Participant's balances under this Plan, the Beneficiary shall be such one or more of the surviving spouse or surviving descendants of such Participant and in such proportions among them, as the Committee in its sole discretion may determine; but if there are none then surviving to the knowledge of the Committee the balances will be distributed to the estate of the last survivor of the participant and designated Beneficiaries. If the Company, after reasonable inquiry, is unable within one year to determine whether any designated Beneficiary did in fact survive the event that entitled such Beneficiary to receive distribution under this Plan, it will be conclusively presumed that such Beneficiary did in fact die prior to such event. SECTION 10 - COMMITTEE 10.1 Committee. This Plan will be administered by a committee consisting of not less than three persons designated by the Board. 10.2 Power of Committee. Except as otherwise expressly provided in this Plan, the Committee shall have full power and authority, within the limits provided by this Plan: (a) to construe this Plan and make equitable adjustments for any mistakes or errors made in the administration of this Plan; (b) to determine all questions arising in the administration of this Plan, including the power to determine the rights of Participants and their Beneficiaries and the amount of their respective interests; (c) to adopt such rules and regulations as it may deem reasonably necessary for the proper and efficient administration of this Plan consistent with its purposes; (d) to enforce this Plan in accordance with its terms and with the rules and regulations adopted by the Committee; and (e) to do all other acts which in its judgment are necessary or desirable for the proper advantageous administration of this Plan. The Committee shall act by the vote or concurrence of a majority of its members and shall maintain a written record of its decisions and actions. All decisions and actions of the Committee pursuant to the provisions of the Plan shall be final and binding upon all persons affected thereby. No member of the Committee shall have any personal liability to anyone, either as such member or as an individual, for anything done or omitted to be done in good faith in carrying out the provisions of this Plan. SECTION 11 - ADMINISTRATION AND INTERPRETATION OF PLAN 11.1 Administration. The general administration of the Plan and the responsibility for carrying out its provisions on behalf of the Company and each Employer will be vested in a Committee as set forth in Section 10. 11.2 Expenses. Expenses of administering the Plan, including the fees and expenses of the Trustee, will be borne by the Employer. 11.3 Trustee. The Company may make all distributions under this Plan or it may transfer assets to a trust established with an independent trustee to make distributions under this Plan. 11.4 Amendments. The Board may amend this Plan in its sole discretion. Any such amendment shall be effective at such date as the Board may determine, except that no such amendment, other than an amendment of a minor nature or permitted in accordance with the terms of the trust, if any, described in Section 11.3, may apply to any period prior to the announcement of the amendment. The Committee may also amend the Plan, both retroactively and prospectively, but only to make minor changes which are technical or administrative in nature. 11.5 Plan Termination. The Board may at any time terminate the making of Employee Salary Deferrals, Employer Matching Credits and Employer Profit Sharing Credits. If an Employer ceases to be a Subsidiary, Employee Salary Deferrals with respect to Participants of such Employer and Employer Matching Credits and Employer Profit Sharing Credits by such Employer will be terminated. 11.6 Non-Alienation. No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit under this Plan shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits except such claims as may be made by the Company or any Subsidiary. 11.7 Notices. Notices, reports and statements to be given, made or delivered to an Employee or a Participant will be deemed duly given, made or delivered, when addressed to the Employee or Participant, and delivered by ordinary mail, or by Employer mail, to such Employee's or Participant's business address or residence address on the Employee Information System of the Company. All notices required to be given by an Employee or a Participant will be given on a form provided for the purpose and will be deemed received when delivered to such Employee's or Participant's personnel department. 11.8 Applicable Law. This Plan shall be governed by the law of the State of Kansas. SECTION 12 - EFFECTS OF THE MERGER On March 9, 1993 (the "Merger Date"), the Company became a wholly-owned subsidiary of Sprint Corporation ("Sprint"). Notwithstanding anything herein to the contrary, effective as of the Merger Date: (a) No employee of the Company, other than individuals who are Participants in the Plan as of the Merger Date ("Continuing Participants"), shall become a Participant in the Plan; (b) Current Participants shall not be deemed to terminate service for purposes of maintaining account balances or other rights outstanding as of March 8, 1993, under the Plan until they cease to be employees of Sprint and its subsidiaries; and (d) Account balances will be maintained for all Continuing Participants and will be credited with interest thereon pursuant to Section 6.2(b) of the Plan, but all Salary Deferrals, Employer Matching Credits and Profit Sharing Credits shall cease as of the Merger Date. Exhibit (10)(z) CENTEL DIRECTORS DEFERRED COMPENSATION PLAN SECTION 1. Plan. Centel Corporation, a Kansas corporation, hereby establishes this "Centel Directors Deferred Compensation Plan". SECTION 2. Definitions. The following words have the respective meanings stated below unless a different meaning is plainly required by the context: (a) "Beneficiary" means any person other than a Director who is entitled to receive distributions under this Plan pursuant to Section 6. (b) "Board" means the Board of Directors of the Company or of a Subsidiary. (c) "Committee" means the committee which administers this Plan as provided in Section 7. (d) "Common Stock" means shares of common stock of the Company. (e) "Company" means Centel Corporation, a Kansas corporation, and its successors. (f) "Director" means an individual who is (1) serving as a member of a Board or who has been nominated to serve as a member of a Board and (2) receives compensation for such service other than as employee of the Company or a Subsidiary. (g) "Market Value" of Common Stock on any date means the closing price of the Common Stock on that day on the Composite Transactions Tape, as subsequently reported in The Wall Street Journal, or, if no sale of the Common Stock shall have been made on that date, such closing price on the next preceding date on which there was a sale. (h) "Plan" means the plan set forth in this instrument, and known as the "Centel Directors Deferred Compensation Plan". (i) "Subsidiary" means any corporation fifty percent or more of the voting stock of which is owned, directly or indirectly, by the Company. (j) "Unit" means the equivalent under this Plan of one share of Common Stock. (k) "Value" of a Unit on any date means the Market Value on such date of one share of Common Stock. SECTION 3. Participation. A Director may elect to defer the payment of: (a) annual or quarterly compensation for service as a Director; (b) compensation paid for attendance at meetings of the Board and of committees of the Board; or (c) annual or quarterly compensation for service as a Director plus all additional compensation paid for attendance at meetings of the Board and of committees of the Board; by giving notice: (1) if the Director is a Director on November 30 of any year, at least thirty days prior to January 1 of the year for which the election is to be effective, (2) if the Director is not a Director on November 30 of any year, within 20 days after the date on which the Director is first elected a Director, or (3) within 20 days after any amendment of this Plan. Each notice shall continue in force unless and until revoked or modified by notice at least thirty days before the January 1 on which such revocation or modification is to become effective. All amounts deferred and accrued under this Plan will be unsecured liabilities of the Company or a Subsidiary and will not be funded with any specific assets of the Company or any Subsidiary. SECTION 4. Method of Deferment. (a) A Director who elects to defer compensation under this Plan may elect to have such compensation credited to a prime rate account, to a Common Stock account, or in increments of 25%, to both forms of account. Amounts accrued in accounts may not be transferred from one form to the other. A different election may be made with respect to compensation earned in each calendar year. (b) An amount equal to the compensation which a Director has elected to have deferred will be credited by the Company in a deferred compensation account in the name of the Director on the date such compensation would otherwise become payable to the director. (c) Prime rate account. Interest equivalents will be credited on the balance in a Director's prime rate account at the end of each calendar quarter. After installment payments to the Director or a Beneficiary have commenced under this Plan interest will be paid quarterly in cash to the Director or Beneficiary, as the case may be. For the purpose of crediting interest, (1) interest will be computed at the prime rate of interest in effect at Harris Trust and Savings Bank, Chicago, Illinois during such quarter, and (2) the balance accrued in a Director's deferred compensation account during any quarter will be the average of the balances in the Director's account at the beginning of the quarter and at the end of each month during the quarter. (d) Common Stock account. When compensation is credited to a Common Stock account, the amount of compensation will be divided by the Market Value on the date such compensation is credited to the account to determine the number of Units (to the nearest one- hundredth) to be credited to such account. On each record date for determination of shareowners entitled to receive a dividend on the outstanding shares of Common Stock, there will be credited to each Common Stock account that number of additional Units equal to the number of shares (and fraction of a share to the nearest one-hundredth) of Common Stock which could have been purchased at Market Value on that date with the amount, if paid in cash, or the value, if paid in property, of the dividend to be paid on a number (to the nearest one-hundredth) of shares of Common Stock equal to the number of Units (to the nearest one- hundredth) in that account on such record date. No account of a Director who has terminated service as a Director on or prior to a record date shall be credited with additional Units, however, if the Director would have been entitled to receive the dividend as a shareowner of record on such record date had the Units in such account been distributed in the form of shares of Common Stock on or prior to such record date. SECTION 5. Distributions. (a) Except as provided in Section 5(b), the timing and manner of each distribution to a Director under the Plan shall be made pursuant to such Director's Valid Election, as defined in the following sentence. A "Valid Election" means an election by the Director which (i) is irrevocable except as provided in Section 5(g), (ii) is made by the Director prior to the first day of the calendar year in which such Director's termination of service occurs, (iii) is made in writing pursuant to such rules as the Committee may determine, and (iv) provides for a distribution pursuant to paragraphs (b) or (c). (b) If the Director so elects pursuant to a Valid Election, or if the Director makes no Valid Election, upon a termination of service as a Director, the amounts accrued in the Director's accounts will be distributed to the Director in a lump sum as soon as practicable after January 31 of the calendar year following the calendar year in which the Director's termination of service occurs (Distribution Date); provided, however, that no payment of amounts attributable to deferrals credited to a Director's Common Stock account on or before October 10, 1991 will be made less than six months after the Director's last acquisition, prior to termination of service as a Director, of a Centel equity security (as defined in Securities and Exchange Commission Rule 16a-l(d)), which acquisition is not exempt from Section 16(b) of the Securities Exchange Act of 1934. (c) Pursuant to the terms of a Valid Election, distributions shall be paid under the Plan commencing on or after termination of service as a director as follows: (i) in a lump sum as soon as practicable after the Director's termination of service; or (ii) in installment payments of principal and interest which (A) shall be paid for a period not exceeding the Director's life expectancy determined at the time of a termination of service (Life Expectancy) and (B) shall commence as of the Distribution Date; or (iii) in installment payments of the interest accrued on amounts in the Director's deferred compensation accounts; such interest shall be paid for the Life Expectancy and shall commence as of the Distribution Date, with the principal and any other amounts credited to the Director's deferred compensation accounts being paid as soon as practicable after the Director's death; or (iv) pursuant to any method determined by the Director, provided that such method provides for full payment of all amounts credited to the Director's deferred compensation accounts no later than a date which is as soon as practicable after the Director's death. (d) All distributions of amounts accrued in a Director's deferred compensation account, whether accrued in a prime rate account or in a Common Stock account, will be paid exclusively in cash. If distribution cannot be made on the day prescribed, it will be made as soon thereafter as practicable as of that day. The Value of Units for purposes of distribution shall be their Value on the date as of which distribution is deemed made. (e) Notwithstanding the foregoing, a Director who has an interest in a prime rate account under this Plan may elect, by giving notice a least 60 but not more than 120 days prior to January 1 of the fifth year following the year in which deferred compensation was accrued in a Director's prime rate account to have the amount accrued in such fifth preceding year, together with interest credited with respect thereto, paid in cash to the Director on the January 31 following receipt of the notice. (f) In the event of a Director's death, any amounts to which the Director is entitled hereunder will be distributed to the Beneficiary entitled thereto in such manner as is determined by the Committee in its sole discretion. The Company may consult with the beneficiary prior to such determination. (g) Notwithstanding any provision to the contrary hereunder, at any time, the Director may change a Valid Election by election to accelerate the date(s) of payment specified in such prior election, subject to the following circumstances: (i) the Committee in its sole discretion consents to the change in Valid Election, and (ii) the amounts which are subject to such accelerated payment date(s) shall be reduced by 6%. Subject to the preceding sentence, the calculation of such reduction shall be made in the sole discretion of the Committee. SECTION 6. Anti-Dilution. In the event of any change in capitalization which affects the Common Stock, such as a stock dividend, a stock distribution, a stock split-up or a subdivision or combination of shares, such adjustments, if any, as the Board in its discretion deems appropriate to reflect such change shall be made with respect to the number of Units in each Common Stock account. SECTION 7. Beneficiaries. (a) A Director may, by giving notice during the Director's lifetime, designate (1) a Beneficiary or Beneficiaries to whom distribution of the Director's deferred compensation accounts will be made in the event of the Director's death prior to the full receipt of the Director's interests under this Plan, and (2) the proportions to be distributed to each such designated Beneficiary if there be more than one. Any such designation may be revoked or changed by the Director at any time and from time to time by similar notice. If there if no such designated Beneficiary living upon the death of the Director or if all such designated Beneficiaries die prior to distribution of all of a Director's interests under this Plan, the Beneficiary shall be such one or more of the surviving spouse, or surviving descendants, of such Director and in such proportions among them, as the Committee in its sole discretion may determine; but if there are none then surviving to the knowledge of the Committee the then remaining balance of such interest will be distributed to the estate of the last survivor of the Director and designated Beneficiaries. (b) If the Company, after reasonable inquiry, is unable within one year to determine whether any designated Beneficiary did in fact survive the event that entitled such Beneficiary to receive distribution under this Plan, it will be conclusively presumed that such Beneficiary did in fact die prior to such event. SECTION 8. Committee. This Plan will be administered by a Committee consisting of the members of the Board of the Company who are employees of the Company or its Subsidiaries and do not receive compensation for serving as Directors. Except as otherwise expressly provided in this Plan, the Committee shall have full power and authority, within the limits provided by this Plan: (a) to construe this Plan and make equitable adjustments for any mistakes or errors made in the administration of this Plan; (b) to determine all questions arising in the administration of this Plan, including the power to determine the rights of Directors participating in this Plan and their Beneficiaries and the amount of their respective interests; (c) to adopt such rules and regulations as it may deem reasonably necessary for the proper and efficient administration of this Plan consistent with its purposes; (d) to enforce this Plan in accordance with its terms and with the rules and regulations adopted by the Committee; and (e) to do all other acts which in its judgment are necessary or desirable for the proper and advantageous administration of this Plan. The Committee shall act by the vote or concurrence of a majority of its members and shall maintain a written record of its decisions and actions. All decisions and actions of the Committee pursuant to the provisions of this Plan shall be final and binding upon all persons affected thereby. No member of the Committee shall have any personal liability to anyone, either as such member or as an individual, for anything done or omitted to be done in good faith in carrying out the provisions of this Plan. SECTION 9. Non-Alienation. No right or benefit under this plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit under this Plan shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits except such claims as may be made by the Company or any Subsidiary. SECTION 10. Notice. Any notice authorized or required to be given to the Company under this Plan shall be deemed given upon delivery in writing, signed by the person giving the notice, to the Secretary of the Company or such other officer as may be designated by the Chairman of the Board. SECTION 11. Plan Modifications. The Board of the Company may, at any time terminate this Plan or may, from time to time, amend any provision of this Plan in such manner and to such extent as it may, in its discretion, deem to be advisable. In the event this Plan is terminated, any amount remaining in any Director's account will be distributed in such manner as is determined by the Committee in its sole discretion. SECTION 12. Applicable Law. This Plan shall be governed by the law of the State of Illinois. Exhibit (10)(aa) CENTEL CORPORATION DIRECTOR STOCK OPTION PLAN 1. Purpose of Plan. The purpose of the Director Stock Option Plan (the Plan) is to promote the long-term financial interests of the company and its subsidiaries by: (a) providing an incentive for all non-employee members of the Centel Board of Directors (the Directors) to maximize the long-term value of the Common Stock and otherwise act in the best interest of shareowners; (b) providing Directors with the opportunity to acquire a greater stake in the future of the Company and its subsidiaries through stock ownership; and (c) attracting and retaining highly qualified Directors who will contribute in exceptional ways to the long-term financial success of the Company and its subsidiaries. 2. Definitions. The following words and phrases have the respective meanings indicated below unless a different meaning is plainly implied by the context. (a) "Administrative Committee" means a committee of management employees which, pursuant to Section 4, has been appointed by the Board Committee and authorized to assume designated responsibilities and perform designated functions. (b) "award" means the grant of stock options on a date specified in Section 7 to an Eligible Director pursuant to this Plan. (c) "Board Committee" means the Organization and Compensation Committee of the Board of Directors of Sprint. (d) "Common Stock" or "stock," or "shares" means shares of common stock of Sprint. (e) "Company" means Centel Corporation, a Kansas corporation, and its successors. (f) "date of award" means the date designated by this Plan for the award of stock options. (g) "Eligible Director" means any present or future member of the Board of Directors of the company (the Board or Board of Directors) who is (1) a member of the Board of Directors on the date an award is made, and (2) not an employee of the Company or any subsidiary. (h) "letter of agreement" means a letter from the Board Committee, or from the Administrative Committee or Administrative Committee member acting on behalf of the Board Committee, to a Director, indicating that the Director is a participant in the Director Stock Option Plan, the number of shares subject to option to be granted to the participant, the option price, the date or dates when such option may be exercised, and other provisions consistent with the Plan. (i) "market value" of Common Stock on any date means the closing price of Common Stock on that date on the New York Stock Exchange Composite Transactions list, as subsequently reported in The Wall Street Journal, or, if no sale of the Common Stock shall have been made on that date, such closing price on the next preceding date on which there was a sale. (j) "participant" means an Eligible Director who has been awarded options pursuant to this Plan. (k) "Plan" means the plan set forth in this Director Stock Option Plan, as it may be amended from time to time, and known as the "Director Stock Option Plan." (l) "Sprint" shall mean Sprint Corporation, a Kansas corporation, and its successors. (m) "stock option" or "option" is a right granted to a participant to purchase a designated number of shares of Common Stock at a stated price for a stated period of time. The participant may exercise that right according to Section 9 of the Plan as to all or a portion of the shares at a specified time or times. Stock options granted under this Plan are not intended to qualify as incentive stock options under Internal Revenue Code Section 422A. (n) "subsidiary" means any corporation fifty percent or more of the voting stock of which is owned, directly or indirectly, by the Company or Sprint. 3. Administration of Plan. (a) The Plan shall be administered by the Board Committee. (b) The Board Committee shall not have authority or discretion to determine (1) the Directors to be granted options, (2) the times at which options shall be granted, (3) the number of shares subject to each option, (4) the period during which each option shall become exercisable, or (5) the terms contained in each letter of agreement between the company and participant. All such matters are fixed and determinable according to the provisions of the Plan applicable thereto. (c) The Board Committee shall have full authority and discretion to adopt rules and regulations and prescribe or approve the forms to carry out the purposes and provisions of this Plan. The Board Committee's interpretation and construction of any provision of this Plan or any option granted hereunder shall be binding and conclusive, unless otherwise determined by the Board. 4. Appointment of Administrative Committee. (a) The Board Committee may appoint an Administrative Committee to: (1) construe this Plan and make equitable adjustment for any mistakes, omissions, or errors made in the administration of this Plan; (2) adopt such rules and regulations as may be deemed reasonably necessary for the proper and efficient administration of this Plan consistent with its purposes; (3) enforce this Plan in accordance with its terms and with the rules and regulations adopted for the Plan; and (4) do all other acts which in the Administrative Committee's reasonable judgment are necessary or desirable for the proper and advantageous administration of this Plan consistent with the Plan's purposes. (b) The Administrative Committee shall not have authority or discretion over matters delineated in Section 3(b) of the Plan. 5. Eligibility. All present or future members of the Board of Directors who are members of the Board of Directors on the date an award is made, and are not employees of the company or any subsidiary, shall be Eligible Directors under the Plan, and participants in this Plan. 6. Shares Subject to Plan. Subject to adjustment as provided in Section 15, the aggregate number of shares subject to options granted under this Plan shall not exceed 288,396 shares of Common Stock, par value $2.50 per share (the shares), which may be treasury shares reacquired by Sprint or authorized and unissued shares, or a combination of both. 7. Size and Frequency of Option Grants. (a) Each Eligible director shall be granted options on the following dates to purchase the following number of shares:
Date of Award Number of Shares November 11, 1988 11,250 November 1, 1989 6,750 November 1, 1990 6,750 November 1, 1991 3,000 November 1, 1992 3,000 November 1, 1993 3,000
(b) Each new Eligible Director shall be granted 5,000 options upon election to the Board of Directors of the Company. (c) No Eligible Director shall receive more than one award in any calendar year. 8. Option Price. The option price per share under each option granted under this Plan shall be 100% of the market value per share on the date an option is granted, but in no event shall the option price be less than the par value per share. 9. Exercise of Options. Each option granted under this Plan shall be fully exercisable as of the date it is awarded to the participant. Shares shall be issued to the participant pursuant to the exercise of an option only upon receipt by Sprint from the participant of written notice of exercise, specifying the number of shares with respect to which the option is being exercised, accompanied by payment in full either in cash or by a single exchange of shares of Common Stock previously owned by the optionee, or a combination of both, in an amount or having a combined value equal to the aggregate purchase price for the shares subject to the option or portion thereof being exercised. The value of the previously owned shares of Common Stock exchanged in full or partial payment for the shares purchased upon the exercise of an option shall be equal to the aggregate market value, as defined in Section 2, of such shares on the date of the exercise of such option. Previously owned shares acquired via prior exercise of a stock option granted under this Plan shall not be accepted in full or partial payment for shares purchased upon the exercise of an option unless such previously owned shares have been held by the participant for at least six months subsequent to such prior exercise. 10. Term of Option. The unexercised portion of any option granted hereunder shall expire ten years after the date the option is granted. 11. Nontransferability of Option. No option granted under this Plan shall be transferable except by will or the laws of descent or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986. Each such option shall be exercisable during the participant's lifetime only by the participant. 12. Termination of Service. Upon termination of service of a participant for any reason including expiration of term with no subsequent reelection, resignation, retirement, total disability, or death, all options previously granted to the participant may be exercised within a one-year period following the date of termination, but in no event earlier than six months, nor later than ten years, after the date of grant of such options. On or before March 8, 1993, termination of service shall mean termination of service as a Director of the Company. Directors who become Directors of Sprint Corporation on March 9, 1993, shall not be deemed to have terminated service for purposes of determining when an option lapses under this Section 12. On or after March 9, 1993, termination of service shall mean termination of service as a Director of Sprint. Upon the death of a participant, options may be exercised by the legal representative of the deceased participant's estate. 13. Nonalienation of Benefits. No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit under this Plan shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits except such claims as may be made by the Company, Sprint or any subsidiary. If any participant or beneficiary hereunder should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit under this Plan, such right or benefit shall, in the sole discretion of the Board Committee (or of the Administrative Committee acting on behalf of the Board Committee), cease, and in such event, the Company or Sprint shall hold or apply the same or any part thereof for the benefit of such participant or beneficiary, such person's spouse, children or other dependents, or any of them, in such manner and in such proportions as the Committee in its sole discretion shall determine. 14. Indemnification of Committee Members. In addition to such other rights of indemnification as any person may have as a director, officer or member of the Board Committee or Administrative Committee, each member of the Committees shall be indemnified by the Company against the reasonable expenses, including attorney's fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which such person may be a party by reason of any action taken or failure to act under or in connection with this Plan, and against all amounts paid by such person in settlement thereof (provided such settlement is approved by legal counsel selected or approved by the company), or paid by such person in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding, that such Committee member is liable for gross misconduct, provided that within 60 days after the institution of such action, suit or proceeding, such Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same. 15. Adjustment in Number of Shares and Option Price. In the event of any subdivision or combination of the outstanding shares of Sprint by reclassification or otherwise, or in the event of the payment of a stock dividend, a capital reorganization, a reclassification of shares, a consolidation or merger, or the sale, lease or conveyance of substantially all the assets of Sprint, the Board Committee shall make appropriate and equitable adjustments in the number and kind of shares with respect to which all outstanding options or portions thereof then unexercised, shall be exercisable. Any such adjustment made by the Board Committee shall be final and binding upon all participants, the Company, Sprint and all other interested persons. 16. Compliance with Rule 16b-3. The intent of this Plan is to qualify for the exemption provided by Rule 16b-3 of the Securities Exchange Act of 1934, as amended. To the extent any provision of the Plan does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative and shall not affect the validity of the Plan. In the event Rule 16b-3 is revised or replaced, the Board Committee, or the Administrative Committee acting on behalf of the Board Committee, may exercise discretion to modify this Plan in any respect necessary to satisfy the requirements of the revised exemption or its replacement. 17. Amendment and Discontinuance. The Board of Directors of the Company may alter, suspend or terminate this Plan; provided, however, that (1) no such action shall increase the term for which any option may be granted, or change in any way the grants made in accordance with Section 7, or increase the number of shares available under the Plan (other than as provided in Section 15), or reduce the minimum option price per share as provided in Section 8, (2) if required to qualify the Plan under Rule 16b-3 of the Securities Exchange Act of 1934, no amendment which alters the amount, price or timing of awards granted under the Plan shall be made more than once every six months, other than to comport with changes in the Internal Revenue Code of 1986, or the rules thereunder, and (3) no action pursuant to this Section 17 shall materially and adversely affect any outstanding options without the consent of the respective participants. EX-11 3 EX11 EXHIBIT (11) SPRINT CORPORATION COMPUTATION OF EARNINGS PER COMMON SHARE (In Millions, Except Per Share Data) Twelve Months Ended December 31, 1993 1992 1991 PRIMARY EARNINGS PER SHARE Income from continuing operations $ 480.6 $ 496.1 $ 472.7 Preferred stock dividends (2.8) (3.5) (4.1) 477.8 492.6 468.6 Discontinued operations, net (12.3) 49.4 Extraordinary losses on early extinguishments of debt, net (29.2) (16.0) (1.9) Cumulative effect of changes in accounting principles, net (384.2) 22.7 Earnings applicable to common stock $ 52.1 $ 499.3 $ 516.1 Weighted average number of common shares <1> 343.7 337.2 333.5 Primary earnings (loss) per share Continuing operations $ 1.39 $ 1.46 $ 1.41 Discontinued operations (0.04) 0.15 Extraordinary item (0.08) (0.05) (0.01) Cumulative effect of changes in accounting principles, net (1.12) 0.07 Total $ 0.15 $ 1.48 $ 1.55 FULLY DILUTED EARNINGS PER SHARE Income from continuing operations, net of preferred stock dividends $ 477.8 $ 492.6 $ 468.6 Convertible preferred stock dividends 0.6 0.8 0.9 478.4 493.4 469.5 Discontinued operations, net (12.3) 49.4 Extraordinary losses on early extinguishments of debt, net (29.2) (16.0) (1.9) Cumulative effect of changes in accounting principles, net (384.2) 22.7 Earnings as adjusted for purposes of computing fully diluted earnings per share $ 52.7 $ 500.1 $ 517.0 Weighted average number of common shares 343.7 337.2 333.5 Additional dilution for common stock equivalents and dilutive securities 2.0 3.1 3.2 Total 345.7 340.3 336.7 Fully diluted earnings (loss) per share Continuing operations $ 1.38 $ 1.45 $ 1.40 Discontinued operations (0.04) 0.15 Extraordinary item (0.08) (0.05) (0.01) Cumulative effects of changes in accounting principles (1.11) 0.07 Total $ 0.15 $ 1.47 $ 1.54 <1>Weighted average number of common shares outstanding has been adjusted for dilutive common stock equivalents using the treasury stock method. EX-12 4 EX12 EXHIBIT (12) SPRINT CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (In Millions) 1993 1992 1991 1990 1989 Income from continuing operations $480.6 $496.1 $472.7 $351.1 $353.0 Capitalized interest (8.1) (11.3) (15.0) (16.9) (21.4) Income tax provision 295.3 282.3 242.9 173.9 151.9 Subtotal 767.8 767.1 700.6 508.1 483.5 Fixed charges Interest charges 460.5 522.4 563.3 549.9 556.5 Interest factor of operating rents 117.8 116.3 105.6 94.6 86.4 Pre-tax cost of preferred stock dividends of subsidiaries 1.6 2.1 2.4 2.5 2.6 Total fixed charges 579.9 640.8 671.3 647.0 645.5 Earnings, as adjusted $1,347.7 $1,407.9 $1,371.9 $1,155.1 $1,129.0 Ratio of earnings to fixed charges <1> 2.32 2.20 2.04 1.79 1.75 <1>Earnings as computed for the ratio of earnings to fixed charges includes the nonrecurring merger, integration and restructuring costs of $293 million recorded in 1993 and nonrecurring charges of $58 million (after the effect of minority interest) recorded in 1990. In the absence of these nonrecurring costs, the ratio of earnings to fixed charges would have been 2.83 and 1.87 for 1993 and 1990, 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 component of operating rents and the pre-tax cost of preferred stock dividends of subsidiaries. EX-21 5 EX21 EXHIBIT (21) SPRINT CORPORATION SUBSIDIARIES OF REGISTRANT The registrant is the parent. The subsidiaries of the registrant are as follows: Percentage Of Voting Securities Owned Jurisdiction Of By Its Incorporation Or Immediate Name Organization Parent Carolina Telephone and Telegraph Co. North Carolina 100 Subsidiaries Carolina Telephone Long Distance, Inc. North Carolina 100 North Carolina RSA 6 Limited Delaware 88 Partnership Partnership Centel Corporation Kansas 100 Subsidiaries: C FON Corporation Delaware 100 Centel Cable Investment Company Delaware 100 Centel Capital Corporation Delaware 100 Centel Cellular Company of Alabama Delaware 100 Centel Cellular Company of Mexico Delaware 100 Centel Credit Company Delaware 100 Centel Directory Company Delaware 100 Subsidiary: CenDon Partnership, The Illinois 50 Partnership Centel-Information Systems, Inc. Delaware 100 Centel-Texas, Inc. Texas 100 Subsidiary: Central Telephone Company of Texas 100 Texas Central Telephone Company Delaware 97 Subsidiaries: Central Telephone Company of Florida Florida 100 Central Telephone Company of Illinois Illinois 100 Central Telephone Company of Virginia Virginia 100 New Centel Communications Company Delaware 100 Subsidiary: Centel Videopath, Inc. Illinois 100 Sprint Cellular Company Delaware 100 Subsidiaries: Cellular 7 Minnesota 6 Partnership Centel Cellular Investment Delaware 100 Company Subsidiaries: Centel Cellular Company of Delaware 100 Laredo Centel Cellular Company of Virginia 100 Petersburg Subsidiaries: Petersburg Cellular Delaware 22 Partnership Partnership Petersburg Cellular Telephone Company, Inc. Virginia 100 Subsidiary: Petersburg Cellular Delaware 51 Partnership Partnership Centel Cellular Company of Delaware 100 Sioux City Subsidiary: Sioux City Cellular District of Partnership Columbia 95 Partnership Allentown MSA Limited Partnership Delaware 17 Partnership Chicago MSA Limited Partnership Illinois 5 Partnership Cincinnati MSA Limited Delaware 1 Partnership Partnership GTE Mobilnet of Austin Limited Delaware 1 Partnership Partnership GTE Mobilnet of Fort Wayne Limited Partnership Delaware 25 Partnership GTE Mobilnet of Ohio Limited Partnership Delaware 4 Partnership GTE Mobilnet of South Texas Limited Partnership Delaware 9 Partnership Kansas City MSA Limited Delaware 20 Partnership Partnership Orlando MSA Limited Partnership Delaware 15 Partnership St. Joseph MSA Limited Delaware 20 Partnership Partnership Centel Cellular Investment Company of Greensboro North Carolina 100 Subsidiary: Centel Cellular Company of North Carolina Limited Partnership North Carolina 5 Centel Cellular Company of Charlottesville Virginia 100 Centel Cellular Company of Florida Delaware 100 Subsidiaries: Centel Cellular Company of Florida 60 Tallahassee Limited Partnership Partnership Centel Cellular Company of Ft. Florida 70 Walton Beach Limited Partnership Partnership Florida 9 RSA Limited Florida 49 Partnership Partnership Centel Cellular Company of Delaware 100 Hickory Subsidiary: Centel Cellular Company of North Carolina Hickory Limited Partnership Partnership 97 Centel Cellular Company of Iowa Delaware 100 Subsidiaries: Waterloo MSA Limited Partnership Delaware 89 Partnership Iowa RSA 5 Limited Partnership Iowa Partnership 7 Iowa RSA No. 13 Limited Iowa Partnership 30 Partnership Centel Cellular Company of Nevada Limited Partnership Nevada Partnership 72 Centel Cellular Company of New Delaware 100 Mexico Centel Cellular Company of North North Carolina Carolina Limited Partnership Partnership 57 Centel Cellular Company of Peoria Illinois 100 Centel Cellular Company of South Carolina Delaware 100 Centel Cellular Company of Texas Limited Partnership Texas Partnership 67 Centel Cellular Company of Virginia Virginia 100 Subsidiaries: Virginia RSA 1 Limited Delaware 5 Partnership Centel Cellular Company of Virginia 100 Lynchburg Centel Cellular Company of Virginia 75 Danville Limited Partnership Partnership Virginia 10 RSA Limited Virginia 33 Partnership Partnership Virginia 10 RSA Resale Limited Virginia 33 Partnership Partnership Centel Nebraska, Inc. Delaware 100 Subsidiary: Omaha Cellular General Nebraska 50 Partnership Partnership Subsidiary: Omaha Cellular Limited Nebraska 27 Partnership Partnership Subsidiaries: RSA 1 Limited Partnership Iowa Partnership 4 Iowa 8-Monona Limited Colorado 2 Partnership Partnership Dubuque MSA Limited Partnership Delaware 85 Partnership Georgia RSA No. 1 Limited Delaware 20 Partnership Partnership GTE Mobilnet of Indiana RSA #3 Indiana 20 Limited Partnership Partnership Illinois Independent RSA No.3 Illinois 18 General Partnership Partnership Illinois Valley Cellular RSA 2-II Illinois 40 Partnership Partnership Iowa 15-Dickinson Limited Colorado 7 Partnership Partnership Iowa 16-Lyon Limited Partnership Colorado 8 Partnership Iowa RSA No. 14 Limited Partnership Iowa Partnership 6 L. J. Systems Corp. Iowa 100 North Carolina RSA 6 Limited Delaware 12 Partnership Partnership North Carolina RSA 15 North Sector North Carolina Limited Partnership Partnership 67 Pennsylvania 3 Wireline Settlement Delaware 28 Limited Partnership Partnership Pennsylvania 4 Wireline Settlement Delaware 33 Limited Partnership Partnership Pennsylvania RSA 10B(I) Limited Delaware 33 Partnership Partnership RSA 11 Limited Partnership Iowa Partnership 14 TeleSpectrum, Inc. Kansas 100 Subsidiaries: Empire Cellular, Inc. Kansas 100 Subsidiary: New York MSA Limited New York 10 Partnership Partnership TeleSpectrum of Virginia, Inc. Virginia 100 Charleston-North Charleston MSA Delaware 75 Limited Partnership Partnership Greenville MSA Limited Delaware 89 Partnership Partnership Raleigh-Durham MSA Limited Partnership Delaware 85 Partnership South Bend/Mishawaka MSA Limited Partnership Delaware 84 Partnership Susquehanna Cellular Communications Limited Partnership Delaware 87 Partnership Toledo MSA Limited Partnership Delaware 75 Partnership Tyler/Longview/Marshall MSA Limited Partnership Delaware 60 Partnership Youngstown-Warren MSA Limited Partnership Delaware 77 Partnership Tennessee RSA 8 Limited Partnership Delaware 50 Partnership Texas RSA 7B1 Limited Partnership Delaware 25 Partnership Texas RSA 9B3 Limited Partnership Texas Partnership 70 Texas RSA 10B4 Limited Partnership Texas Partnership 75 Texas RSA No. 15B1 Limited Texas Partnership 51 Partnership Virginia Metronet, Inc. Virginia 100 Subsidiary: RCTC Wholesale Company Virginia 27 Partnership Virginia RSA 2 Limited Partnership Delaware 5 Partnership DirectoriesAmerica, Inc. Kansas 100 Subsidiary: Sprint Publishing & Advertising, Kansas 100 Inc. Florida Telephone Corporation Florida 100 North Supply Company Ohio 100 Subsidiaries: NSC Advertising, Inc. Kansas 100 North Supply Company of Lenexa Delaware 100 North Supply International, Ltd. Kansas 100 Northstar Transportation, Inc. Kansas 100 Sprint OEM Products Group, Inc. Kansas 100 S FON Corporation Delaware 100 Sprint Capital Corporation Delaware 100 Sprint Asian American, Inc. Kansas 100 Sprint Mid-Atlantic Telecom, Inc. North Carolina 100 Sprint/United Management Company Kansas 100 UCOM, Inc. Missouri 100 Subsidiary: Sprint Communications Company L.P. Delaware 34 Partnership United Telephone Company of the South Carolina 100 Carolinas Subsidiaries: South Carolina RSA No. 2 Cellular South Carolina General Partnership Partnership 50 South Carolina RSA No. 8 Cellular South Carolina General Partnership Partnership 50 United Telephone Long Distance, Inc. South Carolina 100 United Telephone Company of Eastern Delaware 100 Kansas Subsidiary: Sprint/United Midwest Management Services Company Kansas 20 United Telephone Company of Florida Florida 97 Subsidiary: United Telephone Long Distance, Inc. Florida 100 United Telephone Company of Indiana, Indiana 100 Inc. Subsidiary: Indiana RSA 2 Partnership Delaware 75 Partnership United Telephone Company of Kansas Kansas 100 Subsidiaries: Sprint/United Midwest Management Services Company Kansas 80 United Teleservices, Inc. Kansas 100 United Telephone Company of Minnesota Minnesota 100 United Telephone Company of Missouri Missouri 100 United Telephone Company of New New Jersey 100 Jersey, Inc. United Telephone Company of the Oregon 100 Northwest United Telephone Company of Ohio Ohio 100 Subsidiaries: United Telephone Communications Services of Ohio, Inc. Ohio 100 Ohio RSA 2 Limited Partnership Delaware 67 Partnership Ohio RSA 5 Limited Partnership Delaware 58 Partnership Ohio RSA 6 Limited Partnership Delaware 80 Partnership United Telephone Long Distance, Inc. Ohio 100 United Telephone Long Distance of Indiana, Inc. Indiana 100 United Telephone Company of Pennsylvania 100 Pennsylvania, The Subsidiaries: Joint Underground Locating Services, Pennsylvania 100 Inc. Pennsylvania RSA 1 Limited Delaware 80 Partnership Partnership Pennsylvania RSA No. 6(I) Delaware 57 Partnership Pennsylvania RSA 10B(I) Limited Delaware 67 Partnership Partnership Pennsylvania RSA 12 Limited Delaware 67 Partnership Partnership United Telephone Long Distance, Inc. Pennsylvania 100 United Telephone Company of Southcentral Kansas Arkansas 100 United Telephone Company of Texas, Texas 100 Inc. Subsidiaries: Texas RSA 7B2 Limited Partnership Delaware 98 Partnership Texas RSA 10B2 Limited Partnership Delaware 75 Partnership United Telephone Company of the West Delaware 100 United Telephone - Southeast, Inc. Virginia 100 Subsidiaries: Tennessee RSA 8 Limited Partnership Delaware 50 Partnership United Telephone Long Distance, Inc. Tennessee 100 UTLD, Inc. Virginia 100 Virginia RSA 1 Limited Partnership Delaware 95 Partnership Virginia RSA 2 Limited Partnership Delaware 67 Partnership US Telecom, Inc. Kansas 100 Subsidiaries: LCF, Inc. California 100 Sprint Communications Company L.P. Delaware 59 Partnership United Telecommunications, Inc. Delaware 100 US Telecom of New Hampshire, Inc. New Hampshire 100 Utelcom, Inc. Kansas 100 Subsidiaries: Private TransAtlantic Telecommunications System, Inc. Delaware 100 Subsidiary: Private Trans-Atlantic Telecommunications System (N.J.), Inc. New Jersey 100 Sprint Communications Company L.P. Delaware 5 Partnership Sprint International Incorporated Delaware 100 Subsidiaries: Consortium Communications International, Inc. New York 100 PTL (Sprint) Limited United Kingdom 100 Subsidiary: Plessey-Telenet B.V. Netherlands 100 Rosprint Russia 50 S.I. Communications A.B. Sweden 100 Sprint Argentina S.A. Argentina 100 Sprint Bulgaria Limited Bulgaria 50 Subsidiary: Sprint Business Telecommunications Company Limited Bulgaria 60 (SBTC) Sprint Colombia S.A. Colombia 95* Sprint Communications Russia 75 Sprint Communications B.V. Netherlands 100 Sprint Communications Canada Inc. Canada 100 Sprint Communications S.A. Luxembourg 100 Sprint Comunicacoes do Brasil Ltda. Brazil 100 Sprint Czech Republic, s.r.o. Czech Republic 100 Sprint Datenservice Gesellschaft Austria 100 M.B.H. Sprint Denmark A/S Denmark 100 Sprint East Operations Incorporated Delaware 100 Sprint Holding (UK) Limited United Kingdom 99 Subsidiary: Sprint International (UK) United Kingdom 99 Limited Sprint International Belgium N.V. Belgium 99 Sprint International Caribe, Inc. Puerto Rico 100 Sprint International Communications Corporation Delaware 100 Subsidiaries: Sprint Bulgaria Limited Bulgaria 50 Sprint Colombia S.A. Colombia 2* Sprint Communications Company Delaware 2 L.P. Partnership Sprint Holding (UK) Limited United Kingdom 1 Sprint International Belgium Belgium 1 N.V. Sprint International (UK) United Kingdom 1 Limited Sprint Polska Sp. z. o.o. Poland 50 Sprint International Communications Hong Kong Limited Hong Kong 100* Sprint International Espana S.A. Spain 100 Sprint International Finland Oy Finland 100 Sprint International France S.A. France 100* Sprint International Ireland Republic of 100* Limited Ireland Sprint International Italia S.p.A. Italy 100* Sprint International Mexico S.A. de Mexico 100* C.V. Sprint International Norge A/S Norway 100 Sprint International PTE LTD. Singapore 100 Sprint International PTY Limited Australia 100* Sprint Japan, Inc. Japan 100 Sprint Korea, Inc. South Korea 100 Sprint Movil S.A. Argentina 51 Sprint Networks Russia 50 Sprint Polska Sp. z o.o. Poland 50 Sprint Services, Inc. Delaware 100 Sprint Services, Inc. Panama 100 Sprint Telecommunication Services Germany 100 Gmbh Sprint Telecommunications (Australia) Limited Delaware 100 Sprint Telecommunications (France) Limited Delaware 100 Sprint Telecommunications Deutschland Inc. Delaware 100 Sprint Telecommunications (New Zealand) Limited Delaware 100 Sprint Telecommunications (UK) Delaware 100 Limited Sprint Telemail Services S.A. Switzerland 100* *Some shares owned by nominees to meet local shareholder requirements. EX-23 6 EX23 EXHIBIT (23a) SPRINT CORPORATION CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-3, No. 33-34567; Form S-3, No. 33-48689; Form S-3, No. 33-58488; Form S-3, No. 33-59996; Form S-3, No. 33- 64564; Form S-8, No. 33-35173; Form S-8, No. 33-44255; Form S-8, No. 33-38761; Form S-8, No. 33-21662; Form S-8, No. 33-28544; Form S-8, No. 33-31802; Form S-8, No. 2-97322; Form S-8, No. 33- 50421; Form S-8, No. 2-71704; Form S-8, No. 2-62061; Form S-8, No. 33-59316; Form S-8, No. 33-59318; Form S-8, No. 33-59320; Form S-8, No. 33-59322; Form S-8, No. 33-59324; Form S-8, No. 33- 59326; and Form S-8, No. 33-59328) of Sprint Corporation and in the related Prospectuses of our report dated February 2, 1994, with respect to the consolidated financial statements and schedules of Sprint Corporation included in this Annual Report (Form 10-K) for the year ended December 31, 1993. /s/ ERNST & YOUNG ERNST & YOUNG Kansas City, Missouri March 14, 1994 EXHIBIT (23b) SPRINT CORPORATION CONSENT OF INDEPENDENT AUDITORS As independent public accountants, we hereby consent to the inclusion in this Form 10-K of our report dated February 3, 1993, covering the consolidated balance sheet of Centel Corporation (a Kansas corporation) as of December 31, 1992, and the related consolidated statements of income, common shareowners' investment and cash flows and schedules for the two years ended December 31, 1992, incorporated by reference into the following previously filed registration statements of Sprint Corporation. Registration Statements on Form S-3: 33-34567 33-59996 33-48689 33-64564 33-58488 Registration Statements on Form S-8 33-35173 2-62061 33-44255 33-59316 33-38761 33-59318 33-21662 33-59320 33-28544 33-59322 33-31802 33-59324 33-50421 33-59326 2-97322 33-59328 2-71704 /s/ ARTHUR ANDERSEN & CO. ARTHUR ANDERSEN & CO. Chicago, Illinois March 14, 1994 -----END PRIVACY-ENHANCED MESSAGE-----